AB Ltd are motor insurers. One of its policyholders, Robin, has a motor insurance policy which includes the following terms: 'AB Ltd will not provide cover in the event of a motor vehicle accident where the driver of that vehicle is under the influence of alcohol or drugs, at the time of the accident.' Robin has recently been involved in a motor vehicle accident in the insured vehicle. He was later found to have had an adverse reaction to prescription drugs, at the time of the accident. Several third parties were injured in the accident and a number of claims have been made to AB Ltd. It has been established that Robin was to blame for the accident. Robin was not injured, but his vehicle was damaged in the accident and he has made a claim for this damage to AB Ltd. AB Ltd has repudiated Robin's claim. Robin argues that the policy terms are ambiguous and that his claim should be settled.

(a) Explain, with justification, whether the third parties' claims are likely to be paid. 

 (b) Explain, with justification, whether AB Ltd's repudiation of Robin's claim is valid.

(c) Discuss whether Robin's argument regarding the ambiguity of policy terms is valid.

Answer rating: 100% (QA)

Answer a i The third parties claims are likely to be paid by AB Ltd Since Robins adverse reaction to ... View the full answer