Insurance Helpline With Cedric Stephens

Question: I was involved in an accident in January 2012 with a minibus. We exchanged documents, but I did not get (to see) the licence of the (other) 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 of the article you wrote on August 26, 2012, about a case that was similar to mine. None of the two companies have done anything to help. Can you please let me know how I can resolve this matter?

- jkhrish35@gmail.com

HELPLINE: This column is the product of interactions between readers - mostly insurance buyers, I hope; providers, such as insurers and intermediaries like brokers and agents; and me.

The comments or opinions that I express are just one part of the mix. This formula forces me to pay attention to what members of these groups say, even if I do not always agree with them. Collaboration improves the quality of the output.

I have returned to this question — it was the subject of an article that was published on January 6, 2013, "Customer care takes back seat to claims service — because of an unspoken criticism from one of my regular readers, 'KB'.

He writes: "The main point I wish to address is (the writer's) complaint that none of the two companies did anything to help ... the contract of insurance calls for the insurance company to indemnify the insured for any legal liability he/she may incur in the event of an accident and, under (a comprehensive policy), to repair or replace the insured vehicle. Nowhere ... have I seen that the insurer has contracted to represent their insured in the recovery process for uninsured losses. I am not aware of any agent, broker or company ... that provides a recovery service for their client or insured."

Some contracts of motor insurance provide protection against collision damage to the insured vehicle - the so-called comprehensive policies.

As a general rule, they offer only partial coverage, hence my 'so-called comprehensive' label.

The part which is excluded is the deductible or excess. Usually, it amounts to five per cent of the vehicle's estimate of value. Where the estimate of value is J$1.5 million, the deductible would be J$75,000. This means that in the event of a collision damage claim, the insurer pays 95 per cent (J$1.425 million) and the policyholder 5 per cent (J$75,000).

The deductible/excess clause also means that where the damage to the insured vehicle amounts to J$75,000 or lower, the policyholder is expected to bear that amount or to recover it from the person who caused the collision.

The cost of repairing your vehicle, it appears, was below the deductible.

Some insurers require motorists to report all accidents even when the damage to the insured vehicle falls below the excess. Motorists who buy collision damage insurance believe that their insurers have a duty to get compensation from other drivers who cause accidents and/or their insurers even when the cost of repairs falls below their deductibles.

No such legal duty exists on the part of insurers to provide what 'KB' calls a recovery service. Insurers shy away from getting involved in this type of activity due to cost pressures.

unfamiliar with the policy

The claimant appears to have been unfamiliar with his/her policy and the claims process. He/she simply assumed that since the vehicle was insured and he was not at fault, help would have been provided.

A very long delay, the absence of assistance and, generally, poor customer service were among some of the factors that contributed to the manner in which the claim was handled and resulted in the claimant's frustration with both insurers.

The correspondent explains some of the reasons for those three symptoms. He says: "most insurance companies will confirm that they get bogged down in their attempts to do recoveries ... . The end result is that they do not have the time to address the claims being submitted to them thereby creating a further backlog. It is the case of the dog chasing its own tail. This results in additional costs that in turn results in increased premiums."

Given the nature of KB's criticism and my desire for balance and objectivity, I have asked the head of the Insurance Association of Jamaica to enter this discussion in next week's column.

Cedric E. Stephens provides independent information and free advice about the management of risks and insurance.aegis@cwjamaica.comSMS/text message to 812-7233