https://new.kenyalaw.org/akn/ke/judgment/kemc/2026/164

CIC General Insurance Limited v Ndolo (Civil Suit E4057 of 2025) [2026] KEMC 164 (KLR) (24 June 2026) (Judgment) Neutral citation: [2026] KEMC 164 (KLR) Republic of Kenya In the Chief Magistrate's Court (Milimani Law Courts) Civil Suit E4057 of 2025 LA Mumassabba, PM June 24, 2026 Between Cic General Insurance Limited Plaintiff and Peter Kioko Silu Ndolo Defendant Judgment Introduction 1.The Plaintiff, CIC General Insurance Limited, instituted this suit through an Amended Plaint dated 22nd December 2025 seeking declaratory orders pursuant to Section 10(4) of the Insurance (Motor Vehicles Third Party Risks) Act, Cap 405 Laws of Kenya. 2.The Plaintiff seeks the following orders:a.A declaration that the Defendant breached the fundamental warranties, terms and conditions of Insurance Policy No. 01/070/1/011337/2023/09 issued by the Plaintiff in relation to Motor Vehicle Registration Number KCQ 651G.b.A declaration that the Plaintiff is not liable to make any payment under the said policy in respect of claims arising from injuries sustained as a result of the accident that occurred on 5th August 2024 involving Motor Vehicle Registration Number KCQ 651G and/or any accident involving the said motor vehicle during the subsistence of the policy.c.Costs of this suit.d.Costs incurred in Molo CMCC E109 of 2025, Salome Amboye & Dennis Ouma Oluoch (suing as the Legal Administrators of the Estate of the Late Peter Dina Oluoch) v Radha Motors Limited & Peter Kioko Silu Ndolo & Dennis Khisa Khaemba.e.Interest.f.Any other relief the Court may deem fit and just to grant. 3.The Defendant was duly served with summons to enter appearance, the Plaint and all accompanying pleadings. Despite service, the Defendant neither entered appearance nor filed a defence. 4.Upon the Plaintiff's request, Interlocutory Judgment was entered on 3rd June 2026 and the matter proceeded for formal proof. 5.The Plaintiff called evidence in support of its claim. Plaintiff's evidence 6PW1, Marjory Gathoni, a Legal Assistant in the Claims Department of the Plaintiff Company, testified and adopted her witness statement dated 19th December 2025 as her evidence in chief. 7.She also produced the Plaintiff's List and Bundle of Documents as exhibits. 8.Her evidence was that the Defendant obtained a comprehensive motor vehicle insurance policy from the Plaintiff in respect of Motor Vehicle Registration Number KCQ 651G after declaring that the vehicle would be used solely for private purposes. 9.According to PW1, the policy was effective from 12th September 2023 to 11th September 2024. 10.She testified that the policy expressly excluded the use of the vehicle for carriage of passengers for hire or reward, car hire services, taxi services or any other commercial purpose not disclosed to the insurer. 11.PW1 further testified that on 5th August 2024 the insured motor vehicle was involved in a road traffic accident along the Eldoret–Nakuru Road. 12.The Plaintiff thereafter conducted investigations into the circumstances of the accident. 13.According to the investigations, the motor vehicle had been hired out to a third party for consideration and was being used for car-hire business and public service vehicle purposes contrary to the terms and conditions of the policy. 14.The accident resulted in injuries to one Peter Dina Oluoch who later succumbed to the injuries sustained in the accident. 14.Subsequently, the Plaintiff was served with pleadings in Molo CMCC E109 of 2025 arising from the said accident. 16.PW1 testified that the Defendant had misrepresented the intended use of the motor vehicle at the time of obtaining the policy and had failed to disclose material facts relating to the use of the vehicle. 17.It was her testimony that had the Plaintiff known that the vehicle would be used for commercial passenger transport or car-hire business, it would either have declined the risk altogether or charged a substantially different premium. 18.The Plaintiff therefore sought a declaration under Section 10(4) of the Insurance (Motor Vehicles Third Party Risks) Act that it is not liable to satisfy any claims arising from the accident. 19.The Plaintiff's evidence was not challenged and remained wholly uncontroverted. Plaintiff's Submissions 20.The Plaintiff filed written submissions dated 15th June 2026.Counsel submitted that the Plaintiff had discharged its burden of proof on a balance of probabilities and established that the Defendant fundamentally breached the terms and conditions of the insurance contract. 