CONSUMER WATCH | Naked Insurance leaves BMW owner short in third-party bumper-bash claim

Her car was reversed into — and the responsible party’s insurer will not cover the full cost of repair.

Kabelo Collis was in the visitors’ queue at a residential estate. The driver ahead had an issue with the entry code and reversed without paying attention to Collis in her BMW 1 Series.

After exchanging details, she submitted a third-party claim through the driver’s policy with Naked Insurance.

She received a response from a liabilities specialist requesting particulars such as a no-claims letter from her insurer and vehicle registration details and complied. Collis received a response stating an outcome would be reached in 15 days, though the process took longer, prompting her to follow-up after no correspondence was received during the promised timeframe.

She received feedback — and the verdict was simple: Naked would not be offering full compensation for the damage, stating “contributory negligence” on her part. They were willing to cover 70% of the cost.

“To determine what the client is ‘legally liable’ to pay for, consideration needs to be given to the obligations placed on a person in control of a vehicle travelling on public roads as derived from the principles contained in the Law of Delict,” read correspondence from the liabilities specialist.

“The action of each party involved in any specific incident, irrespective of whether they had right of way or not, is measured against that of a reasonable person under similar circumstances.”

“Should the person’s action in the incident deviate from the action of a reasonable person under the same circumstances, the person’s action is seen as negligent. Negligence may be deduced on a balance of probabilities from the circumstances of an occurrence.“

One line from the insurer’s agent left her taken aback: “Although we understand our client reversed into your vehicle, a reasonable person — if they had been maintaining a proper lookout — could have recognised the potential risk and taken evasive action.”

Determined, she engaged with the agent hoping to achieve a more favourable outcome.

“I disputed Naked’s attribution of contributory negligence to me on the basis that my vehicle was stationary at the time of impact, I hooted to alert the driver before impact — the conclusions regarding vehicle movement appear to have been based largely on image interpretation rather than any physical assessment of my vehicle.”

Collis was subsequently informed by Naked that it would offer 80% of the repair cost.

Eager to draw the matter to a close despite not securing full compensation, Collis accepted.

“However, when I later requested an updated settlement breakdown aligned with the position, Naked reversed its position and advised that the reference to an 80/20 split had merely been a ‘clerical error’, maintaining that the matter remained 70/30.”

She decided to approach us with her story, concerned by “the lack of proactive engagement after the incident, repeated follow-ups over extended periods to obtain updates, refusal to facilitate a transparent three-way discussion between myself, the insurer and their insured despite disputed facts, reliance on damage imagery to dispute my assertion that my vehicle was stationary and no physical assessment of my vehicle before conclusions regarding movement dynamics were reached.”

She also suspected that the insurer was excessively reliant on AI-generated responses in their dealings with her.

“Some responses appeared highly templated and generic in nature, raising questions around the extent to which AI-assisted or copy-and-paste claims handling approaches may be influencing the consumer experience in disputes requiring nuanced human assessment and engagement.”

“As this is a third-party claim, I also discovered that certain ombudsman escalation avenues are not available to non-policyholders, which further heightened my concerns regarding accountability and recourse in disputes of this nature.”

In May, Naked announced via a press release that it was the first company in the world to successfully develop and deploy a native app in ChatGPT that can provide a final, binding car insurance quote. The company described the move as “an early step towards a future where consumers will use AI assistants to understand, compare and manage financial products on their behalf”.

Though the damage does not appear severe, Collis is between the proverbial rock and hard place with how to proceed with fixing her pranged bumper.

Of the three repair quotations procured from BMW-approved repairers, one appears to be excessive (R104,193); while the other two range between R19,847 and R23,562.

She could claim from her insurer — incurring payable excess and an effect on her monthly premium — or accept Naked Insurance’s 70% coverage for the damage, footing the rest of the bill herself. Out of pocket either way.

Approached for comment on the matter, co-founder of Naked Insurance Ernest North took the opportunity to respond.

“We understand that motor accident claims can be stressful, especially when the people involved have different recollections of what happened. We also appreciate that, from the third party’s perspective, the process can feel frustrating when liability is not accepted in full.”

North said third-party claims were assessed differently, governed by the law of delict.

“Delict is the area of South African law that deals with civil claims where one person says another person caused them harm or financial loss. In this context, it means the third party needs to show that our insured customer was legally responsible for the accident and for the damage being claimed.

”Where a person has comprehensive motor insurance, the usual and most efficient route is for them to claim from their own insurer.

“Their insurer can then assess the damage, arrange repairs or settlement in terms of that policy and, if another party appears to have been responsible, pursue recovery afterwards.

“It is also important to note that liability in motor accidents is seldom assessed on an all-or-nothing basis. There are cases where one party is held fully responsible, but where the available evidence does not clearly support a 100%/0% outcome, insurers may apply contributory negligence and apportion responsibility between the parties.

“A 70/30 apportionment is commonly used where one party appears more responsible than the other, but the evidence does not justify placing all responsibility on one side.

”A third-party claimant who chooses not to claim from their own insurer, and instead approaches the other party’s insurer directly, is in a different position. They do not have an insurance contract with that insurer.

”Their claim is therefore not a policy claim, but a liability claim against the insured customer. Strictly speaking, the third party would need to prove legal liability before the other insurer is required to compensate them.

“At Naked, we also have a duty to consider and protect the interests of our customer. That does not mean ignoring a third party’s version. It means both versions need to be assessed carefully, and any decision must be based on the evidence available.

”Where our customer’s version is disputed, objective evidence, such as CCTV footage, dashcam footage, or an independent witness statement, is needed to prefer one version over the other.

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“In this case, our insured customer’s version is that he had to reverse because of an issue with the estate access boom code, and that the third party’s vehicle was moving at the time of impact. The third party’s version is that her vehicle was stationary, that she hooted before impact, and that the environment limited her ability to take evasive action.

“These are materially different versions of events. In circumstances like this, insurers look for independent evidence that can help resolve the dispute. No independent evidence of that nature was provided to confirm one version over the other.”

North acknowledged the error made in the 80/20 apportionment offer and said the confusion caused was regretful.

“However, the underlying assessment outcome did not change from 80/20 back to 70/30. The assessment and calculations had remained based on 70/30.”

Regarding the lack of an inspection of the BMW owned by Collis, North said Naked was not under a contractual or legal obligation to inspect the third party’s vehicle in the way it would inspect a policyholder’s vehicle when handling their own repair claim.

Regarding the unwillingness to facilitate a conversation between all parties, he said in disputed liability matters, the process is generally handled through formal claims and liability assessment channels rather than direct discussions between the parties and that a three-way discussion would not have necessarily solved the issue.

“On the concern that Naked did not proactively contact the third party after the incident, it is important to clarify how third-party claims usually begin. Naked cannot start a legal claim against its own customer on behalf of another person. The third party must approach us, submit their claim and provide the evidence they rely on. Once that is done, the claim is assessed based on the information available.

”Naked uses technology to make insurance and claims processes simpler and more efficient, but liability decisions in matters like this are not made by AI or automated copy-and-paste responses," he said.

Read North’s entire response in the photo gallery above.