Cedric Stephens | Insurance payouts rare for auto defects
ADVISORY COLUMN: INSURANCE HELPLINE
QUESTION: A family member was driving a European-made SUV recently when it suddenly accelerated. He said that he slowed down to negotiate a bend when the engine sped up. Because that was so unexpected, the vehicle crashed into a wall. I discussed the accident with a few friends some of whom said that they know about similar crashes involving the same make vehicle. Have you heard about accidents like these? What are the insurance implications? Can the family member make a claim under his comprehensive policy? − A.W., Kingston 6
HELPLINE: The accident you described has a special name. It is called sudden unintended acceleration, or SUA. Friends and professional colleagues told me about five similar cases. There are many more reported overseas.
One free online encyclopedia says SUA type accidents occur as the result of “the unintended, unexpected, uncontrolled acceleration of vehicles, often accompanied by an apparent loss of braking effectiveness. Such problems may be caused by driver error (e.g. pedal misapplication), mechanical or electrical problems, or some combination of these factors”.
What I like about this definition is that it looks behind the collision and focuses on the causes. None of my sources, including you, have offered any information to allow me to assess whether the cause of the accident was due to driver error, mechanical or electrical failure or a combination of all three. The proximate cause of these types of collisions, to use legal jargon, were unclear.
The National Highway Traffic Safety Administration, NHTSA, in the United States estimates that 16,000 accidents occur each year because drivers mistakenly press the accelerator pedal when they meant to apply the brakes. This slip-up is clearly one example of driver error. Motor policies generally assume that drivers make these and other kinds of mistakes.
I am quite sure that neither the statisticians in the Road Safety Unit of the Ministry of Transport or in our motor insurance companies estimate how many crashes are caused each year by the misapplication of the accelerator instead of the brake pedal.
Difficult to settle
SUA collisions caused by mechanical or electrical failure or by the breakdown or malfunctioning of electronic components are more difficult to settle than those involving brake-accelerator mistakes. This is because motor policies almost always exclude loss or damage to the vehicle caused by “mechanical or electrical breakdowns failures or breakages.”
In cases where electronic components cause or contribute to SUA collisions – which is not improbable given the increasing rate at which these components are being used by manufacturers – payment of the claims become more problematic. Long before Boeing’s difficulties with its 737 Max Aircraft surfaced, insurance companies decided to include the Information Technology Hazard Clarification Clause in all policies that insured property.
The provision says that “losses arising, directly or indirectly, out of (i) loss of, alteration of, or damage to or (ii) a reduction in the functionality, availability or operation of a computer system, hardware, program, software, data, information repository, microchip, integrated circuit or similar device in computer equipment or non-computer equipment, whether the property of the Insured or not, do not in and of themselves constitute an (insured) event unless arising from:
• fire, lightning, explosion, aircraft or vehicle impact, falling objects, windstorms, hail, tornado, cyclone; or
• hurricane, earthquake, volcano, tsunami, flood, freeze or weight of snow.”
Put simply, these words mean that loss or damage from cyber or computer-related incidents are excluded. In cases where it was found that an SUA collision occurred due to the malfunction of an on-board computer system in the vehicle, the resulting damage would not be covered. Cyber risks are generally insured under separate policies. On the other hand, if the computer system was among a list of parts that were damaged in a two-car collision, that loss would be recoverable.
A firm of US attorneys who specialise in SUA-type accidents say on their website that “manufacturing defects in car and SUV transmissions or cables may lead to unexpected vehicle movement, gear changes, and sudden, sometimes radical speed increases”.
This is as far as I can go with the limited information that you have supplied. I hope that it will provide you with some general ideas of what more needs to be done to resolve your family member’s claim.
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