Cedric Stephens | Insurance Helpline - The ABCs of handling a loss of use claim
QUESTION: A truck ran into the back of my car on July 22, 2017. The damage is quite extensive. The vehicle cannot be driven. Will my comprehensive policy pay for the hiring of a replacement vehicle until mine is back on the road? When does the repair period start from the time of the accident or from when the parts are sourced and the repair work begins?
INSURANCE HELPLINE: Your email tells me a few things about you in addition to how the collision took place you have just had your first accident; the insurance claim process is like Greek to you; you are not familiar with some of the basic rules relating to legal liability, the road code, and the aims of the Motor Vehicles Insurance (Third-Party Risks) Act, the MVITPRA; you have not read or understood your insurance policy; and you are unfamiliar with how vehicle repairers handle insurance jobs.
These points will guide me in how best to answer your questions.
The MVITPRA is the place to start. I suggest that you read it. This law creates the need for motor insurance. It says, "it shall not be lawful for any person to use, or to cause or permit any other person to use a motor vehicle on a (public) road, unless there is in force in relation to the user of the vehicle by that person or that other person, as the case may be, such a policy of insurance."
The minimum amount of insurance is stated in Section 5(1) and (2). Another part reads that the insurance must cover "any liability incurred 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".
Motor policies are not required by law to pay for the hireage of another vehicle in the event of a collision.
The law was drafted by experts. They were very careful. They made sure that a case like yours, where a truck driver who bought insurance and incurred liability by running into the back of another vehicle, was protected. This means that the truck driver's insurance should pay for the damage to your vehicle and the expenses of hiring a replacement. You, in turn, would not have to file a claim under your policy.
Accidents like yours should, in theory, be simple to solve. This assumes that the other party was insured. Vehicles that damage others from the rear are almost always considered to be at fault. However, problems can and do arise in cases like yours. Hitches can include that the other vehicle may not have insurance; the third-party insurer could refuse to pay for a variety of reasons; both vehicles could be insured with the same company.
The insurer may decide to play the 'we must investigate' game. This was the subject of last week's column titled "Pay the claim, there is nothing to investigate".
Loss of use claims can get very complicated. Each case is different and should be dealt with on its own merit. Conduct research. The website of the United Kingdom's Financial Ombudsman www.financial-ombudsman.org.uk is helpful. This newspaper is also a source of valuable information. Check my column published on September 11, 2016. it offers information on the way local insurers think and handle these kinds of claims.
Legal theory holds that since the collision was caused by the truck driver, he or his insurance company should compensate you for the losses that you suffered.
Compensation means, according to the Law Dictionary, "an act which a court orders to be done, or money which a court orders to be paid, by a person whose acts or omissions have caused loss or injury to another, in order that thereby the person indemnified may receive equal value for his loss, or be made whole in respect of his injury".
The truck driver should pay for all reasonable expenses that you have incurred as a result of the accident. You should not lose any money at the end of the day.
When legal theory is applied to the real world, the compensation for the loss-of-use expenses or car-hireage charges should begin from the date of the accident and end when you take delivery of your vehicle from the repairer.
There is a shortage of written information about loss-of-use claims locally. This knowledge deficit also exists in insurance companies. This article is written specifically to answer your questions and to help fill the gap. I sincerely hope that you will find it to be useful.
- 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