The Insurance & Financial Savings Ombudsman has overturned an insurer’s rejection of a claim following a motor vehicle accident.  The owner of the vehicle was driving when she lost control on gravel going into a corner.  The insurer rejected the claim because of a policy exclusion which provided “there is no cover if your vehicle is being driven by … any person … is not legally allowed to drive in New Zealand”.

The driver was from overseas and had been in New Zealand for over 12 months.  She had been legally allowed to drive on her overseas licence for 12 months following arrival. However, upon the expiry of 12 months she was required to convert her overseas licence into a New Zealand licence.  This meant that she was not legally allowed to drive in New Zealand.

The Ombudsman overturned the insurer’s decision because of a provision in the law which forbids exclusions where the loss was not caused or contributed to by the event giving to rise to the exclusion.  The Ombudsman held that the failure to have an overseas licence changed into a New Zealand licence was the exclusion and that this had not contributed to the accident.  If the accident had occurred three months earlier the insurer would have been obliged to pay out under the policy, so failing to have a licence was not the cause of the accident.

Alan Knowsley
Insurance Lawyer