Advisory Column: Motor claims a costly waiting game
QUESTION: On Sunday October 19, 2014 my vehicle was parked at my gate at 6 am on the right side of the road. A drunk, sleep-deprived driver hit my car, pushing it away about two car lengths. The chassis was bent by the impact. The estimate for repairs amounted to $1.3 million. The pre-accident value was $1.2 million. When I took the estimate to my insurers, it was suggested that I claim under my policy to speed up the process of reimbursement. The owner of the other vehicle has not reported to his insurer as yet.
I reside in Mandeville and work in Old Harbour. My transportation costs without my vehicle so far have been $10,000. Is it possible to claim these costs as loss of use?
What will happen if I claim on my policy and the insurers of the third party doesn't pay over to my insurer by the time I purchase another vehicle? Will the process go any faster if I use the services of a lawyer?
INSURANCE HELPLINE: The Latin phrase mea culpa captures the guilt that I feel for not replying to the email that you sent me nearly six months ago more deeply than if I were to write the usual "I'm sorry". The foreign words also mean that I accept full responsibility for not retrieving your message from my inbox before now. I did not deliver on the promise that I made to help with your problem and with the haste that it deserved.
Many things have happened since last October. I am driven, even at this late stage, to answer the three questions that you asked. There are two reasons for this. The first is to tender a public apology to you. The second is to help readers who experience problems that are similar to yours to understand the claims process, reduce some of the stress and hassle associated with car collisions and avoid nasty surprises when they make insurance claims.
In an article I wrote last year - 'A claims story with a happy ending', Gleaner, November 13, 2014 - firstname.lastname@example.org provides important details about her experiences after her car was struck in the rear. She filed a claim under her policy instead of under the policy of the driver who caused the collision. The events that followed were the exact opposite of another reader whose vehicle and the third party's were insured by the same company. Two years after the accident, that reader's claim was still not settled.
REIMBURSEMENT FOR TRANSPORT
The transportation costs, or loss of use charges, that you have incurred are expenses that would normally be reimbursed by the insurers of the at-fault driver. These costs would not form part of the claim that you make against your insurers.
To express these two ideas in a different way: loss of use charges are recoverable from the insurers of the other vehicle, provided that: those insurers agree that they are liable for the claim; the expenses are fair and reasonable; and you took reasonable steps to minimise the loss.
Claims for loss of use can be very simple or very complicated, depending on the facts of each case. This is the only advice that I can offer based on the information that you supplied.
Even the most careful driver can suffer the misfortune of having his/her vehicle struck by an uninsured vehicle or driver. Uninsured can have four different meanings. The first can be applied to vehicles with fake cover notes or certificates of insurance. The second includes vehicles without any insurance documents, fake or genuine.
Persons in the third group are very sneaky. They buy genuine insurance but fail to tell insurers when accidents occur.
The fourth group covers situations where genuine insurance is bought but the driver or policyholder does something either before or after the purchase, which nullifies the insurance.
Given the four scenarios, the outcome is often uncertain. About one in every four vehicles on our roads are said to have fake documents or have no insurance documents at all.
In email@example.com's case, she had to source funds from her savings to pay her excess (or deductible), pay a higher renewal premium due to the loss of her no claims discount, and fund her loss of use and medical expenses before getting one cent from the insurers of the third party. Luck was on her side because the third party insurers repaid all of the money she had spent, even though it was many months later.
If it turns out that the driver who hit your car did not have insurance you may have no other choice but to consider whether it makes sense to take legal action against him to recover your losses.
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