The financial services watchdog has ordered the Botswana Insurance Company (BIC) to honor a claim in which a policyholder sought a replacement for a vehicle damaged in an accident.
The dispute involves BIC and an unidentified policyholder who appealed a rejected insurance claim with the Non-Bank Financial Regulatory Authority (NBFIRA) Tribunal.
This comes after the policyholder filed a claim for insurance for the repair or replacement of his accident damaged vehicle. BIC rejected the claim saying the policyholder had violated a term of the contract, which required him to provide a breath specimen to a police officer for purposes of analysis of alcohol level.ย
The policyholder, the NBFIRA as well as the NBFIRA tribunal say there was no need for the rejection. The BIC took the matter to the NBFIRA tribunal, which however ruled in favour of the policyholder arguing that the BIC exclusion clauses on motor vehicle policy was vague.
The judgement indicates that during the period of insurance, the insured vehicle got involved in a car accident. Relying on the insurance policy placed with BIC, the policyholder submitted an insurance claim to BIC for the repair or replacement of the damaged insured vehicle. BIC rejected the claim saying the policyholder had breached a material clause of the motor vehicle policy, which among others the insurer would not provide coverage or compensation if the policyholder got involved whilst under the influence of alcohol.
But the said policyholder has not submitted to a breatherlyser. That is when the policyholder took the matter up with the financial services watchdog.
In his defence, the policyholder said the Gaborone Extension II Magistrate Court acquitted and discharged him on matters relating to failure or refusal to provide breath specimen for analysis and that the insurance provider had no reason to insist on same.
BIC differed with the policyholder on the grounds that the court decision had no bearing on the contractual breach by the policyholder in terms of the policy wording in the sense that it does not negate the contractual breach effected by the policyholder.
BIC said the purpose of an exclusion clause is to define the specific risks which will not be covered by the insurer in any event under the policy. As such, BIC argued that this excludes payment under any and all circumstances where a policyholder fails to provide a breath specimen for purposes of analysis of alcohol level.ย
In addition, BIC took issue with NBFIRA decision to the extent that it used the magistrate court ruling in relation to the criminal case against the policyholder to further validate its directive which, in BIC’s view, was relied upon incorrectly. BIC argued that NBFIRA should not have relied on the magistrate courtdecision.
The NBIFIRA Tribunal indicated in its judgement that:
โWe thinkย that where a policyholder โfails to provide a breathย specimen when requested to do so by the police officer for alcohol analysis; the test, according to the plain wording of the exclusion clause, is thatย where a request is made to provide a breath specimen and there is failure on theย part of the policyholder to do so, such conduct gives BIC, the entitlement toย outrightly reject any claim flowing from the conduct.โ
The judgement further states that:
โTo read into the exact policyย wording that even where there is no refusal or failure to proceed to provide a breathย specimen to a police officer, and breath is provided but does not tell whether theย Policyholder is within or beyond the permitted alcohol level, such still amounts toย a breach of the clause, will be to overstretch the plain language of the clause.โ
ย Accordingly, the Tribunal held โthat language is not used unnecessarily; and ifย too little is said, problems arise.โ
โEvery word of a contract must be given a meaning concise details of exclusions of liability, or restrictions or circumstances in which benefits will not be provided,โ the Tribunal said.
Ruling in favour NBFIRA and the policyholder, the Tribunal said that โa policyholder does have a legal valid interest in the certainty that the meaning and effect of an exclusion clause as at the time of the placement of the cover will not exceed its plain meaning when it is now applied as at the time the claim is lodged.โ
Therefore, the Tribunal said it โsees no basis for reading the reference in clause 3.1 (1.2) to “failure to provide breath specimen when requested by a police officer for purposes of alcohol analysis” to mean, if a policyholder complies with the direction of the police officer and provide a breath specimen but the result is insufficient, under no circumstances will it bind the insurer to honour the claim.โ