21.It was submitted that the policy was issued as a private motor vehicle policy and expressly prohibited use of the vehicle for carriage of passengers for hire or reward. 22.Counsel argued that investigations conducted after the accident established that the Defendant had hired out the vehicle to a third party and that the vehicle was being used in a car-hire business at the material time. 23.The Plaintiff submitted that the Defendant thereby breached the limitation as to use clause contained in the policy and violated the principle of utmost good faith. 24.Counsel further submitted that the Defendant failed to enter appearance or file a defence and consequently the Plaintiff's evidence remained uncontroverted. 25.Reliance was placed on Old Mutual General Insurance Kenya Ltd v Board of Directors, Oder Boys Boarding Special School [2020] eKLR and Occidental Insurance Company Ltd -Vs- Dulu [1997] eKLR where courts upheld an insurer's right to avoid liability where the insured vehicle was used contrary to the express terms of the insurance policy. 26.The Plaintiff further relied on Section 10(4) of the Insurance (Motor Vehicles Third Party Risks) Act and urged the Court to issue the declarations sought. Analysis and Determination 27.Having considered the pleadings, evidence and submissions on record, the following issues arise for determination: 1.Whether the Defendant breached the terms and conditions of Insurance Policy No. 01/070/1/011337/2023/09. 2.Whether the Defendant breached the principle of utmost good faith. 3.Whether the Plaintiff is entitled to avoid liability under the policy pursuant to Section 10(4) of the Insurance (Motor Vehicles Third Party Risks) Act. 4.Whether the Plaintiff is entitled to the reliefs sought Whether the Defendant breached the terms and conditions of the Insurance Policy 28.The Plaintiff produced evidence showing that Insurance Policy No. 01/070/1/011337/2023/09 was issued in respect of Motor Vehicle Registration Number KCQ 651G as a private motor vehicle policy. 29.The policy expressly limited the use of the vehicle to private purposes and excluded use of the vehicle for carriage of passengers for hire or reward, taxi services, Public Service Vehicle operations and car-hire business. 30.The Plaintiff's evidence was that investigations conducted following the accident established that at the material time the vehicle had been hired out to a third party for consideration and was being operated as a commercial vehicle. 31.The Defendant failed to appear before Court to challenge or rebut this evidence. 32.The Court has consistently held that where evidence remains uncontroverted and is credible, the Court is entitled to rely upon it. 33.The Court is satisfied that the Plaintiff has demonstrated that the vehicle was being used for a purpose expressly excluded by the insurance policy. 34.Accordingly, the Court finds that the Defendant breached the limitation as to use clause contained in the policy. Whether the Defendant breached the principle of utmost good faith 35.Insurance contracts are contracts of utmost good faith (uberrimae fidei). 36.The doctrine obligates an insured person to disclose all material facts that may influence the insurer's decision whether to undertake the risk and on what terms. 37.In Co-operative Insurance Company Limited -Vs- David Wachira Wambugu [2010] eKLR, the Court emphasized that insurance contracts are founded on utmost good faith and material non-disclosure entitles an insurer to avoid the policy. 38.A material fact is one which would influence the judgment of a prudent insurer in assessing risk or fixing the premium payable. 39.The Plaintiff's evidence demonstrates that the Defendant obtained insurance cover on the basis that the vehicle would be used privately. 40.The subsequent use of the vehicle as a car-hire vehicle fundamentally altered the nature of the risk assumed by the insurer. 41.The Court finds that the commercial use of the vehicle constituted a material fact which ought to have been disclosed to the insurer. 42.By failing to disclose the true nature of the use of the vehicle and by permitting the vehicle to be used for purposes expressly excluded under the policy, the Defendant breached the principle of utmost good faith. Whether the Plaintiff is entitled to avoid Liability under Section 10(4) of the Insurance (Motor Vehicles Third Party Risks) Act 43.Section 10(1) of the Insurance (Motor Vehicles Third Party Risks) Act obligates insurers to satisfy judgments obtained against insured persons in respect of third-party risks. 