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Under the influence, or not?

QUESTION

A commercial client of mine has a Vehicle Fleet with approx 20 vehicles insured.

In December 2020, one of their staff was driving home on a Friday evening, having stopped at a friends house for dinner and a few drinks. On his way home, he hit some loose gravel on the road surface and lost control of the van, ending up colliding with a fence post. After gathering his thoughts and checking the vehicle over to ensure it was still safe to drive, he carried on home and reported the incident to our clients on the Monday morning.

Their Company policy is to report any accident immediately. However, the driver didn't do this as he's been with the company for 13 years, is a senior staff member and didn't want to disturb our client over the weekend, when the vehicle was driveable, albeit a little bit scraped & dented.

Driver has been interviewed by our client & their HR team and line manager on four different occasions and the story is believable and accepted. He has been cautioned about the nonreporting but that is it.

Late February 2021 (3 months later), the insurer has put an investigator on the claim due to the circumstances and they are now intimating that the claim will be declined due to the following exclusion:

Broker Policy Wording (v) being driven by any person who: • is under the influence of any intoxicating substance or drug; or

My question is - what level of proof does the insurer need to be able to decline a claim on this basis?

Can they decline on the 'balance of probabilities'?

There has been no Police Report, no breathtesting nor blood tests taken and i'm very concerned that the insurer has intimated that they have a 'chart that sets out the approximate level of blood/alcohol' based on what someone has allegedly eaten and drunk over a period of time. Although based on science, it would / could never produce an exact measurement. I would have thought that to decline a claim, they'd actually have to have proof that the policy terms had been breached....rather than on a balance of probability?

We do have the option of invoking the Invalidation clause if needed, but our client is not keen on this, as they are supportive of their driver/ employee and his version of events.

Would very much appreciate comment from those in the know?

CROSSLEY GATES

The onus is on the insurer to prove the exclusion applies. As any court proceedings are in a civil court, the standard of proof required is on the balance of probabilities - in other words, it is more likely than it is not that the exclusion applies. Some objective evidence is required, obviously, to get to 51%. The courts don't operate on supposition.

It is correct that a scientist can work backwards, adopting the most generous position in favour of the insured, to calculate what the least the blood/ alcohol level would have been, based on volume of alcoholic drinks consumed and food eaten beforehand.

Your client must have given this information to the investigator (which the insured is entltled to insist on). From memory, based on scientific evidence, the courts have accepted that at a blood/alcohol level of 50 (legal limit being 80) a person is under the influence.

I suggest your client asks the insurer for a copy of the scientific report (or whatever other evidence) it is relying upon, if it has not already done so to see what it says.

Cricketing quandary

A local cricket club was playing a game of cricket. A player during the game hit a ball, it cleared the boundary and hit a neighbouring property, causing damage.

Under the Public Liability policy in place for the Cricket Club, who organised the match, there is a sporting activity endorsement which the insurer believes is sufficient to rule out any cover for the TP property damage. The endorsement reads as follows:

SPORTING ACTIVITY ENDORSEMENT: The Insurer shall not indemnify the Insured for any claim in respect of or alleging Personal Injury or Property Damage: 1. Participants arising out of the participation of any person in a Sporting Activity unless such Personal Injury or Property Damage is as a result of the Insured's negligence in regard to the course or facility provided for such Sporting Activity; "Sporting Activity" means: a competition, event, game, match, practice, race, training, trial or similar and including any warm up or warm down and other prior or post actions which are directly related thereto. 2. Alcohol and Drugs arising from the actions of any Insured who is under the influence of intoxicating liquor or drugs, except a drug taken in accordance with the advice of a registered Medical Person.

Given the events described is there any cover under the club's policy?

QUESTION

CROSSLEY GATES

The endorsement is an exclusion that only provides liability cover if the write back applies i.e. the third party property damage was as a result of the club's negligence in relation to the course or facility provided. It's not entirely clear what that is referring to.

Maybe it is referring to a situation where the choice of cricket pitch chosen is negligent in relation to the nearby property. If so, there will be cover if the club negligently chose a cricket pitch that was too close.

Theft or damage?

We have a client who has had two areas of netting damaged, one area slashed and cut, and another just further along has had a section slashed and cut out and the netting taken.

The netting is designed to stop golf balls from damaging vehicles and property near the fairway. The netting is 5m high and 200M in length and a section of 1.5 x 3 meters has been damaged/ removed.

The netting removed has been roughly cut and along with the slashed area the police have noted it as willful damage. The club last year had another instance where the netting was slashed, the claim was accepted and paid out with the standard $500.00 excess applied.

The insurer has now noted this new damage as theft as the netting has been removed and wish to apply the $2500 excess for theft which is greater than the claim cost in total to repair the damaged section of fence.

So is the insurer right to impose the greater excess as the damaged netting was taken or can this reasonably be considered as willful/malicious damage?

CROSSLEY GATES

There has been a theft of the part of the netting removed and so the application of the excess for that peril seems correct.

Coverage under a policy can be very fact specific and small changes in the facts can make a difference.

QUESTION

Careless car insurance client

QUESTION

A client lives in an upmarket suburb and their house is up a long driveway some 80m+ long and not visible from the street front. Our client was having a number of guests around and as a result left his keys in his vehicle in case the vehicle needed to be moved to allow people to come and go. At the end of the evening the client forgot that they had left the keys in the vehicle so proceeded to go to bed to wake in the morning to find his vehicle had been stolen.

The insurer has decided to decline the claim on the basis the client did not adhere to what they class as reasonable care. If the vehicle had been left in a public area unlocked with the keys in the vehicle I could understand there being some resistance in getting the claim accepted. I would also expect that the insurer would have to deem our client to be grossly irresponsible or grossly negligent in order to meet the legal test of reasonable care but has our client been grossly irresponsible? I'd suggest not but would welcome your thoughts.

The act of leaving the keys in the vehicle was also not a habitual practice and the vehicle was parked right outside our client’s front door up a long driveway out of sight. It is just unfortunate that an opportunist has stolen the vehicle.

I would have thought the fact that the vehicle was up a long driveway and not visible from the road front along with the fact that our client does not normally leave the keys in the vehicle that the legal test of reasonable care to decline a claim could not be met?

Can I have your feedback and thoughts on this matter please?

STEVE KEALL

Really interesting situation. The Courts have considered the issue of what reasonable care can mean in insurance policy like this. As you have indicated it cannot be mere negligence because one of the functions of the policy is for the customer to insure against his/ her own negligence. The insurer would need to establish at a minimum something more than negligence (there is a longer discussion about whether it is something more than that; gross negligence/ recklessness).

In this case, there was a break from what I assume was the customer's usual practice of locking his vehicle. He left his keys in it so it could be moved, because he was having a party; where the car was at the end of an 80m driveway, out of sight of the street (and so the keys could not be observed as they might be if it had been parked on the street). At the end of the night, he forgot he had left his keys in the car.

The act of forgetting, as it has arisen in this particular case is, I suggest mere negligence. The forgetting is contextualised by the setting: the driveway and being out of site. It follows that the insurer cannot rely on the provision requiring the customer to take reasonable care because it could not establish there has been something more than negligence.

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