Cedric Stephens, Contributor
I was involved in an accident in January, 2012 with a mini-bus. We exchanged documents, but I did not get (to see) the licence of the bus driver. The matter was reported to the police on the same day and to my insurer the next day. The third party's insurer has stated that the minibus driver has not reported the incident to them and that they cannot go forward because of this.
I provided my insurer and the other company with a copy the article you wrote on August 26, 2012, about a case that was similar to mine. None of the two companies has done anything to help. Can you please let me know how I can resolve this matter?
When an official of the third party insurer was asked about your claim, she wrote: "Our denial - was not related to the accident not being reported. The claim was denied on the basis of insurable interest, i.e., the vehicle was sold on December 14, 2011 and the accident was on January 17, 2012. Our position was communicated to (the other driver's insurer) in a letter dated November 21, 2012."
Not a single word of explanation or an apology was offered by the company for the long delay in dealing with the matter. The fact that you - a prospective customer - had suffered a financial loss and were inconvenienced by the company's inefficiency was of no significance.
Even though the response began "Dear Cedric", the message content suggests that your case is just one of many nuisance claims that the company would like to rid itself of.
Section 11 of the Insurance Act 2001 describes the conditions under which a licence is granted by the regulator to a company to transact insurance.
Sub-section (1)(e) says that "each of the persons managing or controlling the company is a fit and proper person to manage or control such a company". This provision, presumably, applies to directors and other senior officials.
The next section, (f), continues: "the company is able to implement a policy for settlement of claims without undue delay". The latter words imply - to me a layperson - a continuing obligation on the part of the insurer, its directors and other officials to handle and settle claims promptly and efficiently.
Did the third party insurer comply with the intent and spirit of the two sections of 11 of the Insurance Act? Was the period that you waited in order to get response from the third party insurers fair and reasonable or excessive?
I will leave you and other readers to answer those questions since I have an interest to declare. A non-executive director of one of the country's non-life insurance companies attacked me for "always writing about car crashes". His tone suggested that the problems that readers of this column like you write about were of no importance, in spite of what the law that governs the conduct of the insurance business says.
Insurable interest is a phrase that is used in connection with insurance contracts. In insurance law, "the insured must have an interest in the subject matter of his or her policy, or such policy will be void and unenforceable since it will be regarded as a form of gambling. An individual ordinarily has an insurable interest when he or she will obtain some type of financial benefit from the preservation of the subject matter, or will sustain pecuniary loss from its destruction or impairment when the risk insured against occurs" (source: http://legal-dictionary.thefreedictionary.com/insurable+interest).
The third party insurer is saying a number of things:
1. The minibus was sold about one month prior to the accident.
2. The seller appears to have mistakenly believed that the insurance on the bus could have been transferred to the buyer.
3. Neither the seller nor the buyer contacted the insurer to verify the information in item 2.
4. The coverage under the company's motor policy ended immediately after the minibus was sold.
Because the insurable interest of the seller came to an end on sale of the minibus, the contract of insurance was not in force when the accident took place. There are no grounds on which that argument can be challenged.
The minibus driver did not show you his driver's licence in order to preserve his identity. This way he can avoid taking responsibility for the accident. Since you do not know his real name you are unlikely to trace him.
I am very sorry to be so negative at the start of the New Year but, with so many rackets on the road, the odds are it is very likely that you will end up paying the bill to repair your vehicle.
Cedric E. Stephens provides independent information and free advice about the management of risks and insurance. Send feedback to firstname.lastname@example.org or SMS/text message to 812-7233