Man who hired out his car to ferry church members loses bid for Britam payout after accident

The High Court in Narok has ruled that Britam General Insurance Company is not liable for third-party claims from an accident involving a vehicle that flouted policy limitations. 

Justice Charles Kariuki ruled that the insured, Absalom Onoka Otieno, breached the limitation of use clause in his comprehensive private motor insurance policy when he hired out the vehicle to transport church members from Narok to Njabini in Nyandarua county on July 9, 2023.

The vehicle was involved in an accident at Kijabe along the Kijabe-Mai Mahiu Road on the return journey, leaving seven passengers injured.

When the injured sought compensation through the chief magistrate’s court, Britam launched a suit to absolve itself of liability. 

The insurer argued that by using the vehicle for hire or reward, the defendant had strayed beyond the purposes permitted under his agreement.

The court heard that the policy, which covered the period from November 5, 2022, to November 4, 2023, limited use of the insured vehicle to social, domestic and pleasure purposes and for the defendant's personal business and explicitly excluded use for the carriage of passengers for hire or reward. 

"The policy covered total loss, material damage, theft and third-party risks, subject to payment of premiums and compliance with its terms and conditions,” court documents show.

"An express term of the policy limited the use of the insured vehicle to social, domestic and pleasure purposes and for the defendant’s personal business. The policy expressly excluded use for racing, rallies, trials or the carriage of passengers for hire or reward.” 

Investigations by the insurer revealed the driver was specifically engaged for that trip and was not a regular employee of the defendant.

"The limitation as to use clause is not a peripheral term; it denies the nature and extent of the risk assumed by the insurer. A private motor policy attracts a different premium and contemplates a different risk profile from a commercial passenger-carrying policy, Justice Kariuki ruled.

"The unauthorised conversion of the vehicle to commercial use materially altered the risk exposure and went to the root of the contract.”

The court also addressed the question of whether the insurer remains liable to satisfy third-party claims.

"The defendant breached the express limitation as to use clause by using the insured motor vehicle for the carriage of passengers for hire or reward. That breach was material and went to the root of the contract. The plaintiff is therefore entitled to avoid the policy in respect of the accident of July 9, 2023 and is not liable to indemnify the defendant or satisfy the  third-party claims arising therefrom.”