GMW

It is said every cloud has a silver lining and indeed Covid 19 has revealed to us so. This is manifested in the way the pandemic has rapidly influenced the unlocking of technology and its potential, for utilization in the social -economic aspects of life.

The Judiciary is one of the sectors that has been positively impacted by the wave of technology that is driven by the Covid- 19 wind .With the ‘’new normal,’’ all an officer of the court needs to access court is a Computer, reliable internet connectivity and court link to clickand fix a date for a hearing, mention, deliver a ruling dispense with a matter, give orders and directions on matters and the list goes on.

Whereas the idea to fully harness technology in the judicial operations had been conceived long before the pandemic, its absorption gained momentum with the advent of the pandemic.  Three weeks into the pandemic, the judiciaryvide a report by The National Council on administration of Justicedated 1^StApril 2020 resolved to upscale justice delivery through increased use of technology to curb the spread of the virus. Two weeks later, the said Council announced further measures to be taken, which among them included directions advising advocates to adopt e-filing in the High Court Commercial and Tax Division as well as the Chief Magistrates Courts to greatly limit visits to courts. Judges were consequently advised to consider electronic delivery of rulings, where appropriate.

The above are among deliberate efforts taken by the Judiciary as a matter of necessity and which efforts revolved around the massive upscale in the use of technology. Whereas the speed at which this was rolled out was plausible, the same was spurred by the Pandemic.   Put differently, the advent of Covid 19 simply served to remind us that the wave of change (to technology) which was long overdue, was and is indeed inevitable and when the Pandemic hit, we hadno option but to sail along.

The justice system had to then sail accordingly by fully embracing technology and allowing it to permeate the entire system and spread its tentacles into the registries: to minimize and possibly root- out cases of missing or misplaced files, to the law firms and court rooms to spur efficiency by reducing time spent on matters and generally help minimize extensively on corruption within the system.

Even with the many positives as aforesaid,the massive adoption of technology within the Judicial System was not without its fair share of challenges in its implementation and utilization, especially at the nascent stage.The main beingthe challenge of network connectivity that was characterized by breakdown in communication during court sessions hence the birth of phrases such as ‘’your honour I cannot hear you!yourhonour can you see me? I cannot see you!’’ Such is inevitably an integral part of the ‘’new normal of –the technology way”withbenefits of embracing this Covid 19-driven wind of change to technology in the judicial system far outweighing the challenges.

Incidental and immediate benefits to the effect include economic utilization of resources: labour, time, financein the judicial process. Put differently, technology in the justice system has helped to minimize on input and maximize on output. Yet there is more to the Covid 19 wind-driven technology: For instance the level of efficiency and expeditious progress of cases before courts on the electronic platform is a relatively positive experience in the justice system. Since the inception of online court sessions, a number of cases have been concluded and judgments delivered. Additionally, matters which will otherwise be gathering dust in court shelves are at an advanced stage whereas those that could not be filed due to distance barriers have mention dates courtesy of the e-filing filing system. The resultant benefit to this effect being improvement on efficiency in delivery of justice thereby breathing more life into the Constitution of Kenya 2010 and in particular Article 47 which advocates for expeditious resolution of cases, spurring economy with conclusion of Commercial cases within reasonable time and imbuingthe Judicial transformation Strategic Plan with the impetus to  meet its goals and  ultimately  enable the judiciary to live up to its purpose and mission of optimal service delivery to Kenyans in respect to justice.

Therefore it is in the above respect and context that I  have looked at the good in the bad situation;  a reminder that indeed every cloud has a silver lining if only we can care to take notice.

Bonface Nyabuto Marube

 Intern At : Gertrude Matata, Waithaka & Associates Advocates.

Does your insurer have a right to take legal action against a third party using your name?

Is there a time frame for such action? Why should the insurer disturb my peace long after claim payment and more so when I no longer insure with them? Am I under any obligation to cooperate with them?

Subrogation is the mechanism by which an insurer can take action to recover moneys expended in compensating the insured for the loss occasioned by a third party whose negligence caused the loss in question.

Having compensated the insured for loss arising out of an insurance claim, the insurer is entitled to all the benefits, rights or remedies , legal or equitable, vested in the insured against a third party whether in contract or tort. To enforce such rights, the insurer brings the action in the name of the insured at the insurer’s cost. The insurer is said to “step into the shoes” of the insured and is subrogated to his rights.

Simply put, Subrogation is the substitution of one person for another so that the substituted person assumes the rights of the other.

