By: Kofi OWUSU-AMOAFO
Motor insurance is a critical component of vehicle ownership, providing financial protection against various risks, including accidents, theft, and damages. However, in Ghana, a motor insurance claim can be repudiated if the driver’s licence is not renewed within the two years interval provided for at the back of the driver’s licence. This article explores the legal, regulatory, and practical reasons behind this stipulation, with a specific focus on the case of Samuel Nartey Kodjoe v. Vanguard Assurance Co. Ltd.[1]
Understanding Motor Insurance
Motor insurance is a contract between the vehicle owner and the insurance company (insurer). The insurer agrees to compensate for specific losses or damages in exchange for a premium. The terms and conditions of the policy define the scope of coverage, exclusions, and obligations of both parties.
Legal Framework for Driver’s Licences in Ghana
In Ghana, the issuance and renewal of driver’s licences are governed by the Driver and Vehicle Licensing Authority (DVLA).
According to the Road Traffic Act, 2004 (Act 683) and the Road Traffic Regulations, 2012 (L.I 2180), it is mandatory for all drivers to hold a valid driver’s licence.[2]
According to L.I 2180, a driver’s licence issued in Ghana is subject to renewal every two years and the licence shall be replaced after a period of six years from the date of issue[3]. This means that upon expiration of the two years, the licence must be renewed to remain valid.
L.I. 2180 further states that a person who fails to renew a driver’s licence as prescribed commits an offence and is liable on summary conviction to a fine of not less than ten penalty units and not more than twenty-five penalty units or to a term of imprisonment of not more than thirty days or to both[4]. Driving with a licence which has not been renewed is therefore illegal and constitutes a violation of the road traffic regulations.
The Role of a Valid Driver’s Licence in Motor Insurance
A valid driver’s licence is a fundamental requirement for obtaining and maintaining motor insurance coverage. The licence serves as proof that the driver is qualified, has undergone the necessary training, and is legally permitted to operate a vehicle. Insurance companies rely the validity or otherwise of driver’s licence during processing of motor insurance claims.
Case Study: Samuel Nartey Kodjoe v. Vanguard Assurance Co. Ltd.
The case of Samuel Nartey Kodjoe v. Vanguard Assurance Co. Ltd. provides a legal basis as to why motor insurance claims can be repudiated due to driver’s licence not renewed after two years from the date of issue.
Facts of the case:
Samuel Nartey Kodjoe was involved in a motor accident and subsequently filed a claim with his insurer, Vanguard Assurance Co. Ltd. Upon investigation, it was discovered that at the time of the accident, Kodjoe’s driver’s licence had not been renewed after the two years of issue, even though the six years had not elapsed.
Vanguard Assurance repudiated the claim on the grounds that Kodjoe did not have a valid driving licence at the time of the accident, relying on Part E(2) of their policy wording which states that: “WE WILL NOT PAY If your vehicle is driven by you or any person with your consent, who is not licensed to drive Your Vehicle under all relevant laws“.
Unhappy with the repudiation, the plaintiff, Samuel Nartey Kodjoe sued Vanguard Assurance, claiming the following reliefs:
- A declaration that on the date of the accident on 27-8-2012 involving plaintiff’s vehicle No. GR 8353-10 plaintiff’s driving license was valid.
- GH¢50,000.00 general damages for breach of contract.
iii. An order directed at the defendant to pay for the repair cost of plaintiff’s vehicle estimated at £1,843.45.
- Loss of use of the said vehicle at the rate of GH¢50.00 a day from 27-8-2012.
Courts’ Decision
The High Court upheld Vanguard Assurance’s decision to repudiate the claim. The judgment emphasized that driving with an expired licence violates the terms of the insurance policy and the legal requirements stipulated by the DVLA. The court ruled that the insurer was justified in denying the claim due to the policyholder’s non-compliance with essential legal and contractual obligations.
The plaintiff was dissatisfied with the decision of the trial court and appealed to the Court of Appeal.