44.However, Section 10(4) of the Act provides an exception and permits an insurer to institute declaratory proceedings seeking a declaration that it is entitled to avoid liability under a policy on grounds including material non-disclosure, misrepresentation or breach of policy conditions. 45.The Court has already found that:a)The Defendant obtained a private motor vehicle insurance policy;b)The policy expressly prohibited use of the vehicle for hire or reward;c)The vehicle was being used as a car-hire vehicle at the time of the accident;d)The Defendant breached the principle of utmost good faith. 46.In Occidental Insurance Company Ltd -Vs- Dulu [1997] eKLR, the Court held that an insurer is entitled to repudiate liability where an insured vehicle is used contrary to the express terms of the insurance policy. 47.Similarly, in Old Mutual General Insurance Kenya Ltd -Vs- Board of Directors, Oder Boys Boarding Special School [2020] eKLR, the Court affirmed that an insurer cannot be compelled to indemnify an insured who fundamentally breaches the terms upon which the policy was issued. 48.Further, in Kenindia Assurance Company Limited -Vs- Patrick Mutua Muli [2018] eKLR, the Court held that where an insured vehicle is used contrary to the limitation as to use clause, the insurer is entitled to repudiate liability and seek declaratory relief under Section 10(4) of the Act. 49.The Court is therefore satisfied that the Plaintiff has established sufficient grounds for avoidance of liability under the policy. Whether the Plaintiff is entitled to the reliefs sought 50.The Plaintiff's evidence was cogent, credible and remained wholly uncontroverted. 51.The Court is satisfied that the Plaintiff has proved its case on a balance of probabilities. 52.The Plaintiff is therefore entitled to the declaratory orders sought. 53.Regarding the prayer for costs allegedly incurred in Molo CMCC E109 of 2025, the Court notes that no evidence was tendered demonstrating the quantum of such costs or that the same had crystallized into a recoverable liability. 54.The Court therefore declines to grant that specific prayer. Conclusion 55The Plaintiff has demonstrated that the Defendant obtained insurance cover for Motor Vehicle Registration Number KCQ 651G on the basis that the vehicle would be used for private purposes. The evidence before the Court establishes that the vehicle was subsequently used for car-hire and commercial passenger transport contrary to the express terms and conditions of the policy. 56.The Defendant thereby breached the limitation as to use clause and the principle of utmost good faith, entitling the Plaintiff to avoid liability under the policy pursuant to Section 10(4) of the Insurance (Motor Vehicles Third Party Risks) Act. Orders 57.Accordingly, Judgment is entered for the Plaintiff against the Defendant as follows:a.A declaration be and is hereby issued that the Defendant breached the fundamental warranties, terms and conditions of Insurance Policy Number 01/070/1/011337/2023/09 issued by the Plaintiff in relation to Motor Vehicle Registration Number KCQ 651G.b.A declaration be and is hereby issued that the Plaintiff is not liable to make any payment under Insurance Policy Number 01/070/1/011337/2023/09 in respect of any claims against the Defendant arising from the injuries sustained as a result of the accident that occurred on 5th August 2024 involving Motor Vehicle Registration Number KCQ 651G.c.A declaration be and is hereby issued that the Plaintiff is not liable to satisfy any judgment, decree, claim, costs, interest or other liability arising from the accident involving Motor Vehicle Registration Number KCQ 651G which occurred on 5th August 2024, including any claim arising therefrom in Molo CMCC E109 of 2025, Salome Amboye & Dennis Ouma Oluoch (suing as the Legal Administrators of the Estate of the Late Peter Dina Oluoch) v Radha Motors Limited & Peter Kioko Silu Ndolo & Dennis Khisa Khaemba.d.The Plaintiff shall have the costs of this suit.e.Interest on the costs awarded herein shall accrue at court rates from the date of assessment of such costs until payment in full. 30 Days Right of Appeal. L.A. MUMASSABBAPRINCIPAL MAGISTRATE24. 6.2026JUDGEMENT DATED, READ, SIGNED AND DELIVERED VIRTUALLY AT NAIROBI VIA MICROSOFT TEAMS PLATFORM THIS 24TH DAY OF JUNE ,2026In the presence of :M/s Mwangi Holding Brief for M/s Githuku for the PlaintiffDefendant :AbsentCourt Assistant: Phoebe.