Insurance Helpline | Poor claims service causes careful driver to freak out
QUESTION: I was involved in an accident in downtown Kingston on January 16, 2015. I was travelling along Princess Street, coming from Hellshire. There are no traffic lights at the intersection of Port Royal and Princess Streets. Port Royal Street is the main thoroughfare. I stopped to allow vehicles on Port Royal Street heading towards Marcus Garvey Drive to pass. Port Royal Street has three lanes. When the road was clear, I began to cross it. I cleared two lanes. At the beginning of the third lane, I heard a noise.
I stopped my car, which was travelling at 20-25 kilometres per hour. I saw something through my front windscreen 'flying' gently through the air. I discovered that my car had been hit on the left side by a motorcycle. The rider careened across and landed softly on Port Royal Street. The rider appeared to be uninjured. He got to his feet immediately. I have a photograph of him riding off. My car suffered minor damage. I reported the incident to my insurer. They told me that they had created a reserve of $750,000 in the event that the rider made a claim against me. They also plan to withhold my 60 per cent no-claims discount, which I have had for 25 years. Is the company treating me fairly?
INSURANCE HELPLINE: Jamaica Consumers United advocate Carlene Wilson, in a letter to the editor, urged consumers to "speak up and speak out more on issues affecting them issues such as price movements, (poor) customer service, lack of competition, lack of accountability, lack of transparency ... whether in the private sector or government agencies".
Miss Wilson, like most of us, seems to be focused only on talking. She has ignored the Chinese proverb 'Talk doesn't cook rice'.
The actions that your insurer took after you reported the accident were robotic. They were devoid of empathy. The service provider failed to recognise that even though the collision was minor, you were traumatised by the event. Nothing was done to reassure you that the company 'had your back' or that gave you peace of mind.
The fact that you drove for a quarter-century without any accidents and paid hundreds of thousands of dollars in premiums over those years was completely ignored. No actions were taken that led you to feel that you were in good hands. The collision plus the accident-reporting experiences have left you feeling unsure and uneasy.
What is a claims reserve? Is it routine for an insurer to create a reserve in a case like yours? A claims reserve, according to The International Risk Management Institute, is "an amount of money set aside (by an insurance company) to meet future payments associated with claims". There is nothing unusual about your insurer setting aside money in anticipation that it may have to settle or defend a claim made against you by the motorcyclist sometime in the future. It does not necessarily mean that your insurers have concluded that you caused the collision.
Claimants are given fairly long periods in which to make claims in our legal system. Even though the motorcycle appeared not to have been damaged and the rider seemed unhurt, there is absolutely nothing to prevent the motorcyclist from alleging in 2018 that you were at fault for the accident. The likelihood that this can happen is the reason for the reserve. If a claim does not materialise, the reserve will be removed.
Careful drivers like you who have a long history of driving without accidents, should have nothing to fear when they are involved in minor fender-benders. In some cases, if the costs associated with an accident do not reach a certain level, the no-claims discount will not be affected. In others, the occurrence of a claim event does not automatically trigger a complete loss of the discount. I suggest that you contact your insurers to find out what applies in your case.
I hope that representatives from your insurer's claims department will read this article and, more important, begin to treat their customers with more empathy than they treated you.
On the other hand, you could take aggressive action to start the rice-cooking process. Phone the service provider. Tell him/her that the company's claims service sucks and that it failed to meet your expectations. Putting measures in place to improve how claims service is delivered will be good for the company.
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