The Court of Appeal held as follows:
“Matters relating to license, its issuance and renewal, how to obtain it is regulated by the Road Traffic Regulations of 2012, [LI 2180]. Section 33 deals with Renewal of driver’s license. Section 33 [7] provides as follows:
A driver’s license is subject to renewal every two years and the license shall be replaced after a period of six years.
Section 33 [8] provides that:
A holder of driver’s license shall renew the license personally after the holder;
[a] has passed an eye test and other tests that may be required by the Licensing Authority;
Section 33 [9] provides as follows:
A person who fails to renew a driver’s license as prescribed in sub regulation [8] commits an offence and is liable on summary conviction to a fine of not less than ten penalty units and not more than twenty-five penalty units or a term of imprisonment of not more than thirty days or both.
From the sections in the regulations quoted supra, it means that the renewal of a driver’s license is not automatic. One has to satisfy certain conditions before renewal, for instance the passing of an eye test.
Per exhibit E the defendants repudiated the liability because at the time of the accident the driver’s license in use was not valid. Since the plaintiff had not renewed his license at the time of the accident on 27-8-2012, he did not have a valid license. The trial judge did not err when he held that the plaintiff did not have a valid license at the time of the accident.
There is no merit in this ground of appeal and same is hereby dismissed.”
Implications
This case highlights the critical importance of maintaining a valid driver’s licence, which involves renewing it every two years from the date of issue. It underscores the legal and contractual ramifications of driving with an expired licence and the justification for insurers to repudiate claims under such circumstances.
Reasons for Repudiation of Claims Due to Expired Licenses
- Legal Requirement: Driving without a valid license is illegal in Ghana. Insurance policies typically contain clauses that require the policyholder to comply with all relevant laws and regulations. An expired license means the driver is not legally allowed to operate the vehicle, breaching the policy terms.
- Policy Violation: Insurers stipulate that the policyholder must hold a valid license. An expired license constitutes a violation of this fundamental condition, providing grounds for repudiation.
- Deterrence: By repudiating claims for drivers with expired licenses, insurers reinforce the importance of compliance and deter policyholders from engaging in unlawful practices.
Consequences for Policyholders
Policyholders in Ghana should be aware of the serious implications of failing to renew their driver’s license. The consequences include:
- Claim Rejection: Insurance companies will likely repudiate any claims made while the driver’s license is not renewed. This means the policyholder will bear the full financial burden of any losses or damages incurred.
- Legal Penalties: Driving with a license which has not been renewed can result in fines, penalties, and even imprisonment under Ghanaian law. This adds to the financial and legal troubles faced by the driver.
Suggestions for Policyholders
To avoid the risk of claim repudiation and ensure continuous coverage, policyholders should consider the following suggestions:
- Timely Renewal: Renew the driver’s license promptly before it expires. The DVLA provides guidelines and timelines for renewal to ensure drivers remain compliant.
- Regular Checks: Periodically check the expiry date of the license and set reminders for renewal. This proactive approach prevents unintentional lapses.
- Documentation: Maintain accurate records of all renewal transactions and receipts. This documentation can be crucial in case of disputes with the insurer.
Conclusion
In Ghana, the requirement to renew a driver’s license every two years is not just a legal obligation, as affirmed by the courts in the case of Samuel Nartey Kodjoe v. Vanguard Assurance Co. Ltd., but also a critical condition for maintaining motor insurance coverage. Driving with a license which has not been renewed poses significant legal and financial risks to the driver and/or policyholder.
The case of Samuel Nartey Kodjoe v. Vanguard Assurance Co. Ltd. exemplifies the justification for insurers to repudiate claims under these circumstances. By considering the suggestions enumerated above, policyholders can safeguard their coverage and avoid the pitfalls of claim repudiation.
The writer is a Chartered Insurer with Star Assurance Limited. He can be reached via [email protected]
[1] (2014) JELR 69727 (CA)
[2] Section 53 of Act 683 & Regulation 25 of L.I 2180
[3] Regulation 33(7) of L.I 2180
[4] Regulation 33(9) of L.I. 2180
