The Ombud for Short-term Insurance (OSTI) published its quarterly newsletter during December. Issue 4 of 2018 of the Ombudsman’s Briefcase contains consumer tips and case studies intended to provide guidance and insight into the way the OSTI deals with complaints.
The case studies in this issue focus on misrepresentation or non-disclosure when completing an insurance proposal form, driving under the influence of alcohol, exercising equity with cell phone policies, and challenging an insurer’s decision to write off a vehicle.
We look at two of the case studies published in this issue of the Ombudsman’s Briefcase that focus on exclusions, the concept of equity, and the standard of proof in civil matters.
1. Cell phone policy- Exercising equity
In this case study, the cell phone policy contained an exclusion if the mobile device is not used with the sim card that the device was initially insured with. The policy allowed for two numbers to be listed on the schedule. The reason for such exclusion serves to limit the insurer’s exposure to risk and enables the detection of fraud on the part of the insurer. The insurer later rejected a claim for a damaged cell phone on the basis that the sim card in use at the time the loss incurred was not noted on the policy. While the insurer’s decision may be in line with the policy terms and conditions, it may not have been equitable. The OSTI is empowered to resolve complaints and make rulings based on law and equity. Regard must be given to the provisions of the policy, the particular circumstances of each individual case, and what is fair and reasonable in the circumstances. Since the insurer was unable to demonstrate any prejudice suffered, such as the transfer of ownership or any other material factor, the OSTI was of the view that under these circumstances it would be unfair and inequitable for the insurer to reject the claim purely on the ground that the sim card in use at the time of loss was not listed on the policy. The insurer agreed to abide by the OSTI’s decision and settled the claim.
2. Driving under the influence of alcohol
In this case study, there was a policy exclusion on a motor vehicle policy which excused the insurer from liability where the loss or damage arose whilst the vehicle was being driven by a person under the influence of intoxicating liquor. Two independent witnesses asserted that the driver of the vehicle did not consume alcohol or did not appear to be under the influence of alcohol, while another two independent witnesses asserted that the driver displayed visible signs similar to that of a person intoxicated by liquor. Since the insurer relied on the statement that the driver was under the influence of alcohol, the insurer had to bear the onus of proving its allegations. In civil matters, the standard of proof is on a balance of probabilities unlike criminal matters where the standard differs to prove a version beyond a reasonable doubt. This means that in order to discharge its onus, the insurer’s version in support of the rejection of the claim, must be found on the whole to be more probable or likely than that of the complainant. The case study points out that confusion as to the standard of proof often leads to an insured concluding that it is sufficient to “poke holes” in the versions of the insurer’s witnesses to create doubt or offer other possibilities without presenting an alternative probable version of his or her own. This is an incorrect approach to civil matters. After considering the evidence holistically, the OSTI found that the balance of probabilities favoured the conclusion that the driver was driving under the influence of alcohol when the collision occurred.
To read the more on these two cases studies, click here to download The Ombudsman’s Briefcase.