The recent publicity surrounding the case of Jerrier vs Outsurance, in the Kwazulu-Natal, Pietermaritzburg High Court, seems to have raised more questions than answers. In this case the court found in favour of the insurer who had rejected the claim based on the drivers alleged intoxication and non-disclosure. The main issue revolves around the disclosure of ‘material’ facts.
The insurer had said that they originally rejected the claim based on the fact that the driver was under the influence of alcohol. The court stated that they did not deal with this aspect ‘in any great detail’ as they had already concluded in favour of the defendant, based on the reasons of non-disclosure. This related to the fact that the insureds vehicle had been involved in two previous incidents which the insured had not disclosed to the insurer. The value of the damage, certainly in one of the incidents, would be considered significant. This may well have impacted on how the insurer viewed the risk. What impact it would have had; whether the clients policy would have been renewed, or if the premium charged would have been increased, was not discussed.
Why the insured chose not to go the route of the Short term Ombudsman or the Fais Ombudsman is not known. What the circumstances of the actual claim in question are, is also not known. There also seems to be no mention of whether the insured was made fully aware of the terms of his contract.
While the ruling may cause certain consumers to panic with regard to what they should or shouldn’t be informing their insurers of, this panic is probably unfounded. The circumstances of this case are fairly unique and if different channels were followed may have resulted in different outcomes. We also live in a time when determining what a ‘reasonable man’ is, is as clear as mud. The main point to consider is, whenever you have a concern about whether a fact is material or not, to rather disclose it. The insurer will then be in a position to evaluate your risk and charge the appropriate premium, when you do suffer a loss you can be confident that no extraneous factors will come into play. This is echoed in the advice of Donald Dinnie of Norton Rose, South Africa, ‘a good rule of thumb is when in doubt to make the disclosure or to obtain the guidance of a good short term insurance broker.’