Insurance Helpline with Cedric Stephens

Question: A trailer ran into the back of my car in August. To date, neither its owner nor the driver has reported the accident to the insurance company.

I am insured with the same insurer.

The cost of repairing my car is in the low six figures.

The repairs have now been authorised. The claim, I was told, will be settled under my policy.

I will have to pay the excess and am likely to lose my no-claims discount, unless the owner/driver comes forward. I suffered neck and back injuries for which I am still receiving treatment. I believe that I should not be penalised for this accident. What are my options?

- D.S., St. Andrew.

Answer: Three words popped into my head after I read your email. They were used after Don Wehby was appointed to a post in the Ministry of Finance. They are: conflict of interest.

I have more than a passing interest in moral principles. The practice of ethics in the insurance business is of particular interest. I wondered why, among the many criticisms levelled against insurance and insurers, I had not heard those same words? Insurance companies, like most businesses, exist to serve their own interests - in spite of statements to the contrary. When the vehicles of two or more customers collide, as happened in your case, does it not create an ethical problem for in-surers? In the absence of information, can we be sure that customers are being treated fairly?

Nonsense

The scene of a motor accident along the Spur Tree Hill main road, Manchester, in August, is seen in this Gleaner file photo. The law protects consumers from penalties on premiums and claims avoidance in cases where the accident is not caused by the insured. - File

Your broker and insurer are talking nonsense.

This assumes that the trailer driver had a proper licence. Also, that the vehicle he was driving was insured.

The fact that the trailer driver reported the collision to the police leads me to believe that my assumptions are correct. It is unlikely that the driver would have behaved this way in the absence of a permit and/or insurance.

You should not have to find money to pay the excess or extra premium. All of the costs associated with the accident - including claims for loss of use, personal injury and medical expenses - should be borne by your insurers under the trailer's policy. Why? The law says so.

Insurers, like the rest of us, are not a law unto themselves. They must operate according to law. Section 8 (1) of the Motor Vehicles Insurance (Third-Party Risks) Act was written nearly 20 years ago. It was drafted in 1989 to close a loophole that allowed insurers to avoid paying claims.

Only a few persons in the insurance industry are aware of this. Motorists know even less.

Loophole long gone

The law says: "Any condition in a policy - providing that no liabi-lity shall arise - or that any liability so arising shall cease, in the event of some specified thing being done or omitted to be done after the happening of the event giving rise to a claim under the policy, shall be of no effect."

These words were meant to put millions of dollars into the hands of consumers.

However, due largely to ignorance, insurers act as though the law does not exist and still tell people rubbish. The effect of the change is only fully grasped when the amendment is read along with two conditions of the typical motor policy.

The claims condition of the policy imposes a duty on the insured/driver. He, or she, should "give notice in writing - immediately upon the occurrence of any accident."

Its intent is unmistakable.

The second condition states that: "The due observance and fulfilment of the terms of this policy in so far as they relate to anything to be done or complied with by the Insured - shall be conditions precedent to any liability of the Company to make any payment." Before the change, insurers could use these two conditions to refuse payment where an insured failed to report an accident. If the report was not submitted "immediately upon the occurrence", in other words, if it was late, insurers could reject the claim.

Insurers would have been correct to deal with your claim in the manner that was explained to you, if no changes were made to the law - that is, pay for the damage to your car under your policy and act as though the trailer was uninsured until the owner/driver proves otherwise by reporting the accident to them.

Fortunately, the loophole was closed. Now, insurers do not have a choice. Your claim can be settled under the third party's policy. Once again, this assumes that it was in force.

We are now in the 21st century. The old, lame excuse - awaiting a report from the owner or driver about the accident - went out of fashion a long time ago.

Your best option now, is to educate your broker and insurer about the law. To paraphrase Thomas L. Friedman, they are still sleeping while the world is becoming even flatter.

Cedric E. Stephens is an in-surance consultant. He provides free, independent information and advice to consumers. Email: aegis@cwjamaica.com