Insurance Helpline, With Cedric Stephens
On February 22, 2011, a security company's vehicle collided with my 1999 Honda Accord. This happened on Barbados Avenue when the driver tried to switch lanes because another car had stopped in his. I reported the incident to my insurer and also gave them a police report. It stated that the other vehicle hit my car. Since that time, I have been getting the runaround. My insurer paid my claim. They said they are waiting to hear from the other party's insurers for the balance. When I contacted the latter directly, they told me they were waiting to hear from the third party before they can pay.
My policy was up for renewal on February 28. I renewed it. Due to frustration with the claim, I decided to sell the car and cancel the policy a few months later. My insurers told me I would not be getting a refund because I had an outstanding claim. Also, that if the other party's insurance company did not pay, I would lose my no-claim discount, although I was not at fault. What should my next move be?
HELPLINE: The events that took place at the scene of the accident and afterwards should not have happened. The run around you got is inexcusable. Hundreds of thousands of collisions like yours occur each year. By now, all insurers should have learnt how to handle claims like yours quickly, fairly and efficiently. Your experience reminds me of the pre-cell phone period in the 1970s and '80s. Getting landline telephone then was filled with many hassles and, more often than not, many years spent waiting for service until the cellphone revolution occurred. But, I digress.
The third-party insurer is giving you a six for a nine. Do not believe the tale they have spun. "Waiting to hear from the third party before they can make payment" is a very lame excuse. Why? Even though I do not know the identity of the company, I have a very good idea - based on more than 10,000 hours of practice (to use the unit of measurement in Malcolm Gladwell's bestseller Outliers) of reading motor policies - what the contract they issued to the security company says in relation to the conduct and settlement of claims to third parties.
It would say something like this: 'No admission, offer, promise or payment shall be made by or on behalf of the policyholder (the security company) without our (the insurer's) written consent and we shall be entitled, if we so desire, to take over and conduct in your name, the defence or settlement of any claim ... for indemnity or damages or otherwise and we shall have full discretion in the conduct of proceedings and in the settlement of any claim and you shall give all such information and assistance as we may require'.
This intention is very clear. The insurer calls all of the shots in defending or settling claims - not the security company. It also means that if the insurer decides that its policyholder, or the driver, has not told the truth about how the accident occurred, they can pay the claim. Insurers almost always never give up their right to handle claims as they see fit.
Pay a visit to the third party's insurer. Pretend you are buying motor insurance. Ask to see a specimen copy of their contract. Search it for the section marked conditions of contract or policy conditions.
Look for one that seems similar to the claims condition that appears in this article. It may not match this one word for word, but its aim should be the same.
Go to the motor claims department after you have found it and enquire about your claim. If they repeat the nonsense that they cannot make payment without hearing from the security company, show them what their policy says about 'who run tings' in relation to claims.
It is probable that they may tell you that the security company has failed to file a report of the accident and/or because so much time has passed in the absence of a report, they are not liable to pay you. If this were to happen, play your trump card. Refer them to section 8(1) of the Motor Vehicles Insurance (Third-Party) Risks Act.
Many persons who work in insurance companies are ignorant of it. Here is what it says: "Any condition in a policy ... providing that no liability shall arise ... or that any liability so arising shall cease, in the event of some specified thing being done or omitted to be done after the happening of the event giving rise to a claim under the policy ... shall be of no effect."
The change in the law effectively closes the loophole that previously allowed insurers to refuse to pay legitimate claims in cases where dead-beat third parties who caused accidents tried to duck responsibility by failing to file reports with their insurers.
Once you get the third-party insurers on the hook, it should be fairly simple for them to reimburse your insurers for amount that they paid to settle your claim. When this happens it should pave the way for you to get back your no claims discount and premium refund.
Cedric E. Stephens provides independent information and free advice about the management of risks and insurance. email@example.com SMS/text message to 812-7233