What does “reasonable care” mean?

AMI Insurance is urging New Zealanders to better understand what their insurance covers them for after two apparently similar claims ended with one being accepted and the other declined.

AMI technical claims specialist Chris Kiddey said that the two claims, both for stolen cars whose owners had left their keys inside, were helpful in explaining the concept of “reasonable care”.

“We think people know their insurance will cover them for accidental loss, even if that loss might have happened through some fault of their own, like losing your phone,” Kiddey said.

“Insurance policies are supposed to cover the consequences of simple carelessness but there must be limits, and these often come up in the difference between negligence and gross recklessness or irresponsibility,” he said.

The first stolen car claim, which was accepted, involved a car being been stolen from a rural area when the owner had felt ill and so quickly went inside to lie down, leaving the keys in the car behind them without thinking.

The second claim concerned a car that was stolen after having regularly been left on the street with the keys inside. This claim was declined.

Kiddey said that in the first instance while the claimant’s action contributed to the loss it was not a case of recklessness and that a ‘reasonable person’ would probably have acted similarly in those circumstances.

In the second claim the claimant had demonstrated a failure to take the actual risks into account by regularly leaving their car parked on the street with the keys inside.

“Just because the car hadn’t been stolen already did not mean the risk was not there,” he said.

Insurance and Financial Services Ombudsman Karen Stevens said, unfortunately, some people think that because they have paid for insurance, they will be automatically covered.  “However, taking reasonable care of your property is a standard requirement in insurance policies, particularly car, house, contents and travel insurance policies,” Stevens said.

“What this means is that people are usually still covered if they have been a bit careless or just a bit negligent, but most insurers won’t cover you if you do something a reasonable person wouldn’t do in the same circumstances.”   

“This could mean, for example, leaving your handbag in the passenger seat of your car with the window open, regularly leaving the windows of your house open when you’re not there, leaving your valuables on a beach in plain sight while swimming, or wandering away from your luggage at the airport – in the hope that all of this will be ok.”

“The message we’d like to get across to consumers is to always take care of your valuables, and take reasonable steps to avoid theft or burglary. Insurance will cover you for something unexpected, but not for things you should have anticipated.”

The Insurance and Financial Services Ombudsman provides case studies of various complaints involving reasonable care, and an information sheet available from the IFSO Scheme website: www.ifso.nz.


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