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Insurance Helpline | Always check the fine print

Published:Sunday | November 15, 2015 | 12:00 AM

QUESTION:

I was involved in a fender-bender along the Howard Cooke Boulevard in Montego Bay last week. The collision occurred because - truth be told - I was using my cellphone. My car, which was in a line of traffic, ran into the rear of the vehicle that was ahead. The impact caused minor damage to both vehicles. Because I was at fault and the damage was relatively minor, I am toying with the idea of not reporting the accident to my insurers and paying for the repairs from my own pocket. The aim is to protect my 50 per cent no claims discount and prevent my premium from going up. Is this a wise thing to do?

R.W., Montego Bay,

St James.

INSURANCE HELPLINE: My first thought after reading your email had very little to do with insurance! The manner in which the collision occurred influenced me to write about the new Road Traffic Act. The bill, as it is now called, was passed by the Lower House last week. Next, it will go to the Senate for approval. After that happens, it will be sent to the governor general to be signed. That is when it becomes the law of the land.

The new law, which will replace the existing 77-year-old legislation bearing the same name, is intended to change the way that motorists behave on our roads. It will impose new and increased penalties for traffic violations. For example, the use of cellphones while driving will become unlawful. Offenders will be subject to prosecution and pay heavy fines. This heads-up, I hope, will help readers to start adjusting their behaviour and avoid fines.

The correct answer to the question you asked is: it depends. Many persons think an accident automatically triggers higher car insurance rates. That's not always the case. To complicate matters, the term 'accident forgiveness' often comes into play in collisions like yours.

According to Jessica Bosari, a Forbes.com contributor, that phrase was invented by marketing people in the car insurance business "to convince consumers how much they", the insurers, want to help consumers and that "these companies use a ton of similar tricks, all designed to create feelings that their products don't actually provide".

She continues: "All accident forgiveness means is that when insurers are entering data into the software system that calculates insurance premiums, they agree not to factor a potential future accident into the formula." Ms Bosari was obviously writing about US insurance market practice. Whether the same thing happens locally, I do not know.

Motor policies in Jamaica generally say that "after any loss, damage or accident", policyholders are required to "give full details of the incident in writing" within a specified period. It would, therefore, be inadvisable not to comply. Also, rear-end accidents are notable for causing soft-tissue injuries which may not become apparent until a few days or weeks later. Failure to comply with the claims reporting provision of your policy could cause you to become personally liable to pay thousands of dollars to an injured passenger or driver in future.

Would it be a 'sin' to settle a third party's property damage claim without telling the motor insurer? Most persons would say yes. The correct answer is, once again, that it depends on what the policy says.

The wording of the policy before me reads: "No person claiming under this policy must admit to, negotiate on or refuse any claim, unless they have written permission from us." The first six words are the key to the rest of the sentence. They permit a person not claiming under the policy to "admit to (or) negotiate ... any claim" provided that the claim will not be presented to the insurer for payment.

In order to comply with the claims reporting provision of your policy, I suggest that you file a report of the accident with your insurer. Make sure that you write on the form that you will not be filing a claim to repair your car and that you will assume the responsibility to fix the third party's vehicle. This assumes that the wording of your policy is similar to mine and that there is nothing in there to prevent you from doing as I have suggested.

Many persons see their motor insurer as the enemy instead of being a partner who helps them to manage risks. Motor insurance is often treated as a reluctant purchase by some consumers. Add to this mix a deficit in technical skills and poor customer service at the insurance company end. As a result, routine matters like yours are not normally the subject of insurer-consumer discussions.

Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to: aegis@flowja.com