Failure to remain at scene of accident

David made a car insurance claim after an accident. However, after investigating the circumstances, the insurer declined the claim because David had failed to remain at the scene of the accident.

Failure to remain at scene of accident

David* held insurance on his car.

In September 2022, while driving on a main road between two South Island towns, David lost control of his car and crashed into a roadside ditch.

David got out of the car and saw that minor damage had been caused to a wooden fence bordering an adjacent private property. He recovered his car from the ditch, parked it on the opposite side of the road where it was out of the way, and then left the scene on foot. Approximately an hour later the police arrived.

David made an insurance claim for his car, and it was assessed as being a total loss. However, after investigating the circumstances of the loss, the insurer declined the claim. They said that David had breached the policy by failing “to… remain at the scene following [the] accident”.

Under the law, a driver’s duties when an accident occurs are set out under s 22 of the Land Transport Act 1998 (the Act).

In David’s case, because the accident only involved damage to a fence and a fence post and not another vehicle, under s 22 (4) and (5) of the Act, he had “48 hours after the time of the accident, report to the owner … [or] to an enforcement officer … within 60 hours after the time of the accident”. Accordingly, David was not obliged to remain at the scene until the police arrived.

In this case, in addition to the insurer’s misunderstanding of the Act, its position that David had to remain at the scene until the police arrived conflicted with case law set out in Houten v Police.

In Houten, the Court held that remaining stopped at an accident scene for 15 seconds was, in the circumstances, sufficient for the appellant to ascertain whether any person had been injured. According to Richmond J:

All the appellant had to do was to get out of his car, look inside the other vehicle to make sure nobody was injured, and also look round the back of the car to see that nobody had been struck by the car and injured at the time of impact”.

Accordingly, the IFSO Scheme upheld the complaint on the basis that the insurer had not proven the exclusion.

The insurer asked the IFSO Scheme to reconsider the complaint, because it believed it could gather additional information to establish that David had made false statements in support of the claim.

The IFSO Scheme said it was not possible for the insurer to change the basis on which they had declined the claim in a review of the original decision. Any opportunity to change the bases on which the claim is declined happens before the complaint has been through the insurer’s independent dispute resolution process and has reached “deadlock”.

Complaint upheld

When an insurer decides to decline a claim using a policy exclusion, they must establish the application of the exclusion. Insurers also cannot change the basis on which they have declined a claim after it has been through their independent dispute resolution process and reached “deadlock”.

* Name has been changed


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