Motor insurance breach on permitted use does not justify full repudiation; claim should ordinarily be settled on a non-standard basis.
Where a comprehensive motor insurance policy remained in force and the vehicle was otherwise covered at the time of the accident, a breach relating only to permitted use did not justify total repudiation by the insurer. The SC applied the settled approach that such policy-condition breaches are ordinarily dealt with on a non-standard basis, so the claim should be paid at a reduced admissible percentage rather than rejected outright.
Issues: (i) whether the insurer was entitled to repudiate the claim in full on the allegation that the private car was used on hire in breach of the insurance policy conditions; (ii) whether, on such alleged breach, the claim ought to have been settled on a non-standard basis.
Issue (i): whether the insurer was entitled to repudiate the claim in full on the allegation that the private car was used on hire in breach of the insurance policy conditions.
Analysis: The vehicle was covered by a comprehensive policy and the accident occurred during the currency of that policy. Even assuming a breach of the limitation as to use, the nature of the breach did not justify total repudiation where the claim arose from an otherwise valid policy.
Conclusion: The insurer was not entitled to repudiate the claim in toto.
Issue (ii): whether, on such alleged breach, the claim ought to have been settled on a non-standard basis.
Analysis: The decision relied on the settled approach that breaches of policy conditions relating to use are to be dealt with by settling the claim on a non-standard basis rather than rejecting it outright. The applicable guidelines supported payment of a reduced percentage of the admissible claim.
Conclusion: The claim was required to be settled on a non-standard basis.
Final Conclusion: The order of the fora below was set aside to the extent that the insurer was directed to pay a reduced consolidated amount instead of rejecting the claim entirely.
Ratio Decidendi: Where a comprehensive motor insurance policy is otherwise valid and there is only a breach relating to the permitted mode of use, the insurer may not repudiate the claim wholly and the matter should ordinarily be settled on a non-standard basis.
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