An insurer institutes or defends a claim in its insured’s name because it cannot prosecute or defend such claim in its name. It provides legal representation to its insured and pays the legal costs for such legal representation. On its part, the insured is contractually obligated to fully co-operate with counsel who has been appointed on his behalf to assist the insured in recovering any sums paid to such third party.

If the insured renounces or compromises any right of action he has against a third party, he is in fundamental breach of the contract of insurance and must repay to the insurers the benefit of which he has thereby deprived them. If on the other hand he receives compensation from a third party in respect of the same risk, he must surrender or account for it to the insurer; otherwise this would amount to double compensation.

The insured’s contractual obligations entails inter alia, that he collaborates with the insurer in pursuing recovery of compensation from the third parties to whom the loss for which he is indemnified may be attributed. In other words, the insured is bound to actively participate in all proceedings to this end at the cost of the insurer. The said participation entails, providing a detailed statement on the circumstances of the loss, swearing a verifying affidavit and testifying in court as a witness, if need be. Quite often, such matters are settled out of court without the need for the witness’ court attendance.

The court interrogated the doctrine of subrogation in the case ofMercantile Life & General Assurance Company Limited & another v Dilip M Shah & 3 others [2015] eKLR, when it referred to the Treatise of  K.I. Laibuta; Principles of Commercial Law at pg 254 where the author stated as follows:-

“Having compensated the insured, the insurer is entitled to take advantage of and enforce any legal and equitable rights and remedies that the insured has or might have enforced against such third party whether in contract or in tort. To enforce such rights, the insurer brings the action IN THE NAME OF THE INSURED who must lend his name in return of an undertaking that he will not be personally liable for the costs in the action. The insurer is said to “step into the shoes” (stands in the place of the insured) and is subrogated to his rights.”

Time frame; Under the Limitation of Actions Act Cap 22 an action founded on tort for damages for personal injuries or damage to property caused by negligence, may not be brought after the end of three years from the date on which the cause of action accrued. Accordingly, the insurer has up to three years to file a recovery suit and the insured is bound to comply for as long as the claim is within the prescribed limitation period.

Consequences of non-compliance; in the event of non-compliance by the insured, the insurer has a right to sue the insured for the recovery of the amount that was due from the third party, on the basis of Breach of the insurance contract.

In a nutshell, beware when you refuse to cooperate with your insurer in the claim recovery process. You might find yourself on the receiving end!

By: J. Waithaka

17^THMAY 2021

The insurance contract has been the quintessential of  fine print or small print, at least for those standard contracts that should be scrutinized  by the consumer.

It is a fact that the Insurance  Regulatory Authority Kenya took steps to address the woes of consumers regarding  policy documents. The regulator has made several steps in an attempt to address this by simplifying the language used in the insurance policies and standardizing most of them.

When you have come across many disputes brought by consumers of insurance one cannot fail to notice that, the dilemma of the Insurance products for consumers cannot be cured by slightly enlarged print and slightly decoded language only.

When an Insurance product consumer is interviewed at the time of a problematic claim, you find that there is confusion on the proposal form, the main part of the policy document and the schedule.

 Most of the consumers will not even read these documents due to confusion regarding the insurer, the agent and the role of each. The insurance sales process is wanting in disclosure.

The proposal form which forms part of the policy document is like at the entrance or the application, the policy is the inside(the wordy main part)  and the schedule is the backyard.(contract)

For most, the proposal form (where applicable) is the only document they get to see, it is often the only document presented by the intermediaries for collection of insured’s information and signature. The proposal form is the formal request for the insurance of  the property or risk and should ideally  address extent of coverage, but does not. It has a declaration part to reinforce the principle of utmost good faith which Insurers will throw at you when rejecting a claim, this good faith is applied in favor of the insurer .

 The policy,(agreement part)  is prepared after and the actual risk covered is in the schedule appended to the policy document. This is usually delivered once the deal is done and premium paid. Consumers trust the agent understands terms on their behalf!

Not all policies used in the industry are standard, insurers customize with regulator’s approval and not consumer approval.

Unless  consumers are warned that there are terms and conditions plus exclusions in the wordy part; that risk, limits  and objects covered  are as described in the schedule, they always assume the  risk has been transferred fully to the Insurer in case of total loss. They do not even read the excess clause, if at all they read anything.

