Ignorance and the injustice of unreported accidents
Insurance Helpline With Cedric Stephens
Question: I was involved in an accident while driving along Alice Eldemire Road on August 18, 2011. It was about 7.15 p.m. and I was in the right lane. A 2000 Grey International Truck in the left lane drifted over and hit my 2009 Toyota Corolla. Its left front door was damaged. The driver did not stop. I followed him until eventually I got the registration number of the vehicle. I made a report at the Freeport Police Station that same night. The next day I also filed a report with my insurers. An assessment of the repair estimate was conducted. The police report and the other papers were later sent to them. They tell me that they are in constant contact with the truck's insurers. However, the discussions seem to be headed nowhere. The third party's insurers claim they have received no information about the accident from the other driver. What should I do?
HELPLINE: One day after you wrote me, I posed the following question to the third-party insurer's claims manager in an email: Can Section 8(1) of the Motor Vehicles Insurance (Third-Party Risks) Act be invoked in the case of the accident that took place in Montego Bay?
Four days later she sent a brief, positive and emphatic response: "The matter has been reviewed. Our release will be forwarded to the Toyota Corolla's insurers by Tuesday, May 22."
No reason was offered to explain why the company had changed its position on the claim or the reasons for the nine-month delay. I guess that perhaps my reference to the act may have been a factor.
Parliament passed an amendment 23 years ago to the law that governs motor vehicle insurance. It closed a loophole that allowed insurers to avoid paying claims where the owner or driver of an insured vehicle that caused an accident failed - deliberately or otherwise - to file a report with his insurers as required under the terms of his policy.
Few know about law
That change was also done to prevent dishonest persons, like the truck driver, from avoiding responsibility for their actions. It also done to ensure that the owner (or driver) of an insured vehicle would bear the financial burden of an accident in the form of higher premiums instead of those costs been passed on to the accident victims.
Few persons know about the changes that were made to the law, even after nearly a quarter century. Insurance buyers and employees of insurance companies and brokers are among this group. The ignorance is even more surprising nowadays when all of the major laws are just a few mouse clicks away.
Section 8 (1) of the act 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 effect of the law can only be fully grasped when it is read along with two conditions in a typical motor policy. One of those conditions is the claims condition. It imposes a duty on the insured to "give notice in writing ... immediately upon the occurrence of any accident".
The second condition states that: "The due observance and fulfilment of the terms of this policy in so far as they relate to anything to be done or complied with by the insured ... shall be conditions precedent to any liability of the company to make any payment."
A condition precedent to liability is defined as "an event which must take place before a party to a contract must perform or do their part".
This means that if first condition was not complied with by the person driving at the time of the accident, the insurer would have no legal obligation to settle the victim's claim. Before the amendment was made in 1989, claims could have been avoided where the insured failed to report an accident or submitted a late report.
The changes to the law have closed that loophole. I strongly suspect that it was because of this particular provision in the law why the third-party insurers have changed their tune and decided to pay your claim.
Cedric E. Stephens provides independent information and free advice about the management of risks and insurance. firstname.lastname@example.org SMS/text message to 812-7233