Cedric Stephens | When are promised insurance reforms likely to take effect?
Question: What is the maximum in loss of use expenses that my husband and I can claim as a result of the loss of our vehicle? We received a loss of use form from the third party's insurers. It suggests that those costs are limited to 14 days. We are hesitant to sign the form. We believe that we are entitled to more. My husband travels across the island in connection with his job. Further, we have not been paid for our vehicle even though it was totalled five months ago. My husband is also claiming for injuries that he suffered in the collision. That claim is being handled by his lawyer.
- S.T. P., Kingston 5.
Answer: There are, to my knowledge, no common set of rules or standards that all motor insurers use to settle claims like yours. If such rules exist, I am asking The Insurance Association of Jamaica - the industry lobby group - to send them to me. Each insurer does its own thing in handling claims made by third parties. When property damage and loss of use claims like yours are handled by non-experts, they sometimes end up in a sort of no-man's-land. This area, unfortunately, is often not on the insurance regulator's radar. Claimants, therefore, end up holding the short end of a very long stick. The quality of service that is delivered to policyholders is invariably much better than what third-party claimants get.
In 'Finally, insurance reform with upsides for consumers' (September 9, 2018), I itemised six claims-handling rules that the insurance regulator said that it plans to introduce. The measures will force insurers to treat all types of claimants - policyholders and third parties - more fairly. One of the rules applies specifically to claims like yours for loss of use and the damage to the car. It imposes a duty on the insurer to "inform unrepresented claimants of their rights and duties when the claimants are not policyholders and (to) take steps to ensure that those claimants are treated fairly". In the absence of this rule, third-party claimants without attorneys can, on some occasions, be left to 'suck salt.' This could happen to your family.
The compensation to which your family is entitled has three parts. One is the claim for the damage to your car. Why is it taking the insurer more than five months to assess its pre-accident value, negotiate a settlement and cut you a cheque? Claims for the loss of a vehicle are typically settled in a few weeks. Who is responsible for the extraordinary delay?
The claim for loss of use expenses is the second part. Presumably, the person who sent you the loss of use form should have been aware of the status of the claim for the damage to your car and the reasons why it has remained unsettled. Yet, despite that knowledge, they have offered you no more than two weeks' loss of use expenses. Why the low-ball offer and the pressure for you to sign away your rights when the claim for the car remains unpaid? Whatever the reasons for the insurer's actions, something does not smell right!
The claim for personal injuries is the third piece of the cake. The insurer should know that your husband has retained the services of an attorney. Why then is it so intent in getting you to sign the form for two weeks' loss of use when the claim for the loss of the vehicle remains unpaid without the knowledge of the attorney? Why does the company - which probably has lawyers on its staff - appear willing to negotiate parts of the claim directly with you and your husband and another part with the attorney? This does not constitute fair treatment. The industry to which the insurer belongs was supposedly built on a foundation of the utmost good faith. It is now seeking the help of honest policyholders to combat insurance fraud. Is it likely to get consumers' cooperation by handling your claims in this slapdash manner? Finally, when are the promised reforms likely to come into effect?
You and your husband would be doing yourselves a disservice by negotiating two-thirds of the compensation to which you are entitled directly with the insurer and leave the attorney to handle one-third. Benefits will accrue from the merger of the three parts and the attorney is given instructions to this effect. You will have access to professional advice in relation to how much you can reasonably claim for loss of use which you don't currently have. Loss of use claims can get very complicated. The typical claims department employee is often unaware of the complexities and tends to use a standard as the basis for settling these claims. Attorneys have tools and weapons in their toolbox that the average lay person does not. Their job entails protecting your legal interest. Insurers know this. Claims that are handled by lawyers seldom spend time in no man's land.
You and your husband should instruct your attorney to handle all aspects of the claim. Send the loss of use form to him/her unsigned.
- Cedric E. Stephens provides independent information and advice about the management of risks and insurance. If you need free information or counsel or to give feedback, email firstname.lastname@example.org.