By way of example, there  is a policy type called the first loss policy insurance.(FLP) It is a shock that in most cases, in property insurance like burglary, the meaning  and essentials of the FLP sinks in  at the time of claiming .These essentials are what an underwriter should have explained without fail:-

  a) the cover taken was partial insurance

 b)Premium is based on the assumed single exposure i.e. maximum loss that can occur at the same time. This is sound reasoning  if  the maximum loss that can occur is expertly  computed.  Determining that  likelihood may  requires some risk analysis not just what proportion of  premium the consumer can afford.

   c) There is usually a high deductible in property and other high value insurance( deductible is the amount to be paid by the insured (consumer) before the Insurer can pay  its share of the claim. It has

unfortunately happened  in some cases, that  the insured unintentionally becomes  its own insurer for the higher proportion.

d) The premium for FLP is lower than the amount for full insurance coverage.  Unfortunately, this is used as a tool ensure a sale by intermediaries who tout the  option of paying lower premium without explaining that lower  premium means in case of loss, the claim amount the insurer pays is calculated proportionate  to that low premium  and once the deductible is factored in, risk cover loses meaning.

d) It is affordable to insure this way; but the reasoning which is never explained to the insured, is that you take such cover in situations where upon sound calculation and collating of data risk of total damage/loss  is very highly unlikely.

 For example , you are a motor-trader with many cars in the compound, you may  assume only one may be stolen at any one time? Will it be the highest valued or the cheapest so decide wisely.

If you are insuring property like expensive gadgets that are easy to steal in quantity, and your limit  covers only  a few pieces, then you may be in for a surprise.

It is important to sensitize  Insurance consumers , that proper inventory and valuation of  property is important. Reviewing of the patterns of loss  in the risk being insured against is also crucial.

 For example, it would be sensible to review the ways of modern burglars whose tech survey methods of planning  burglaries make for higher loss scenarios. Often certain business categories with high cost valuables are  targeted and theft executed with military precision.

EDUCATION & DUE DILIGENCE

Insurance may be an intangible product but it requires education to know what to look out for and due diligence is what agents/brokers should be giving to consumers in exchange for the business . The products are usually sold through intermediaries and a few of them do not explain the finer details or ask the consumer to read the proposal form and  the policy plus its schedule. Some will even fill the proposal for the insured and sometimes information is inaccurate. Instances are many where the agents have signed even the proposal and have put their addresses as customer address.

What  should  Consumers look for in an insurance policy.

1. Always ask how many documents to expect for the transaction. Get the checklist written out by the intermediary  preferably showing it is from the particular underwriter(or principal underwriter) issuing cover.

2. Ensure the information you are required to give in the proposal  is understood and completed correctly, before  signing  the declaration part.

3.Read the policy and look out for clarity in the following:

The  description of the risk so that it is clear that it is in alignment with what you would like it to be. Crosscheck with definitions given because where words are defined, it will not be open to other interpretation. In insurance  words like theft and burglary or flood/rain and storm are not the same.

Check  what is included and what is excluded.

See Conditions (i) what is required to be in place when policy takes effect, e.g guards, alarms, specified fencing. ii) what is expected to be done  when loss occurs? In what circumstances will the policy not be in force?

Most important, once everything has been fulfilled,  what  will be the exact nature of indemnity?  How will the compensation be calculated or effected?

 For a contract to be a contract, you have to know what is expected from you and what  you expect from the insurer. There should be agreement on salient points.

Schedule: read the schedule for the specific details  agreed upon.

Period of insurance, breakdown of premium payable, full particulars of  the items covered, their description, is that all you wanted covered?

This is most important, if you agreed to limit cover to a certain amount or you  extended cover it is all in there. If cover is in force for necessary removal of items and use in different locations etc.

 Excess or deductible is also indicated in the schedule.

If after reading you note errors have been made, there is a period within which these can be rectified, don’t wait for a claim to say, this is not what I told the agent. If cover was to be extended to cover particular people or situations, read the schedule to see that is reflected.

What is in the schedule is the specific not the general or standard clause.

Consumers need help, know where to get it, if the intermediary is not helpful:

i)Directly from the Insurance Company. It would be better to put an inquiry in writing and have it duly received, anything else added in discussion ;put the date and name of the officer you have discussed with and put in your insurance file.

ii)From  Insurance Regulatory Authority (IRA) , check website for information and call them or visit  customer care.

iii) If you have a lawyer and they understand insurance contracts,( reading and understanding contracts may be easy for most commercial lawyers).

iv) If intermediary is all you have, after listening ask as many questions as possible.

A policy can be cancelled as stipulated in the terms or stopped  when you realize it is of no use for your particular purposes. You cannot know this without reading it.

