Insurance Helpline with cedric Stephens

Question: My vehicle was stolen while I was abroad over a week end. The theft occurred at a location that I thought was safer than my home. I made a report to the police and to my insurers. The company has refused to pay the claim. They say that I breached the policy, that the vehicle was left "unprotected" and a "prudent" person would not have parked the vehicle at the location I chose.

Ironically, my decision to leave the vehicle there was based on security. On earlier trips, I had done the same thing and found the vehicle on my return. What is your take on this matter?

- CJ, Kingston 10.

Answer: Sources tell me that fraud is a big worry to companies that write motor insurance. Figures are hard to come by, but the number of cases is said to be on the rise. Claims are being put under the microscope in an attempt to control the problem. Theft losses get special treatment. Recent reports in this newspaper give insights into the racket. Stolen cars recovered by the police and stored on their compounds are not, as one would believe, immune from theft. The Porus incident and the recent case at UWI tell only a small part of what is actually going on with stolen vehicles.

Fraudulent claim

Insurers believe that your claim is fraudulent. That is my reading of the situation. They feel that you orchestrated the theft of your own vehicle. This explains the shock and awe tactics and their refusal to pay. My opinion - which could be dead wrong - is not founded on anything specific. Rather, it is based simply on a gut feeling. I believe they have mistakenly placed red flags on your claim because of how the loss occurred. In their zeal to combat fraud, they are treating it as suspect. On the other hand, I could be dead wrong. If you were complicit in the theft of the vehicle, you should get zilch.

The reasons your insurers have given for not paying the claim are:

The vehicle was left unprotected and, as a result, breached a policy condition "to protect it from loss or damage."

The theft was not reported to the police.

The actions you took before and after the theft amounted to negligence and recklessness on your part. You are not entitled to any benefits under the policy because of this.

Reason No. 1 is self-serving. It could be applied to any site where the vehicle was parked if it were stolen while you were out of the country.

Secondly, the theft coverage granted by the policy is not limited. There are no specific provisions about what you should or should not do in the event that you decided not to park the vehicle at the usual place or felt that it was unsafe to leave it there during a short absence from the island.

By parking the vehicle at a location where you believed that the security was superior to your home - and which you had used in the past - was, in my opinion, in keeping with what a "reasonable person" would have done.

What Does the Contract Say?

Your insurer's claims staff appears to be unfamiliar with the terms of their policy. Had they read the contract they would not have raised argument no. 2. There is nothing in their private car policy that says claimants should report theft losses to the police. The company can not rely on a non-existent provision to escape liability. At any rate, even in the absence of that particular condition in your contract, you acted as a reasonable person would. You reported the theft to the police. In spite of the absence of records to confirm your actions, I understand that the police recovered the vehicle.

Reason No. 3 was built on the foundation of arguments 1 and 2. If, as I have shown, they are unsound what rests on them should also be unstable.

My advice to you is simple: contact the head of the company. Ask for a review of your file. If this approach fails to resolve the problem, ask an attorney to intervene. Quite frankly, I do not buy the official reason (or unofficial one based on my instincts) for the non-payment of your claim.

Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel to help you solve a problem write to Mr. Stephens at aegis@cwjamaica.com.