ADVISORY COLUMN: Insurance impact of cellphone ban
Question: I read in this newspaper that a Joint Select Committee of Parliament is now reviewing the new Road Traffic Act. It will ban the use of "hand-held devices such as cellular phones or radio communication instruments" while driving a motor vehicle or motorcycle. Assuming that the law is passed without any major amendments, what impact will it have on the insurance of motor vehicles? Will it give insurers more reasons not to pay claims?
- M.C., Kingston 6
INSURANCE HELPLINE: Sources say that last week's article - 'Are insurance customers being treated fairly?' - the second in a two-part series, caused unease in and around New Kingston.
The fact that a number of persons phoned me to find out the name of the insurer, which I did not disclose, leads me to believe that treating customers fairly is on the agenda of some companies. This is a positive sign.
On the other hand, it also appears that some persons missed the main point of the article, which was not about one insurer. It was more about how customers should be treated by an industry.
By the way, if any insurance company officials or persons in the regulator's office who read this column feel that the facts in that article are wrong, they are welcome to say so. I enjoy a good debate.
Nearly 12 years have passed since I wrote 'Consequences of a car accident while using a cell phone'. Since then, the cell phone (correction: smartphone) population has surged.
The use of these instruments, even while walking, driving or riding - motorcycles and bicycles - on the public roads is now the norm. They are part o1f our daily lives. It is good to see, even though we are playing catch-up, that our lawmakers are about to revise a law that brings changes to how our roads are used and recognise the risks that these devices pose.
Trinidad, incidentally, banned the use of mobile devices on its roads four years ago.
The liability section of a motor policy is decreed by law. Section 5(1) of the Motor Vehicles Insurance (Third-Party) Risks Act says: "In order to comply with the requirements of this act, the policy of insurance must be a policy which ... insures such person, persons or classes of persons, as may be specified in the policy, against any liability incurred by him or them in respect of: (i) the death of, or bodily injury to, any person; and (ii) any damage to property, caused by or arising out of the use of the motor vehicle on the road."
Subsections (2) and (3) state the minimum monetary limits that are required for personal injury and property damage.
Subsections (4) and (5) provide important information about what kinds of liability do not have to be included in motor policies - in other words, they say which things can be excluded - and also some things that are not excluded. Section 5 of the act, in its entirety, explains the scope of what the third party liability section of a motor policy should cover.
On April 30, 2003 I wrote: "There is no local law that bans the use of cellular phones while driving. The police tried hard to prosecute a motorist for using a cell phone a few years ago. The courts, however, threw out the case. Even if such a law existed, insurance coverage would still be available. This (conclusion) is based on the same principle that applies to third-party claims where there is a case of manslaughter. Although manslaughter is a criminal offence, motor policies do not exclude (third party) claims that are linked to that offence."
The same can be said about claims where the speed limit is exceeded or where drivers are under the influence, or where passengers who were not wearing seat belts submit claims for personal injuries.
The Motor Vehicles Insurance (Third-Party Risks Act speaks to "any liability incurred". The new Road Traffic Act should therefore not give insurers additional reasons to refuse claims due to the fact that an at-fault driver was using a cell phone at the time of accident.
Persons who violate the ban on the use of cell phones while driving will face penalties immediately the new law comes into effect.
The insurance implications of the legislation are likely to be felt by much later. It will lead to the creation of another group of traffic offences which, upon conviction, motorists will be required to disclose to insurers when applying for or renewing their policies. Failure to disclose these or other types of traffic violations, either intentionally or by accident, could lead insurers to avoid claims.
The new law will also create a new type of risk for companies that provide cell phones to their employees for business use. Where those employees use their own vehicles and company-supplied handheld devices to conduct company business while driving, the company could well find itself exposed to liability claims from third parties in the event of collisions.
I am glad to see that the committee studying the new law has rejected the police argument to be exempted from the proposed ban on the use of handheld devices while driving. Lawmakers in Trinidad did the opposite even though that state, like Jamaica, bears all of the risks associated with police activities.
'Big up' local lawmakers, even though we are four years behind the twin-island republic.
n Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to: firstname.lastname@example.org