People in the Insurance line, like loss adjustors can interpret policies, see if they provide consultancies.

In cases where the Insurer’s reputation is so bad, they are in the media for wrong reasons, do yourself a favor and get a reputable alternative before it is too late. Some intermediaries will keep you with a bad insurers because  they are paid extra.

Prevention of claim rejection is always better, there is no cure when the insurance contract is null and void  or cannot apply  for terms that should be ascertainable in advance.

GERTRUDE  MATATA.

“Do not prepare a new meal before the last meal’s dishes have been washed.”

“Do not prepare a meal in a dirty kitchen”

Your work station is your kitchen and whatever is completed and adds to revenue growth is the meal served in a clean dish of good work ethic.

~~~~Gertrude Matata~~~~

GMW Partner

Human rights are an inalienable, inherent entitlement that all human beings have mealy by being human. It follows, therefore, that refugees as human beings, are entitled to human rights available under international law and national legal systems of the host country, except with respect to rights that are specifically spelt out to accrue to citizens only.         

The 1951 United Nations Convention Relating to the Status of Refugees, spells out various rights owed to refugees such as the right to non-discrimination provided under Article 3, right to access courts provided under Article 16 and many others.

The Convention,  defines a refugee as a person owing to a well founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion, is outside the country of his nationality and is unable or owning to such fear, is unwilling to avail himself for the protection of that country,  or who, not having a nationality and being outside the country of his former habitual residence as a result of such events, is unable or owing to such fear, is unwilling to return to it.  

Kenya hosts a large asylum-seeking and refugee population.  This is due largely to the country’s location in a conflict-prone area.  For example, neighboring countries like Somalia and South Sudan have experienced civil wars that caused internal and external displacement of large groups of their population. 

Refugees in Kenya primarily reside in the Dadaab refugee complex (which is in Garissa County and consists of five camps: Dagahaley, Hagadere, Ifo, Ifo II, and Kambios) and the Kakuma Refugee Camp located in Turkana County.

Kenya is also a signatory to a number of international treaties applicable to individuals seeking asylum and protection.  For instance, it acceded to the 1951 United Nations Convention Relating to the Status of Refugees on May 16, 1966, and its 1967 Protocol in 1981. Kenya is also a state party to the 1969 African Union (AU) (formerly known as the Organization of African Unity, OAU) Convention Governing the Specific Aspects of Refugee Problems in Africa, which it signed in September 1969 and ratified in June 1992. In addition, Kenya acceded to the 1984 Convention against Torture and Other Cruel, inhumane or Degrading Treatment or Punishment in February 1997.

In 2006, the country put in place a national legal framework governing refugee matters and assumed partial responsibility for the refugee status determination (RSD) process.  It did this when it took a step to implement its obligations under international law by enacting the Refugees Act in 2006, which took effect the next year, and its subsidiary legislation, the Refugees (Reception, Registration and Adjudication) Regulations, in 2009 (Refugees Regulations).

When a person is compelled to flee his country of origin or nationality his immediate concern is protection against refoulement (the forcible return of refugees or asylum seekers to a country where they are liable to be subjected to persecution). Such protection is necessary and at times, the only means of preventing further human rights violations hence the international community has recognized the principle of non-refoulement, which prohibits both rejection of a refugee at the frontier and expulsion after entry. This rule derives its existence and validity from the twin concepts of ‘international community’ and ‘common humanity’ and must be seen as an integral part of the foundation of freedom, justice and peace in the world which is human rights.

Legal basis for protection against forced return of refugees to countries where there is danger to their lives, safety, security and dignity can also be found in the law relating to the prohibition of torture and cruel or inhuman treatment.

Thus the principle of non-refoulement is well entrenched in conventional and customary international law.  Despite this, governments everywhere are adopting unilateral restrictive practices to prevent the entry of refugees and other forcibly displaced persons into their territories.

Refugees are intercepted on the High Seas and penalties have been imposed against airlines or shipping companies carrying suspected passengers. New concepts such as ‘temporary protection’ and the ‘safe third country rule’ which allow officials to eject people on flight who have already transited another state have been introduced.  Hundreds of thousands of refugees seeking shelter in the refugee camps have been demarcated in airports where physical presence does not amount to legal presence and where summary and arbitrary removal is permissible.

As refugee protection is an important dimension of human rights protection, unilateral restrictive practices adopted by both the developed and developing countries are inconsistent with their obligations under international refugee law and humanitarian law and constitute a serious violation of human rights.

