Fais ombud orders insurance broker to pay out client for stolen car
A SHORT-TERM insurance broker has been ordered to pay a motorist R189 400 after the rejection of his insurance claim following the theft of his Toyota Hilux because of the failure to regularly test the tracking device installed in the vehicle.
Ombud for financial services providers (Fais) Noluntu Bam, in a determination released yesterday, ordered AB Insurance Brokers and/or Ahmed Bayat to pay this amount to Neil Venter from Vereeniging.
Venter obtained insurance for his Hilux from Saxum after consulting AB Insurance Brokers and/or Ahmed Bayat in July 2011.
His Hilux was stolen at a retail store on March 2 last year. He immediately reported the theft to Altech Netstar, which could not locate the vehicle due to their inability to pick up the signal from the tracking device installed in the vehicle.
Venter’s claim was rejected by Saxum Insurance, which relied on a clause in the policy that specified a tracking device approved by it must be installed in the vehicle and tested every six months, with proof that it was tested produced and supplied at the time of submitting a claim.
Venter claimed it was AB Insurance Brokers and/or Ahmed Bayat’s non-compliance with the provisions of the Fais Act and negligent failure to disclose the material term in the insurance policy related to the testing of the tracking device that led to the rejection of his claim.
The Fais ombud’s office asked Netstar what led to their inability to pick up the signal.
Netstar said without the actual unit being available, they could not provide a definitive reason for the vehicle not being recovered or signals not being received.
“The theft of a vehicle occurs in circumstances which are highly unpredictable and the reasons for non-recovery range from the (tracking) unit being removed or damaged by the perpetrators to the vehicle being taken into an area where a signal is not available and these occurrences may happen notwithstanding the unit being tested by the customer,” Netstar said.
Bam said there was no indication from Netstar that the tracking unit was faulty.
AB Insurance Brokers and/or Ahmed Bayat referred to the insurance proposal form that was completed by Venter and stipulation that the onus was on the insured to avail himself of “all terms and conditions” of the policy.
They said there were hundreds of insurance clauses in an insurance contract and it could not be expected of brokers to explain each and every clause to clients.
The statutory disclosure documents were sent to Venter, who was asked to read all these documents, including the policy schedule, they said.
Bam said this was an admission that the material term related to the testing of the tracking device was not disclosed prior to concluding the contract as demanded by the general code.
“In short, (the) complainant was not placed in a position where he could make an informed decision about the transaction.
“Customers should not discover at claim stage they are bound by provisions of which they were not aware. It is the duty of the provider to disclose all material provisions of a policy to the client and in the circumstances of this case, the respondent failed to discharge that duty.
“As a result of the respondent’s failure to discharge on this duty, complainant remained oblivious of this material requirement,” she said.