Reviewing the law on ‘reasonable precautions’

The reasonable precautions clause which commonly appears in policies requires the insured to take reasonable steps to safeguard the insured property or prevent accidents and minimise loss, damage or liability (or variations thereof). The clause most likely requires proof of recklessness on the part of the insured but interestingly, there is no authoritative judgment by the Supreme Court of Appeal determining the test.

There are a number of judgments by the Gauteng and Kwa-Zulu Natal High Courts suggesting that proof of negligence suffices and others in the same jurisdictions and in the Cape High Court holding that the correct test is recklessness.

The latter judgments hold that the requirement is what is ‘reasonable’ as between insured and insurer without being repugnant to the commercial object of the insurance contract. The judgments that require recklessness hold that the insured should not deliberately court a danger, the existence of which the insured recognises by refraining to take any measures to avert it.

The Supreme Court of Appeal in Renasa Company Limited v Watson had the opportunity of considering whether the bar had been set too high by requiring the insurer to prove recklessness on the part of the insured. The court held that it was unnecessary to determine the issue because the matter could be disposed of on the main defence raised. The court did however say that, at the very least, proof is required that a reasonable person in the position of the insured would have foreseen the reasonable possibility of the loss eventuating and would therefore have taken reasonable steps to prevent the loss.

Where the policy expressly indemnifies the insured for liability arising from its fault or negligence, the court is unlikely to determine that negligent failure to adopt reasonable precautions is sufficient to constitute a breach of the clause. There may however be appropriate facts and policy wordings which allow for a more nuanced development of the law on reasonable precautions, but proof of foreseeability of the loss eventuating will always be needed.