Once a person fleeing persecution enters a state other than that of his origin or nationality, what he needs most is asylum.  Asylum is the protection which a State grants on its territory or in some other place under the control of its organs, to a person who comes to seek it.

Asylum is necessary not only for safeguarding the right to life, security and integrity but also for preventing other human rights violations.  Thus the grant of asylum in the case of refugees who constitute a unique category of human rights victims is an important aspect of human rights protection and should be considered in the light of the U.N. Charter as a general principle of international law and an elementary consideration of humanity. 

The deflection of responsibility by the North towards refugees, exacerbate the economic burdens of the South, which today hosts 90% of the total refugee problem which has also compelled many Southern States to emulate Northern non-entree practices.

In conclusion, it is safe to say that rights of refugees have presented themselves as rights which should be accorded special attention and consideration since no one leaves home unless home is the mouth of a shark. What is at stake is nothing less than the survival and well being of a generation of innocents.

When talking about refugee rights we are talking about human dignity and that should be done without borders. We have to understand first that no one puts their children in a boat unless the water is safer than the land.

Author – June Njoki

Donoghue v Stevenson [1932] A.C 562

When a partly decomposed snail was found in a bottle of ginger beer, it was held that the manufacturer of the drink owed a duty of care to the eventual consumer, and was therefore liable for her inconvenience and illness. This is known as the ‘neighbour’ principle (where it is foreseeable that a person will be affected by actions, then a duty of care is owed to that person). That is the case that is very famous and has been relied on in various cases against our soda bottlers with mostly successful outcomes for damage seekers. This House of Lords decision has been reviewed so much and is hailed as the mother of tort law as we know it today.

Lord Atkin articulated the principle in the following landmark legal pronouncement:The rule that you are to love your neighbour becomes in law, you must not injure your neighbour; and the lawyer’s question, Who is my neighbour? receives a restricted reply. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour.Who, then, in law is my neighbour? The answer seems to be – persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called in question.

Cases looked at ranged from those where duty required physical proximity to the person or property, to those that gave a wider interpretation to the proximity rule to apply to the case of goods supplied knowing that the user may not have a reasonable opportunity for inspection before use.

Lord Buchmaster also extensively  analysed common law cases which posited that except in the cases of fraud, duty of care must arise from existence of a contract. The exceptions to the rule  were as follows:

• an article dangerous in itself
• an article not dangerous in itself, but dangerous due to some defect or other reason known to the manufacturer.

 He also cited Lord Esher M.R in Heaven v Pender who summed up the position in various cases as follows:” wherever one person is by circumstances placed in such a position with regard to another that everyone of ordinary sense who did think would at once recognise that if he did not use ordinary care and skill in his own conduct with regard to those circumstances he would cause danger of injury to the person or property of the other a duty arises to use ordinary care and skill to avoid such danger.”

He added that in absence of contract, the law would imply the duty.Again, Lord Atkin in arguing in the interest of social responsibility cited the following: “My Lords, I do not think so ill of our jurisprudence as to suppose that its principles are so remote from the ordinary needs of civilised society and the ordinary claims it makes upon its members as to deny a legal remedy where there is so obviously a social wrong.”

To bring the issue closer to digital era, we have to address situations that can possibly lead to harm in the course of interfacing: Exposing personal data received from a 3rd party (which information may in addition to that party, be from other parties connected to the same transaction), to unauthorised persons who might use it to harm that person, family or property. The example is financial institutions who may contract with one person, their client, but gather information about the guarantor, the spouse, the lawyer and a seller in a transaction. All these usually reveal National Identity card numbers, bank account details, phone numbers, Box Numbers and Tax Pin Certificates. This falls under the category of sensitive data as it can occasion loss and injury if the data is in the hands of criminals. The loss varies from identity theft to actual tracing and inflicting physical harm on the data subject or inflicting non material damage.

One of the causes of breach is negligence in handling Data. Negligence is the platform on which the neighbourhood principle was built and it is worth considering whether negligence in handling sensitive data leading to injury which can be termed foreseeable in this era will be the new tort.  Will the General Data Protection Regulations(GDPR) be the  new standard  of duty of care?

The neighbourhood principle was also applied to negligent misstatements.

