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OSTI rules against insurer – Faulty interpretation of the law

Is it a case of “innocent until proven guilty” or “guilty until proven innocent”? Although witnesses shared their views and not one piece of evidence was overlooked, a recent Ombudsman case study indicated that insufficient evidence can lead to a favourable ruling for the client.

What lead to the claim?

The claimant, Mr M, was involved in a motor vehicle accident around 22h00 on 8 August 2018. He reported that a friend, Ms S was the incident driver. The incident description provided by both Mr M and Ms S was that a third party driving a Toyota Corolla skipped a stop street and collided with the insured vehicle.

The insurer’s assessment

The insurer rejected the claim on the following grounds:

Failure to provide true and complete information to the insurer.
Driving under the influence of alcohol.

As part of the insurer’s assessment, Mr M had to provide detail of his whereabouts leading up to the accident. He gave a thorough statement of all the locations that he visited, from work, assisting a student with school work, visiting a friend, driving to a “chesanyama”* to dropping off a friend when the accident occurred.

During the assessment conversation, Ms S confirmed that she was the incident driver and confirmed that she had her last drink at 17:00. She also agreed with Mr M’s version regarding the circumstances of the loss. The assessor also interviewed two witnesses at the accident scene. However, according to these witnesses, the incident driver was male. Additionally, the towing operator who uplifted Mr M’s vehicle stated that the vehicle smelled of alcohol.

The assessor also found alcohol in the car as well as a receipt for alcohol purchase. The evidence was double-checked against Mr M’s bank records and it was found that more items, possibly liquor, were purchased that evening.

The insurer argued that the assessment findings indicated that Mr M gave false and misleading information with regards to his whereabouts before the accident, the identity of the incident driver and the consumption of alcohol. According to the insurer, there was sufficient circumstantial evidence on which it could prove that Mr M was the incident driver and that he was under the influence of alcohol at the time of the accident.

As this is a civil matter (as opposed to a criminal one), the insurer is not required to prove the facts beyond a reasonable doubt, but on a balance of probabilities.

Furthermore, the insurer submitted that if Ms S was the incident driver, the evidence indicated that she was under the influence of alcohol as a metro police officer conducted a breathalyzer test at the accident scene that showed a breath alcohol content of 0.14mg per 1,000ml.

OSTI’s findings

After thorough investigation, OSTI found that the evidence submitted by the insurer did not support the allegations made against Mr M. A lot of the evidence was based on speculation and not fact. The insurer therefore failed to prove that Mr M had submitted false information regarding his whereabouts before the accident, the identity of the incident driver and the consumption of alcohol. As a result, the insurer was not justified in declining liability on this ground.

Although the policy entitles the insurer to decline liability where the incident driver is under the influence of alcohol, or had a blood-alcohol level exceeding the legal limit, or failed a breathalyzer test, Ms S’s blood-alcohol levels were never tested. The legal limit of a breathalyzer test is 0.24mg per 1,000ml. Hence, Ms S did not fail the breathalyzer test.

The issue which had to be determined, therefore, was whether Ms S was, on a balance of probabilities, under the influence of alcohol at the time of the accident. In the case of Swart v Mutual & Federal Insurance Co. Ltd (10352/2004) [2009] ZAWCHC 107 (4 August 2009, the court stated further that the inference to be drawn must be based on objective facts, not conjecture and speculation.

The insurer therefore had not demonstrated sufficient evidence to prove that Ms S was influenced by the consumption of alcohol or that it had contributed to the accident.

In light of this, the insurer was not justified in its decision to decline liability on the basis that the incident driver was under the influence of alcohol.

Accordingly, OSTI recommended that the insurer settle the claim. The insurer agreed to settle the claim and the dispute was resolved in Mr M’s favour.

Click here to download the OSTI case study to read the detail of the case.

* braai/barbeque

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