Insurance Helpline With cedric Stephens

Question: My car is 25 years old. It is in excellent condition. About three months ago, I took it to the examination depot where a certificate of fitness was issued. Due to the poor quality of service my insurers provided, I decided to try another company. The four companies that I approached refused to insure my car due to its age. It seems absurd that after I paid the tax and the authorities gave me permission to drive my car, insurance companies can take away that right. It is not okay to deny coverage required by law. Can you do anything to help?

- L.P., Kingston 7.

Answer: Zimbabwe has been in the news a lot these days. And that is not due only to Cricket World Cup 2007. The social, economic and political conditions there are making the headlines. Is there a link between those matters and the question you posed? Members of the power elite here, unlike Zimbabwe's Robert Mugabe, seem to recognise that they are fallible - just like the rest of us. This allows the market, not the government, to find solutions to problems like the one you have.

The good news is that there is a market solution. The bad is that only some motor insurers insure 'older vehicles'. Others, as you found out, do not give two hoots. These findings are based on the results of a crude survey. It was done by telephone. Five companies (or 45.4 per cent) of 11 registered insurers were contacted: Advantage General Insurance (AGI) - version 2.0 of United General or UGI; British Caribbean Insurance Company (BCIC), The Insurance Company of the West Indies (ICWI), Jamaica International Insurance Company (JIIC) and NEM Insurance. These insurers are the big guys. They controlled 80 per cent of the market in 2005.

Is vehicle age a major factor in motor vehicle crashes? It is very hard to say. None of the sources that I checked had this type of information. However, a study carried out in New Zealand between 1998-99 may provide some clues. Its aim was to 'quantify the associationbetween vehicle age and the risk of crash injury (to occupants)'.

Vehicles made before 1984 were found to have a much greater risk of being involved in an injury crash than those built after 1994. Insurers obviously know more about this than you and me, as you will see below.

Survey findings by insurer:

"AGI, with about 30 per cent of the market, has a thing against older vehicles. Owners pay 10 per cent more for coverage when the car falls in the 13 to 20 year bracket. For vehicles 20 years and older, presumably the owners pay even more. Unless it is an old, top-of-the-line, luxury car - Mercedes-Benz or BMW were the examples given - you will not get comprehensive coverage after 10 years.

"BCIC, which calls itself 'innovative', falls into the 'don't give two hoots' camp for persons who are not existing customers. It is not interested in vehicles that were made before 1990. Cars like yours are out of the question. I got the impression that, depending on the make and model of the vehicle and your clout, they may give you a 'bligh'. BCIC and AGI are similar in one respect: older vehicles need an engineer's report in addition to a certificate of fitness to get coverage.

ICWI, the company that now has competitors fighting to gobble up the market it created for female drivers, seems fairly broadminded about old vehicles. Coverage is offered to vehicles over 15 years old if they are in tip-top mechanical condition. ICWI does not charge an extra premium like Advantage. It also offers collision damage (a.k.a. comprehensive) coverage.

JIIC's approach to older vehicles is similar to that of ICWI.

NEM, the company with the second biggest market share, treats older vehicles much like AGI and BCIC. Vehicles made before 1990 are offered third-party insurance only. Owners are also charged 'age loadings' or extra premiums. As with all the other insurers, an engineer's report plus a valid certificate of fitness are required.

Comparing companies

Ask AGI, ICWI, JIIC and NEM to provide quotations to insure yourcar. If you believe that you carry some clout, contact BCIC as well. After you have received the quotations construct a grid. Compare the companies on the basis of their third-party personal injury and property damage limits, premiums, service and reputation for paying claims.

In other words, do not make a decision solely on the premium.

As one who sometimes questions the ability of the insurance market to find solutions to problems, I was pleasantly surprised by the results of the survey. Fortunately, I do not have to make a choice between driving an uninsured car or scrapping my car and taking public transit for another few years.

Cedric E. Stephens is an insurance consultant. He provides free, independent information and advice to consumers. Email: aegis@cwjamaica.com