This blog was co-authored by William Hayne, Candidate Attorney.

In October 2024, the High Court dismissed the claimant’s claim against their insurer due to initiation of legal proceedings outside stipulated time limits in the time bar clause.

The claimant operated a business centred around the purchase and resale of lucerne. To protect its stock, the claimant entered into an insurance agreement, negotiated through a broker appointed by the claimant, with the insurer, covering risks including spontaneous combustion.

On 29 December 2012, an incident of spontaneous combustion occurred, and the claimant, submitted a claim to its insurer. The insurer rejected the claim on 1 March 2013. The claimant thereafter appointed a new broker, who lodged a complaint with the insurance ombud on 11 December 2013. The matter could not be resolved, and the claimant issued and served summons on 18 December 2015.

The insurer argued that the insurance agreement contained a time bar clause, which provided that the insurer would not be liable after the expiry of 24 months from the occurrence of the event. Additionally, if the insurer denied any claim and a summons was not served within six months from such denial, all benefits under the policy would be forfeited.

The claimant alleged that the time bar clause did not form part of the insurance agreement.

In evidence, the insurer called the claimant’s broker, who testified that he acted as the claimant’s agent in brokering the insurance cover and that he was aware of the time bar clause. The fact that the broker acted as the claimant’s agent was also conceded by one of the claimant’s witnesses.

The claimant’s witness testified that the only written policy document received by the claimant was the schedule, which did not contain the time bar clause. However, the schedule included a clause stating that it must be read together with the general terms and conditions that formed part of the agreement, which were either annexed to said schedule or could be obtained on request. The court found that this clause made it abundantly clear to the claimant that there was more to the agreement than just the schedule.

The court held that due to the broker acting as an agent of the claimant, which was conceded by both the broker and the claimant’s witness, the claimant was accordingly bound to the terms of the insurance agreement, including the time bar clause.

The claimant’s claim was dismissed.

This case highlights the importance of not only adhering to policy timelines but also the importance of ensuring that policyholders are aware of important policy terms and requirements and the implications of non-compliance. Given the prevalent use of brokerage firms in modern day insurance, policyholders must be aware that information that is within the knowledge of their appointed agent will probably be imputed to them as the principal.

CCN Boerdery BK v ABSA Versekeringsmaatskappy BPK (2622/2015) [2024] ZANCHC 98 (4 October 2024)