Meeting by Accident

When people ask me what I like so much about my job they are often surprised when I say, “the claims”

When people ask me what I like so much about my job they are often surprised when I say, “the claims”. People (rightly) assume we shed a tear every time there is a claim notification against one of the policies we have underwritten. The truth is that when we are confronted with a tricky claim we get the opportunity to debate and engage with our policy wording, the law and each other. One such claim recently became a talking point in the General Liability division.

This claim related to security officers who were guarding a site. These security officers had physical access to the keys of the vehicles on site but they were certainly not permitted to take vehicles for joyrides.

And then it happened. Someone saw the sparkle of the keys and a glint in the windscreen and thought, “what could possibly go wrong?”.

His question was answered when the vehicle he was driving became integrally connected with another vehicle. This lead to a claim notification under his employer’s General Liability policy for damage to two third party vehicles.

The question that then arose was whether vicarious liability for the insured would still apply if the employee disobeyed the employer’s instructions. For the employer to be liable there are three criteria that need to be met:

1.     There must be an employer-employee relationship at the time of the act/omission,

2.     The employee must have committed a wrongful act/omission,

3.     The employee, at the time of the action, must have acted within the course and scope of his job

 

It is the third requirement which can pose a potential dilemma in a situation such as the one outlined above where the employee has seemingly deviated from his normal duties. This is a matter which the courts have considered in K v Minister of Safety and Security 2005 (6) SA 419 (CC) as well as Feldman (Pty) Ltd v Mall 1945 AD 733.

Essentially the issue comes down to whether or not the employees’ activities, even in contravention of their job description, are sufficiently connected to their job.  If an employee has abandoned his work entirely in favour of pursuing his own activities then the employer cannot be held legally liable. However if the activities in which the employee is taking part essentially amount to negligence in the performance of the job itself then the employer may indeed be held liable for the harm arising out of those activities.

It can therefore be seen that although the security guard taking the vehicle may seem to negate the employer’s liability, the act was sufficiently close to the performance of his duties that the insured can be held liable for the damage.

Once the insured’s legal liability has been established, the question arises if the policy will respond. In this regard the issue was whether or not this claim would be rejected based on the fact that there is an exclusion of employee dishonesty. Theft, as a form of dishonesty, would not be applicable as an exclusion in this case since the item never left the premises of the third party and it had never been the intention of the employee to deprive the customer of their vehicle. Given the aforementioned point, it is also our position that this exclusion is not applicable to this specific claim as the motives of the employee were never to cause harm or damage.

While some underwriters may reject a claim such as this one, we maintain that it should fall within the ambit of a General Liability policy.

More News Stories

September 26, 2019
IIG International 2019

#IIGlobal2019 Crossword Challenge powered by Camargue

Read story
September 16, 2019
Camargue Turns 18

18 years ago, on this day [16 August 2019], Camargue Underwriting Managers made history by selling its first policy via satellite phone at the mount summit of Mt Kilimanjaro’s Uhuru Peak.

Read story
September 15, 2019
Silent Cyber - Managing the Risk

In July 2017 the Prudential Regulatory Authority (the “PRA”) of the Bank of England issued Supervisory Statement (SS4/17) (the “Statement”) entitled “Cyber insurance underwriting risk”. The Statement was aimed at non-life insurance and reinsurance companies, and pronounced an expectation of them to identify, quantify and manage cyber insurance underwriting risk.

Read story