Jacob runs a transport company in New Zealand.
Ben, a former administration employee, who was then based in Australia, asked Jacob if he could return to work for the company. Jacob agreed, but told Ben he needed to obtain a truck licence first because he would be required to drive trucks as part of his new role.
Ben told Jacob he would obtain the licence in Australia. A few weeks later, Ben forwarded Jacob a ‘certificate of attainment’ which stated he had completed the necessary training for the truck licence with a registered training organisation in Australia. When Ben returned to New Zealand, he told Jacob he was still waiting for his updated, physical licence to arrive in the post from Australia. Ben also asked Jacob for a pay rise because the truck licence made him a more valuable employee.
When Ben started working for the company, Jacob supervised him driving a couple of the company’s trucks to make sure Ben was comfortable with the controls.
A few months later, Ben crashed one of the trucks when driving it alone. The police attended the crash and discovered that Ben did not have a licence to drive trucks in New Zealand.
Jacob submitted an insurance claim for the damaged truck.
The insurer declined the claim because there was a condition precedent for cover under the policy requiring the company to ensure that any employees operating vehicles were qualified to drive those vehicles. It transpired that, although Ben had passed the theory assessment for the truck licence (which the certificate was issued for), he had not passed the practical aspect assessment which would have entitled him to the full licence.
Jacob did not agree with the insurer’s decision and complained to FSCL.
Dispute
Jacob thought it was reasonable for the company to rely on Ben’s misrepresentations about being licensed. Ben appeared to understand the Australian licensing system, provided a copy of the training certificate to Jacob, and told Jacob the licence was on its way from Australia. Ben had even asked Jacob for a pay rise on account of obtaining the licence.
Jacob also complained about delays and information withheld during the claim process.
Review
We sympathised with Jacob’s circumstances. Jacob had relied on Ben’s word, as a trusted former employee, when he told Jacob he’d obtained the truck licence.
However, the wording of the condition in the policy was clear. To have any cover under the policy, the company needed to ensure employees were suitably qualified to drive vehicles they were required to drive. Ben simply wasn’t qualified to drive trucks in New Zealand.
In our view, there was no assessment of ‘reasonableness’ in the condition to determine how far an employer should go when checking their employees’ licensing. To comply with the condition, we found Jacob needed to check the Australian licensing requirements and follow up with Ben for a copy of his licence before he let Ben drive any trucks.
We didn’t agree with Jacob that there were any unreasonable delays in the claims process. However, we agreed the insurer should have provided Jacob with the loss adjuster’s report once it was issued, because Jacob had substantially contributed to the report by providing information relevant to the crash and the truck’s repair.
Resolution
We recommended the insurer pay the company $500 as compensation for the inconvenience of withholding the report. Without it, Jacob didn’t know if it was possible for the truck to be repaired or if it would be written off.
Both parties accepted our recommendation.
Insights for consumers
Many insurance policies include conditions that the insured has to comply with in order to have cover. Conditions exist to reduce the insurer’s exposure in certain areas. In this case, unlicensed employees under a motor vehicle insurance policy would likely lead to more claims about damaged vehicles and pose a higher risk to the insurer.
