Cedric Stephens

Question: I bought a car in December after five years of driving a company vehicle. I was not involved in any accidents during that time nor was I cited for any traffic offences. I was most surprised that I did not get a no-claims bonus when I insured my own car. As a result, my premium was far more than I had expected. What can I do to get back some of the money that I paid?

- M.M., Kingston.

Answer: I prefer the term 'no-claims discount' to 'no-claims bonus.' The latter is, in my opinion, misleading. It suggests that the insurer gives you the buyer something extra. In reality, this does not happen. The premium of the careful driver is reduced or discounted according to a pre-set scale fixed by the insurer. The discount is earned. The careless driver, on the other hand, earns none.

Where is the 'brawta?' With that now out of the way, I can tackle your question. You can get a refund from your insurer.

This is based on the results of a telephone survey I conducted last week. I spoke with officials of United General Insurance, NEM Insurance, Jamaica International Insurance and The Insurance Company of the West Indies. These companies control the market for motor insurance. Other insurers tend to follow their lead.

These companies say that they would have offered you a 50 per cent discount. This assumes that you gave them proof that you were not involved in any accidents during the last five years. Evidence of that could take one of two forms. The first could be a letter signed by an authorised agent of your employers. It would provide details of the vehicle(s) that was/were assigned to you, the names of the insurers and confirm that no claims were paid by their insurers during the period while you were driving.

second type of proof

The second type would also take the form of another letter. This one would be prepared by your employer's insurers. It would contain details about the vehicle(s) you operated and state that no claims were reported or paid during the five-year period.

If you were unable to submit evidence to confirm that you were accident-free, you would not get the discount. Word of mouth will not do. Insurers can verify the accuracy of the information that you give them. So, those persons who may read this and be tempted to try 'a con,' in the words of a most honorable gentleman, "Forget it!" Your coverage could be cancelled and you may end up being targeted by the police for driving an uninsured vehicle.

If you are insured by one of the four companies which I contacted you 'gone clear.' If not, obtain a letter. I am very confident that you will get a refund to tide you over until your next pay day.

Question: Does a no-claims discount have an expiry or 'best by date?'

- P.S., Kingston 6.

The typical no-claims discount has a lifespan of 12 months. This means that if the person who earned it has not driven a vehicle continuously for more than a year, it may lapse at the end of that period. He or she may not get the discount if, for example, insurance were bought in month 13. This would be the case even if the person had earned the maximum discount before, according to some insurers.

The customer would be treated in the same way as a first-time buyer. Other companies are far less strict. Their discount "best by" date lasts more than 12 months. How much time is allowed and the size of the discount is left to the discretion of a manager.

forgiveness

Finally, a few insurers 'forgive' careful drivers who are involved in accidents. (Perhaps, this is really the 'brawta.') The discount is not taken away entirely as is often the case. The size of the discount is simply reduced, provided the amount of the claim falls within a certain range. This feature, once again, shows the folly of buying coverage by looking solely at price.

Cedric E. Stephens is an independent insurance consultant who provides free information and advice about risks and insurance. Contact him directly at aegis@cwjamaica.com