Mc Naught & Co
Expired licence .. insured?
The Department of Transport announced a grace period extension for the renewal of expired driver’s licences to March 2022 due to the backlog caused by COVID-19. Transport Minister Fikile Mbalula advised that this extension applies to all learners’ licences, driving licence cards, temporary drivers’ licences and professional drivers’ licences. However, questions remain regarding insurance claims where a driver is in a vehicle accident with an expired driver’s licence or vehicle licence.
Current practice is that driving without a valid licence, results in the dismissal of your claim with your insurance company for any damages to your vehicle. Your insurer will thus not cover you for the damage sustained to your vehicle if you are driving with an expired driver’s licence.
Furthermore, consideration should be given to the policy wording. Some vehicle insurance policies make the specific exclusion regarding the insured not having a valid driver’s licence or a valid motor vehicle licence and will repudiate the insured’s claim. Thus, the insurer will have the right to repudiate the insured’s claim irrespective of the reason for the expired licence. The insurer should carefully read the wording of their policy and take note of any exclusions. You should consider whether the wording provides for any exclusions or exclusions specifically for an invalid or expired driver’s licence or motor vehicle licence. It is of pivotal importance that the insured understands the cover afforded by their policy. The primary rule is that the words which appear in the insurance policy must be given their ordinary meaning. An example of the interpretation of the meaning of words can be found in the case of Mutual and Federal Insurance Limited v Manuelle Gouveia 2003 ZASCA 16 (Mutual and Federal Insurance Limited v Manuelle Gouveia, 2003). The insured’s vehicle was hijacked while being driven by an unlicensed driver. The insurer repudiated the claim based on the exclusion clause which made provision for an unlicensed driver. The insured argued that the exception did not apply to hijacking events arguing that the licence was irrelevant because it was not the cause of the loss. The Supreme Court of Appeal, by assigning the ordinary meaning of words in interpreting the contract, concluded that this proposition could not be sustained. In terms of the ordinary meaning of the words, the loss was incurred whilst the vehicle was being driven by an unlicensed driver and hence the exception was indeed applicable.
It is due to the above that motorists had many questions regarding whether insurance companies would pay out in the event of an accident if they are driving around with expired documents. The seriousness of this issue prompted the South African Insurance Association (SAIA) to step in and put motorists at ease. The SAIA makes it clear that a claim will not be automatically rejected because of an expired driving licence. The reason for this is due to the huge backlogs and delays in getting an appointment (amongst other problems such as technological and administrative issues) at Drivers Licence Testing Centres (DLTCs) across South Africa.
According to the SAIA, we should follow the guidance of the Ombudsman for Short-term Insurance (OSTI) who, as far back as May 2007, ruled that insurers should not refuse to entertain the insured’s claim, if the driver’s licence or licence disc has expired. The OSTI advised that insurers should consider the merits of a matter and whether a driver not having a valid licence is material to the cause of damages to the insured’s vehicle. The insurer is required to show whether it suffered any prejudice by the insured’s expired licence.
According to the OSTI, the insurer should consider all of the merits of an individual claim before
coming to a decision. Due to this, an insurer may come to the conclusion that not having a valid
licence was material and therefore directly relevant to the claim. In this instance, a claim might be denied.
The SAIA advises the policyholder to proactively contact their respective insurer or broker to make them aware of difficulties being experienced in getting a licence renewed. You should also provide evidence that the renewal application has been made or at least that attempts have been made in this regard. Insurers would make the necessary concessions for valid claims in consideration of this.
In summary, each case should be dealt with individually and on its own merits. Insurers should
acknowledge that COVID-19 has placed strain on DLTCs. The insured should be able to show that they have taken all necessary steps to renew their driver’s or vehicle licence and the backlog or unavailability of the DLTCs being the only reason that their licence having expired. However, it remains to be seen if all insurers will take these factors into account when dealing with a claim
whereby a factor for consideration is a driver with an expired licence. Insured drivers should err on the side of caution and contact their insurer to determine their insurance cover should they submit a claim for damages to just have their claim repudiated after the fact.
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