Negligent Misstatement is a statement meant honestly but carelessly usually in the form of advice given by a party with special skill/ knowledge to a party that does not possess this skill or knowledge. This tort was discussed in the case of Hedley Byrne & Co. Ltd. vs Heller & Partners Ltd.[1964 ] A.C 465

Lord Morris had this to say: “if someone possessing special skill undertakes, quite irrespective of contract, to apply that skill for the assistance of another person who relies upon such skill, a duty of care will arise. The fact that the service is to be given by means of or by the instrumentality of words can make no difference. Furthermore, if in a sphere in which a person is so placed that others could reasonably rely upon his judgment or his skill or upon his ability to make careful inquiry, a person takes it upon himself to give information or advice to, or allows his information or advice to be passed on to, another person who, as he knows or should know, will place reliance upon it, then a duty of care will arise” (online source)

We are now faced with a barrage of opinions, advice and statements from online sources including authors who do not disclose their qualifications but claim careful inquiry leaving no doubt that whatever they post is a well sourced statement which should be relied upon. Statements range from business advice, educational tips, nutrition suggestions, etc. Whereas some put disclaimers along with the posts, others urge readers to follow the advice an example being whattsApp platforms.

In view of the obvious fact that more and more people are relying on those online statements which do sometimes occasion negative results, how can the public be protected?Just seen an example of such effects in a post from @thenasem (National academy of sciences engineering & medicine) stating that measles outbreaks in the US are being fueled by misinformation about safety of vaccines.We know for sure, misinformation on anything is spreading so fast due to the online conversations.

There is need to establish:

• Can a duty of care to the readers be inferred in certain circumstances?
• Can the harm suffered be traced back to the posted articles or statements? how?
• Who owes the duty, the website host?, whatsApp manager? the posting party or original author?
• Is there reasonable expectation that one can cause damage through online posts?
• Consider the outcry against social media when youths are entrapped by dangerous characters online.

This needs to be looked into to establish both the contractual online relationships and the non contractual ones whereby those we do not know from far away jurisdictions affect our every action including analysing our likes and dislikes and anticipating our reactions. We have a growing community of people whose interactions are predominantly with the online community.

So In this digital era, who in law is my neighbour?

Author – Gertrude Matata – Advocate / mediator

IS THE MYTH BEHIND THE SO CALLED “SMALL PRINT” REAL?

What to consider before you seek to enforce the insurance contract for Indemnity purposes.

The sole purpose of buying insurance is Risk transfer. Risk transfer is the mechanism by which financial consequences of an event are shifted from one party to another. Basically, the customer expects to be indemnified by the insurer in the event that he suffers a loss arising from an insured peril. Sadly, more often than not, the insured is dissatisfied with the indemnity provided by his insurer following a loss.What could be the root cause for this disharmony between the two parties when it comes to compensation? Is it just mistrust, ignorance or sheer misunderstanding? Or, is it possible that the insured does not even understand the rationale behind the term Indemnity?

Indemnity is defined as placing the insured in the same financial position after a loss as they occupied immediately before the loss. Note, the key words here, “financial position occupied immediately before the loss.”!Here is an illustration; A customer insures his laptop for a value of Kshs. 100,000/-. Unfortunately, he loses the laptop ten monthslatereither through theft or accidental damage. If it turns out that the replacement cost of a similar laptop or equivalent model at the time of the loss is lower, say Kshs 60,000/-, the insured would be paid not the sum insured but the replacement cost of Kshs. 60,000/. Consequently, by paying the replacement value of the lost item, the insurer has put the customer back to the financial position he occupied immediately before the loss.

The same logic would apply to a claim for a motor vehicle insured at a value of Kshs.500,000/- and subsequently lost through theft, fire or accidental damage. The fact is, unless the vehicle was insured on agreed value basis, the actual financial loss at that point in time would not be the full sum insured but the applicablemarket value of the vehicle or vehicle of similar make, age and mechanical condition. This means depreciation would be factored in to determine the actual financial loss.

Even though the objective of most policies is to provide indemnity, there are other scenarios when the insured does not get fully indemnified. The insured may get less than the full amount because of the limitations of the sum insured such as the policy limit, applicable excess, deductible and average clauses.It is therefore crucial to scrutinize all the applicable clauses, conditions and exclusions therein bearing in mind the fundamental principles of insurance such as utmost good faith, Insurable interest, full disclosure etc, before commencement of legal action.

Further, ensure to pursue the avenue provided for under the contract for dispute resolution; is it Mediation, Arbitration or Court Process?

Author; Wamuyu Waithaka – Partner GMW

WE ARE DOERS, WHATEVER NEEDS TO BE DONE, JUST DO IT AND DO IT WELL