Insurance Helpline with Cedric Stephens

Question: My Mitsubishi Galant station wagon is insured with General Accident (GA). In early January, it was hit in the back by another vehicle. It was in a line of traffic near the Ocho Rios Cruise Ship Pier. The impact pushed it into the vehicle in front. The driver of that car and I reported the accident to the police.

The person who caused the accident has not done so as yet.

His insurers, Key, do not have a report either. Allied Brokers tell me that I have two options: Option A, claim against the offending party's insurance. the snag is that it is unlikely to be paid until it is reported. Option B is to file a claim of about $300,000 with GA. The problem is that my premium will increase in April if they do not recover from Key. Over the last five years, my premium has moved from J$70,000 to under $25,000. Am I going to bear the burden of this accident even though I was not at fault?

- brianbrichard@netscape.net

Answer: The short answer to your question is probably. The main difference between your problem and that of danwen51@ yahoo.com - see The Sunday Gleaner February 4, 2007 - is that that third party had bogus motor insurance. The guy who ran into your car appears to be insured. He and the owner seem to be another type of crook. They, apparently, have decided not to report the accident to the police. This way they are sure to avoid prosecution for the accident. Their other motive is also based on self-interest. If they say that their vehicle hit yours from behind, Key will have to pay you and the other party. Not filing a report means the avoidance of a premium increase.

Avoiding liability

Call me cynical, but I am convinced that six months later the two reports will not be made.

You and your brokers can foil the plan of the two crooks. Section 8 (1) of the Motor Vehicles Insurance (Third-Party) Risks Act provides the tools to do so. It says: "Any condition in a policy - providing that no liability 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."

The import of these words is not fully grasped unless they are read with two conditions that are found in motor policies.

One condition says the insured must "give notice in writing immediately upon the occurrence of any accident". The other states that "due observance and fulfillment 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."

This means that insurers can avoid liability where an insured fails to report an accident. Further, if a report was not submitted immediately, then the claim could be rejected.

Loopholes

Fortunately, these loopholes were closed in 1989. In my opinion, therefore, Key will have no choice but to pay you and the other third party.

Here are a few things you and Allied can do to get Key Insurance to pay you instead of making a claim under your policy:

Obtain a report from the Ocho Rios Police. This should confirm that the accident took place, contain details about all the parties that were involved, demonstrate that Key's insured/driver caused the accident and show that you and the other affected party played by the rules.

Write to Key Insurance. The aim of that letter should be to send them a copy of the police report. They should also be informed that you expect them to make payment to you and the other party under Section 8 (1) of the Motor Vehicle Insurance (Third-Party) Risks Act even in the absence of a report from the owner/driver of the other vehicle.

Prepare a detailed statement of your claim. Include all of the expenses you incurred as a result of the accident: cost of the police report, loss of use expenses, medical and other expenses, adjusters' fees, plus any excess (or deductible). Send this information with all the receipts to Key to support your claim.

I sincerely hope that I have been of some help. Best of luck.

To W.H. in Spanish Town: I am very glad that you and your family escaped serious injuries after your car skidded out of control during a trip to the country.

The accident occurred because of oil on the road.

The culprit who created the hazard is unlikely to confess. Because of this, you will be unable to recover the losses you suffered. You will have to take the 'lick'. While the financial implications of the mishap are severe, try to maintain some balance. Your family escaped unharmed.

Cedric E. Stephens is an independent insurance consultant who provides free information and advice about risks and insurance. Emial: aegis@cwjamaica.com