“Law Journal’s” Warning To Motorists Oh Insurance

Press, Volume XCIX, Issue 29258, 16 July 1960, Page 14

“Law Journal’s” Warning To Motorists Oh Insurance

A warning to motorists against delays in notifying insurance companies after accidents, which can result in rendering insurance cover invalid, after a decision of the Court of Appeal earlier this year, is contained in a leading article in the “New Zealand Law Journal.” The article also discusses possible amendments to the Transport Act to eliminate undue hardships to motorists, and at the same time to give the protection due to insurance companies.

The case was Whitwell v. the South Island Motor Union Mutual Insurance Association. The appellant, as the owner of a car, nominated the respondent as his insurer when registering the car. The respondent thereupon became liable to indemnify the appellant against claims arising from death or bodily injury suffered as the result of the. use of the car. While being driven by the appellant the car collided with a cyclist. The appellant drove the injured cyclist to a doctor and later to hospital. The appellant saw his solicitor next day and claimed that he thought the latter would notify the respondent of the accident. «

After a legal claim for damages from the cyclist, the appellant completed the usual report and claim form and the respondent thereupon took over the conduct of the defence in which the cyclist was awarded £2OOO damages. The respondent later successfully took action in the Supreme Court- to recover the damages from the appellant on the ground that it was some six weeks before the accident was notified. “It is an obvious necessity for insurance companies who undertake business under Part V of the Transport Act to be provided with protection against the motor-

Ist who is dilatory in complying with his obligations under the statute,” the article says. “In jnany cases speed in the investigation of the circumstances of an accident is vital to the successful defence of claims arising out of it, and if the insurer is prejudiced in its defence by actions or lack of action on the part of the insured, it is right and proper that the insured should be penalised and the insurer compensated. Where the present sub-section errs is in imposing a heavy arbitrary penalty on all cases of default irrespective of the seriousness of the default itself for its consequences. Penalty for Default “It is easy to suggest in general terms the amendment to the statute which is called for. The punishment, and the corresponding indemnity to the insurer, should be made to fit the crime. But when one enters on a serious consideration of the various means of achieving this result which are open, difficulties of practical application are found. “The case, in our opinion at least, seems to call for some minimum penalty for default in the insured’s obligations, perhaps related to costs, which would be recoverable in all cases where the insurer could establish some default on the part of the insured. Neither the liability for nor the amount of such penalty would be affected by the seriousness or consequences of the default. “There is no question of Government policy involved in this matter, and once agreement is reached between the interested parties one would expect Parliament without hesitation to .give such agreement legislative effect. The matter is, however, urgent and should receive immediate attention.”