No insurance cover if licence conditions breached

16 August 2016

Insurance cover is another benefit to encourage learner drivers to get licensed, but the Insurance & Financial Services Ombudsman urges restricted drivers not to break the rules.

The Community Driver Mentor Programme is helping young learner drivers to get their restricted driver’s licence. The programme, run by the NZ Transport Agency and the Automobile Association (AA) with support from the Salvation Army, provides access to vehicles and driving coaches in various communities to encourage driving confidence and safety skills.

“The programme is very positive, and it is timely to remind people that driving in breach of your learner or restricted licence has insurance, as well as legal, consequences,” says Karen Stevens, Insurance & Financial Services Ombudsman.

“In most cases you will have absolutely no insurance cover if you’re involved in an accident while driving in breach of your licence,” says Karen. “We hear from many parents who have had to pay for the damage, not only to their own car, but to another car, because their son or daughter was driving outside the conditions of their licence when an accident occurred. For example, a driver on a restricted licence may have been driving at midnight, or with passengers, and without a supervisor in the car, when an accident occurs.”

Declined insurance claims due to breach of licence are a common complaint to the IFSO Scheme. Breaches include: driving with passengers on a learner or restricted driver’s licence, or driving between 10pm and 5am on a restricted driver’s licence, without a supervisor.

Car insurance policies usually specifically exclude cover for damage caused if an accident occurs while the driver is in breach of their licence.

“All drivers should drive safely and lawfully, and that includes complying with the conditions of your licence,” says Karen. “Parents should be aware, and ensure their children are aware, of the risks of breaching their licence conditions – including no insurance.”

Karen says in some complaints people say that the breach of licence did not actually cause the accident. “If the insured can prove that the breach of the licence (most commonly, the absence of a supervisor with a restricted driver) did not cause or even contribute to the accident, then the insurer cannot decline your claim on the basis if this exclusion. However, it can be very difficult to prove that a supervisor would not have assisted the driver to avoid the accident.”

The IFSO Scheme has been resolving insurance and financial services complaints for 21 years.

See our info sheet