QUESTION:
Our client had taken out PMV policy and it was named driver only comprehensive policy. Named driver is under 25.
Driver's uncle was driving the car who caused the accident. He is over 25 and has no previous claims history. He has full NZ driver license since 2003 and also hold class-2 license since 2006.TP vehicle is also involved.
Insurer declined claim on the basis it is named driver only policy.
Is insurer position correct in declining a claim?
Steve Keall replies:
Hello, the correct answer depends on the insurance contract documents including the policy wording.
The insurer has in mind that the insured being the driver is a condition precedent to liability. Were this requirement to be a condition precedent to liability then this stance would be correct.
There is a conceptual difficulty with this requirement being a condition precedent to liability, even if it is stated to be one. What it really means is that there is no cover while someone else is driving the vehicle. Who is driving the vehicle is a state of affairs at the time of the incident about which the insured is making a promise ("only I will drive the car"). This is closer to warranty.
If it is a warranty, then law reform legislation provides that there is no cover only if the breach of the warranty caused the loss.
More information would be needed in this case to understand the issue of the cause of the loss (causation). The issue is straightforward if the TP is responsible. In that case, if there is no condition precedent and it is a warranty, the breach of warranty cannot have caused the loss because the TP caused the loss. So, there should be cover. This issue is less clear-cut where the uncle is, apparently, responsible. Given his good history, I suggest the fact that his being the driver was not the real and efficient cause of the loss, but rather his (apparent) carelessness on this particular occasion. In that kind of situation, assuming there is no condition precedent then there should be cover.
