Cedric E. Stephens, Contributer
A little girl watches a police officer secure a car that was involved in an accident in downtown Kingston. - ANDREW SMITH/PHOTOGRAPHY EDITOR
Question: I am finding it very hard to insure my car. It was involved in an accident six months ago. The insurers blamed my 21-year old son because he was turning right. They settled my claim for $250,000 and paid $300,000 to fix the other vehicle. The company says they expect to pay $250,000 for personal injuries. I have lost my 50 per cent no claims bonus. My premium has gone up by nearly 400 per cent. Six insurers have refused to insure me. Can you help me to find coverage at a reasonable price?
- T.J.W., Kingston 7.
Answer: We are all in the same boat. Price increases are all the rage - bus fares, electricity, petrol and also at super market check-out counters. Jamaica Broilers is the latest one to get into the act. What are the reasons for the increases? Do buyers have options? When consumers can answer questions like these, use substitutes and make changes in their lifestyles the impact can probably be lessened. Similarly, it may be possible to help you solve the problem by taking a close look in and around the insurance market.
HOW INSURERS SEE THE NUMBERS:
The payback period for your claim will stretch very far into the future. If it is assumed that you filed no more claims and paid $25,000 to your insurers each year, the premiums would equal the claim paid this year in 2037 (i.e., $800,000 25,000 + 2005). Insurers feel that they are unlikely to recover the sums they paid on your claim. This partly explains the price increase and why the market is not scrambling to insure you.
YOUNG MALES ARE BAD NEWS:
Men are the scourge of our roads. Official numbers show that they are involved in nine times as many accidents women. Males between the age of 21 and 40 are in more than fifty per cent of all traffic accidents. Younger males in your son's age group, 21-30, were in one in of every four mishaps reported to the police in 1999, according to the ministry of transport. Your son's accident was no fluke. Insurers charge extra premiums for persons in your son's category or avoid them like the plague.
READ THE RIOT ACT TO YOUR SON:
Part of the solution to your problem is to do something differently. This could include a number of things. Use the carrot or the big stick approach. A ban on your son's driving, retraining with emphasis on the road code (as opposed to the mechanics of driving) and the imposition of driving limits are examples of your options. Some action is necessary because your son was clearly at fault whether or not he recognises it. Once you have agreed on the course of action tell insurers what you have done.
Some of the points that I raised in my last article should also be implemented to help you obtain coverage at a reasonable price. These include: 1. seeking the help of a broker or finding a new broker.2. Continue shopping around. 3. Increasing the amount of deductible that you carry. 4. Limiting the number of persons who can drive your car. five. Examine the pros and cons of self-insuring collision damage. The ball-park cost of this type of coverage for a vehicle valued at $750,000 is about $75,000. Best of luck, whatever you decide.
Cedric E. Stephens provides independent information and advice about the management of risks and insurance. If you need free information or counsel to help you solve a problem write to The Financial Editor or contact Mr. Stephens directly at aegis@cwjamaica.com
