Claim declined for failing to wear a seatbelt

Ah Lam and her brother, Shen and mother, Juan, arrived in New Zealand at 5am for a holiday.  Ah Lam, Shen and Juan hired a car at the airport and purchased car and travel insurance.


Later that day, while driving the rental car, Shen fell asleep at the wheel.  The car crossed the centre line colliding with a car travelling in the opposite direction.  Ah Lam, Shen and the driver of the other car were wearing seatbelts, and were not seriously injured.  Juan was asleep in the backseat, unrestrained.  Juan suffered fatal injuries and died at the scene.


Ah Lam made an insurance claim for her mother’s death. 


After reviewing the post-mortem report, the police investigation and a doctor’s report the insurer declined the claim.  The insurer explained to Ah Lam that although Juan’s death was accidental it was caused by Juan’s failure to wear a seatbelt, as required by law.  The policy does not cover loss if the event giving rise to the claim is directly or indirectly related to an illegal act by the insured person


Ah Lam’s view

Ah Lam did not accept the insurer’s decision and referred the complaint to us.



Under the insurance policy the insurer agreed to pay $75,000 on the death of an insured person, provided no exclusions applied.  Cover was excluded if the event giving rise to the loss arose from an illegal act of the insured.


From all the available information it was accepted Juan was not wearing a seatbelt when the accident happened.  Expert medical opinion provided to the insurer was that if Juan had been wearing a seatbelt, she would have survived the accident.  We were satisfied that Juan’s death and the loss flowed from the failure to wear a seatbelt.


Section 10 of the Land Transport Act 1998 requires all road users to follow rules.  Clause 7.10 of the Land Transport (Road User) Amendment Rules 2009 requires everyone over 15 to correctly wear a seatbelt while they are in a moving vehicle if the vehicle is fitted with a seatbelt.



We explained to Ah Lam that the policy did not cover situations where the loss was caused by failing to follow the law and in our view the insurer was entitled to decline the claim. Ah Lam did not reply to us and we assumed she did not wish to take the complaint further.  We discontinued our investigation.


Our insight

Even if the loss is accidental, an insurer may exclude cover where the loss is caused by a failure to follow the law and, in this case, driving rules and regulations.