Mon | Mar 27, 2023

Insurance company's need not honour claims against clients in breach of policy

Published:Wednesday | April 1, 2015 | 12:00 AM

The Court of Appeal has ruled that motor vehicle

insurance companies are not liable to make payments whenever a vehicle involved in an accident was being operated contrary to the terms of the insurance policy.

The recent ruling was made in the case of an appeal brought by Advantage General Insurance Company against a multimillion-dollar award granted to Lloyd Heman.

In 2005, Heman was injured in a motor-vehicle accident in which the driver died.

The vehicle involved in that accident was insured by its owner with Advantage General Insurance.

Heman sued and was granted judgment for more than $4.5 million.

However, Advantage General refused to honour the award on the grounds that at the time of the accident, the car was being driven by someone who had a driver's licence for less than three years.

It said this was in breach of the insurance policy.

Heman then sued the insurance company claiming that it was bound to honor the judgment under the Motor Vehicles Insurance (Third-Party Risks) Act.

Ordered to pay

The Supreme Court granted judgment against the insurance company ordering it to pay Heman up to the policy limit.

However, Advantage General appealed the decision.

Attorney-at-law Kevin Powell, who represented the insurance company, argued that under the Act, an insurer has no responsibility to honour a judgment against its insured if the insurance policy was breached at the time of the accident.

Attorney-at-law Jeffrey Daley, who represented Heman, argued that under the legislation, as long as there is an insurance policy in place an insurer is obliged to honour judgments against its insured, even if the insurer is exempted from covering the insured.

The appeals court, disagreed with Heman's lawyer and ruled in favour of Advantage General.