With cedric Stephens

Question: Someone ran into the front side of my motor vehicle at the start of this year. I reported the accident to the police and my insurance company.

I told my insurer that I would rather claim on the offender's policy. They told me that they were in an alliance with the offender's insurance company.

As a result, I will have to fork out approximately 60 per cent of the cost of repairs. They will then claim it back on my behalf. What kind of madness is this? They also say that my premium will be increased, even though I was not the guilty party.

The company representative asked me to remind them to give me back the no claim discount. This is slackness. What can I do to resolve this issue? I do not believe that I should be out of pocket for the repair cost. I will definitely not be paying for the repairs.

- jonesconrad@gmail.com.

Answer: What are some of the things that shape the responses of the victims of road accidents? They are insured. The accidents are not their fault. The expectation is a 'jiggy' situation. The costs will be borne by the other person's insurer. Yet, often that belief is unmet. The unease begins in an encounter with the young, poorly-trained claims staff of the insurer. They know nothing about human emotions. They make no link between rising prices, the difficulties most persons face in finding extra money to pay a big, unexpected bill, insurance and their jobs. The end result is what you describe: 'madness.'

My discussion with your insurer's rep was different from yours. I suspect that this had to do more with the person with whom I spoke and less with the facts that I was representing this newspaper or that she knew me.

She was a very good listener. She offered many explanations. She had a can-do attitude. At the end of our talk, she was very confident that your claim can be handled in the way that you want; that you will not have to fork out one cent.

She gave me permission to mention her name. I suggest, therefore, that you telephone Yvonne Campbell at your insurer's head office.

claims-handling agreements

Insurers in Jamaica - as elsewhere - enter into claims-handling agreements. Your question describes the pact as an alliance. The person with whom you spoke apparently does not understand the nature of the agreement. Or, he/she did not take the time to explain it to you. I will use the rest of this article to tell you about two types of agreements.

The agreements set out pre-agreed formulas for dealing with claims involving vehicles each company insures when they collide with each other. Their goal is to avoid lengthy delays and court/legal costs.

The theory is that consumers benefit from lower insurance premiums as a result.

KNOCK-FOR-KNOCK

The Knock-for-Knock Agree-ment is the more well-known of the two. It applies in cases where say, two vehicles, have 'comprehensive' policies. Each insurer would settle its customer's property damage claim less the deductible or excess.

The insurer of the driver who caused the accident would pay the uninsured expenses - excess and loss of use - incurred by the other person.

The negligent driver would lose his no-claims discount while the other person's would not be affected. You should not lose your discount.

KNOCK-HALVING AGREEMENT

Knock-halving applies when one vehicle is insured 'comprehensively' and the other has third-party coverage. For the purposes of this agreement, it will be assumed that the other party had third-party coverage.

Under this agreement, the other party's insurers would end up paying one half of the cost of repairing your vehicle plus your uninsured expenses. Your insurer would pay the other half of the repair bill.

As in the case of the other agreement, the good guy should end up paying zilch while the 'baddie' bears all of the costs in terms of losing his no-claims discount and higher premiums.

These two agreements, in my judgement, do not harm insurance consumers. Until proven otherwise, I strongly believe that they do not violate the Fair Competition Act. Your experience with your insurer has some upsides. It gives your insurers the chance to correct a mistake. Secondly, it provided me with something to write about. Hopefully, those who read this column will benefit in some way.

Cedric E. Stephens provides independent information and advice about risk and insurance. For free information or counsel, email Mr. Stephens: aegis@cwjamaica.com

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The theory is that consumers benefit from lower insurance premiums as a result of knock-for-knock and knock-halving agreements.