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Insurance & Reinsurance
In what is a rare win for an insurer in recent times, the court’s judgment in Musa v King Price Insurance Co on 9 May 2022 highlights the importance of insureds abiding by their claims cooperation obligations. The court's decision will provide some welcomed relief to insurers who frequently encounter uncooperative insureds and serve as a caution to insureds who seek to obstruct an insurer's access to information and documentation required to verify a claim.
Mr Musa submitted a motor claim to King Price following a collision during April 2022. During the claim verification process, King Price’s assessor placed Mr Musa on terms to provide consent to access his cellphone beacons and billings records, which he did not do, even after an extension to do so. Consequently, King Price rejected the claim and cancelled the policy. It relied on a breach of General Condition 5 of the policy which reads similarly to other such conditions in the market and required Mr Musa to:
Mr Musa filed a complaint with the Ombudsman for Short-term Insurance, who confirmed King Price’s rejection and cancellation, prompting Mr Musa to apply to court for relief.
Mr Musa did not challenge the rejection and cancellation but instead sought a declaratory order directing King Price to, amongst other things, determine the insured value of his vehicle at the time of loss and to pay that value to him in terms of the policy.
In the circumstances, the court had to decide whether Mr Musa could claim specific performance on the cancelled policy.
King Price argued that the application was fatally flawed, given that Mr Musa had not requested the review and setting aside of its decision to reject the claim.
The court referred to Taljaard v Sentrale Raad Vir Kooperatiewe Assuransie BPK 1974 (2) SA 450 (A) and Commercial Union Assurance Company of South Africa Ltd v KwaZulu Finance and Investment Corporation and Another 1995 (3) SA 751 (A) which found that an insurer bears the onus of proving the decision upon which it relies. Despite the formulation of Mr Musa’s prayers, the court proceeded on the basis that the crux of the issue between the parties, and what it had to decide, was whether the claim was correctly rejected.
While the court did not specify which portion of General Condition 5 was breached on the facts, it broadly found that Mr Musa failed to provide information and assistance as required in terms of the policy and thus breached it, which entitled King Price to accept Mr Musa’s breach, cancel the policy and reject the claim. The court did not expressly deal with Mr Musa’s arguments on why he did not provide the required consent, namely that the information sought was not reasonable and King Price failed to furnish an undertaking to safeguard his personal information. It would seem, by implication, that the court did not afford any value to these arguments.
Terms like those involved in this case are often considered vital terms due to the importance of the duties created by them and an insurer is, as the court correctly found, entitled to rely on their breach. While we accept that an insurer can reject the claim tainted by the breach, there has in the past been some debate about whether the policy can be cancelled (which the court found it can).
Insurers who intend to rely on these types of terms should ensure a clear paper trail evidencing the insured’s breach.
Given the court’s decision, it did not need to consider Mr Musa’s request for King Price to determine the value of the vehicle at the time of loss. In our view, this relief would have been incompetent, as the onus is on an insured to prove its loss, rather than an insurer.
The full judgement can be accessed here.
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