It has been suggested by some that the judgment against Outsurance in favour of Mr Jerrier in the KZN High Court 2015 resulted from a failure of plain language. On the contrary, it is based on the plain meaning of the bargain. The court found:
- The policy document explains in plain terms that the insured is “rewarded for not claiming”.
- The policy was not a conventional policy subject to annual renewal. The policy provided for an indefinite insurance facility as long as the premiums are paid.
- The insured was required to report a claim or any incident that may lead to a claim including “incidents of which you do not want to claim but which may result in a claim in the future”. The policy gave an example of the collision with another car where there was a potential for a claim by the other motorist.
- The insured failed to report two incidents.
- In one unreported incident the vehicle’s rim had been damaged by a pothole and was repaired for R15 000. In the other incident the insured reversed into a bakkie. He paid the bakkie owner R12 000 and thought his own damages were R20 000. When he found out the damages were R200 000 it was too late to claim. In both incidents he did not want to claim because he wanted to preserve his outbonus of 10% of his total premiums in cash after three years increasing progressively as the years go on.
- The obligation to report a claim or incident included circumstances where a third party claim was possible.
- The court found that on any interpretation the failure to report the two previous incidents did not permit the insurer to avoid liability under the policy in respect of a loss sustained in a later, unrelated accident. It was not surprising that the insured would opt not to claim for damages which he thought were within his excess in order to preserve the outbonus. Neither of the claims that he failed to report were, because of the insured’s conduct in settling his own damages and paying the third party, claims “which may result in a claim in the future”.