Insurance Helpline With cedric Stephens
QUESTION: My spouse was in a single-vehicle accident in October 2012. Her vehicle was written off by the insurance company. Four months prior, she was involved in another collision. Another vehicle ran into the back of her car. The latter accident was reported to the police. The driver was warned for prosecution. The third party decided to fix my wife's car instead of making an insurance claim. The car was not fixed to our satisfaction and therefore my wife sought the assistance of her insurers who had difficulty in contacting the third party.
After the second accident was reported, my wife was interviewed. During the interview, she was asked if she planned to pursue the earlier claim. She sought the advice of the interviewer. He suggested that it would be best to drop the first case, as it would delay the last one. A few days after the interview, the insurer informed her that she had breached the contract since she was the only person who was permitted to drive. The car was at the repairer for many months because the claim took so long to be processed. We had to foot that bill. Now the car is somewhere parked rotting. Should we just walk away with nothing? What can we do?
- JP, Spanish Town PO.
HELPLINE: This is a very strange case. I have never encountered one like this - ever. In order to get a proper handle on the matter, I sought information from the insurers of your wife's car. This is what they said (with a few minor editorial changes):
"The insured had two losses, June 15 and October 7, 2012. The accident on June 15 was reported on June 20. The insured stated on her claim form that she was the driver at the time of the accident and that she was not making a claim as the third party would be fixing her car.
"She subsequently advised us that the vehicle had not been satisfactorily repaired and that the third party had told her to claim on his insurer. She submitted supporting documents which we submitted for uninsured losses to the third party's insurer as the knock-for-knock agreement applied.
"We then received information that she was not the driver of the vehicle at the time of the accident and wrote to her on July 31, requesting confirmation of this as driving under the policy is restricted to her. We have received no response to this letter.
"We appointed an investigator for the second accident. The investigator interviewed her on October 11. He advised us by email that the insured was withdrawing her own damage claim relating to the accident which occurred in June and also that she admitted that someone other than herself was driving at the time of that accident.
"On October 15, we forwarded the full details of her claim, to include the damage claim, to the third-party insurer, advising them that our policy had been breached.
"We subsequently received the investigator's report which included a signed statement from someone on the scene of the accident describing the male who was driving the vehicle, as well as confirmation from the police investigating officer, that someone other than our insured was, in fact, the driver at the time of the loss.
"The October claim was not honoured because the policy was rendered void as a result of the false and fraudulent information on the claim form submitted for accident in June. The insured was formally advised of this on January 7. The insured's attorney wrote to us on April 11, 2013 and we responded to that letter on July 2."
Copy of letetr
The company provided me with a copy of the letter that was sent to your spouse (at your former address in Kingston 8). Its decision to reject the claim is based on the form that your wife signed when the first accident was reported.
The letter states: "We further remind you of the declaration that you signed on the claim form wherein you agreed that if you 'shall make, any false or fraudulent statement, or if found guilty of any suppression or concealment, the policy shall be void and all rights to recover thereunder in respect of past or future accidents shall be forfeited'."
The specimen copy of the motor- accident report form that I have seen confirms the existence of that declaration.
The fraud condition of a policy that is similar to your wife's insurance contract - condition number 4 - tells an entirely different story than the claim form.
It says: "If the insured shall make any claim which is in respect fraudulent, or if any declaration be made or used in to support thereof, or if any fraudulent means or devices are used by the insured or anyone acting on her behalf to obtain any benefit under this policy all benefits under this policy in respect of such claim shall be forfeited."
The penalty in the declaration that your wife agreed to when she signed the claim form is far more onerous than that stated in the policy contract.
The insurer is relying on the declaration in the claim form to avoid paying the claim and not on what the policy says. Frankly, as a layman, I am not sure that the insurer's position is legally justified.
I would strongly recommend that you and your spouse use the information in this article plus any other details that you have to brief an attorney.
Your reputation is at stake and you stand to lose money if you just walk away and do nothing.
Cedric E. Stephens provides independent information and free advice about the management of risks and firstname.lastname@example.orgSMS/text message to 812-7233