New Zealand's Insurance & Financial Services Ombudsman Scheme has warned drivers who take medication such as sleeping pills to wake up to policy wording issues after an insurer initially declined a driver’s accident claim.

The claim centred on a driver who crashed her sister’s vehicle into another car after failing to stop at a red light at 10am. 

During its investigation, the insurer asked the driver if she had taken any medication 24 hours before the accident. She had taken half a sleeping pill the night before at around 11 pm – 11 hours before the crash.  

The insurer declined the claim, noting that the policy excluded losses caused by “any person who … is under the influence of any intoxicating substance or drug”. It also stated that the driver’s sister had failed to take reasonable care of the vehicle and should have disclosed her prescription when the policy was purchased.

The insured complained to the ombudsman scheme, noting that her sister’s doctor had only advised her not to drive within eight hours of taking the sleeping pill.   

The scheme case manager said the insurer’s drug exclusion did not apply as there had been no evidence to show that she had been impacted or affected by the medication.

The reasonable care provision also did not apply, and the manager also disagreed that the policyholder had failed to inform the insurer, and argued that she may not even have been aware of her sister's prescription.  

Following this guidance, the insurer agreed to settle the claim by paying for damaged vehicles, storage fees, and an additional $1000 for special inconveniences.  

Insurance and Financial Services ombudsman Karen Stevens says the case shows insurers are checking for prescription medicines when assessing claims and outlines the importance of knowing when it is acceptable for a driver to operate a vehicle.  

“Many people think ‘driving under the influence’ only applies to recreational drugs and alcohol, but one in four prescriptions are for medications that can impair driving,” Ms Stevens said.

“Vehicle insurance policies contain conditions which can mean cover may be declined if they drive while under the influence of medication.

“If you take sleeping pills later in the night and then drive to work early the next morning, you are at risk of causing problems if you need to claim on your insurance.

“This applies not just to sleeping pills, but to many other medications too, such as strong painkillers, and heart or allergy medications.” 

She recommends policyholders carry out research to avoid not being covered for any potential losses. 

“However, don’t stop taking medication just because you want to be okay to drive,” Ms Stevens said. “Rather, talk to your doctor first about your options and whether you can drive safely and legally.”