In a recent case, the full bench of the Gauteng Division of the High Court, Johannesburg, reaffirmed the enforceability of time-barring clauses in insurance contracts.1
Time-bar clauses are a common feature of insurance contracts and provide that unless the insured institutes action against the insurer within a specified time period, the insured would lose his/her right to claim under the policy.
Even though time-bar clauses are common, insured parties occasionally fail to comply with these clauses. Where the insured has failed to comply with the clause and it does not violate public policy, the insured is required to show that, in the circumstances of the case, there was a good reason for the non-compliance.2
In a recent case in which we acted for the insurer, the insured had lodged a claim for indemnity following a motor vehicle accident. The claim was rejected for various reasons but the insured failed to institute action against the insurer within the agreed time period. When the insured instituted action against the insurer, the latter raised the time-bar clause as one of the defences to the action. The insured did not file a replication providing an explanation for his failure to comply with the clause.
During the trial in the court
a qou, the insured sought to impermissibly explain the reason for the non-compliance notwithstanding that this was not pleaded by giving various reasons, including blaming his attorneys and claiming that he did not institute the action timeously because he was engaged in settlement negotiations with the insurer (which he could not prove). He succeeded in the court
a qou but this judgment was reversed on appeal, with the full bench finding that the parties were bound by their pleaded cases and even if this was not the case (and the insured could introduce new issues during the trial), he had failed to justify his failure to comply with the clause. In the result, the appeal was upheld with costs.
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