Cedric Stephens | Two wrongs don’t make a right

ADVISORY COLUMN: RISKS & INSURANCE

QUESTION: My car was wrecked in an accident that occurred three months ago. I was blameless. There was no insurance on my car. Two other vehicles, which appeared to be racing, collided, and crashed into the back of my vehicle. My girlfriend, who was in my car, suffered a broken ankle, and I was badly shaken up. I reported the accident to the police and claimed on the other driver's insurance.

I gave the police and adjuster’s reports, plus the receipt for the wrecker’s charges, to the third parties’ insurers. Sometime later, I was told that they had decided to pay for my car. They refused to reimburse the expenses for the police and adjuster’s reports and the wrecking fee. They said they were punishing me for driving an uninsured vehicle. This does not seem right. What do you think?

– RT, Kingston

RISKS & INSURANCE: When you and I spoke by telephone, my response was immediate. The insurers were wrong in law and insurance practice. They should not be allowed to get away with short-paying you.

Later, after examining the facts in more detail, I now clearly understand the insurers’ desire to punish you. You are one in four motorists who do not buy motor insurance. This practice is wrong, is against the law, and is unfair to persons who buy motor insurance, and it cheats insurance companies out of revenue.

However, the proposed action to deduct part of your claim is not permitted by law. Jamaica is governed by a system of laws. The Motor Vehicles Insurance (Third-Party Risks) Act, the MVITPRA, does not give insurers permission to withhold money from the owners or drivers of uninsured vehicles who seek compensation from the system that they decide, by their actions, intentionally or otherwise, not to make contributions.

Here is what the United Nations says about the rule of law. It is a “principle of governance in which all persons, institutions, and entities, public and private, including the State itself, are accountable to laws that are publicly promulgated, equally enforced, and independently adjudicated, and which are consistent with international human rights, norms, and standards. It requires measures to ensure adherence to the principles of supremacy of the law, equality before the law, accountability to the law, fairness in the application of the law, separation of powers, participation in decision-making, legal certainty, avoidance of arbitrariness, and procedural and legal transparency.

“The rule of law is fundamental to international peace and security and political stability; to achieve economic and social progress and development; and to protect people’s rights and fundamental freedoms. It is foundational to people’s access to public services, curbing corruption, restraining the abuse of power, and to establishing the social contract between people and the state.”

The good, the bad and the illegal

If the insurer was allowed to deduct two parts of your claim – from which it would earn a monetary benefit – its action would be no different from you saving money by driving an uninsured vehicle, in contravention of the law.

Section 4(1) of the MVITPRA says: “Subject to the provisions of this act, it shall not be lawful for any person to use, or to cause or permit any other person to use a motor vehicle on a road, unless there is in force in relation to the user of the vehicle by that person or that other person, as the case may be, such a policy of insurance or such a security in respect of third-party risks as complies with the requirements of this act.”

Subsection (2) speaks to penalties for breaking the law.

“If any person acts in contravention of this section, he shall be guilty of an offence and shall, on summary conviction before a Resident Magistrate, be liable to a penalty … or to imprisonment, with or without hard labour, for a term not exceeding six months, or to both such penalty and imprisonment, and a person convicted of an offence under this section shall (unless the court, for special reasons, thinks fit to order otherwise and without prejudice to the power of the court to order a longer period of disqualification) be disqualified for holding or obtaining a licence under the law for the time being in force relating to motor vehicles, for a period of twelve months from the date of the conviction.”

Section 8 says: “In order to comply with the requirements of this act, the policy of insurance must be a policy which is issued by a person who is an insurer; and subject to the provisions of this section, insures such person, persons or classes of persons, as may be specified in the policy, against any liability incurred by him or them in respect of: the death of, or bodily injury to, any person; and any damage to property, caused by or arising out of the use of the motor vehicle on the road.”

Now that you have seen the error of the insurers’ proposed action, as well as the error of your ways on breaking the law, you should resolve in the future to buy motor insurance for the vehicle you purchase to replace the one that got wrecked in the accident. May I suggest that when you resume negotiations about the settlement of your claim that you put on the table a commitment to buy motor insurance coverage in the future.

Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to aegis@flowja.com.