Risky rides - Large premiums for high-theft models

Marcella Scarlett, Gleaner Writer

In the midst of rising motor-insurance claims, key players in the insurance industry have reduced their exposure by earmarking certain vehicles as 'high risk'.

The Insurance Association of Jamaica (IAJ) 2010 yearbook points out that "motor-vehicle theft continues to plague owners and insurance companies". It further advises that "buyers of vehicles should try to avoid becoming a car thief's second victim".

The top three brands of motor vehicle stolen in Jamaica from 2008 to 2010 were Toyota (1,956), Honda (691) and Nissan (577). Of that number, the Toyota Corolla accounted for 997, Nissan Sunny 351, Honda Civic 246 and Toyota Hiace 303.

As a result of these trends, insurance companies have not only come up with ways to limit their exposure but, in some instances, even opt not to write premiums for 'risky' vehicles.

Paul Lalor, president of the IAJ, said vehicles such as the Toyota Corolla, Nissan Sunny and Toyota Hiace are targeted to be used as public passenger vehicles. Also, there is a ready market for sale of parts if thieves decide to scrap these vehicles.

In 2008, the average loss to the motor insurance industry was $1.6 billion dollars to replace 1,358 cars. The following year saw an increase to $1.8 billion to replace 1,262 cars. In 2010, there was a slight reduction to $1.7 billion for 1,044 cars. Average replacement per vehicle was $1.2 million for 2008, $1.5 million for 2009 and $1.6 million in 2010.

Honda fit

The Honda Fit was highlighted as another high-risk model. Automotives' checks on comprehensive insurance coverage for a 2008 Honda Fit valuing $1.6 million turned up premiums ranging from $126,747 to $265,837.50 - if coverage was offered in the first place.

One of the larger players in the industry said they accept only third-party insurance for the Fit. Other models given similar treatment by the company are the Mitsubishi Cedia, Nissan Bluebird and Suzuki Ignis.

"We don't like the Fits at all. There are a lot of them on the road and they can be easily targeted to steal, but police are not quick to stop them," said Lalor.

While some companies will write premiums for vehicles considered risky, it is based on the insurer accepting certain conditions. For example, one company said it will write a premium for a Honda Civic, but the owner must be willing to accept a higher-level excess of 10 per cent. Under normal circumstances, the excess is usually 7.5 per cent for Japanese domestic cars and five per cent for new cars bought locally.

In the insurance industry, excess is the amount of a payout which the insured has to cover.

Some companies have opted not to write premiums any at all for some model vehicles. The same company will not write a premium for the Toyota Corolla Altis, because of its high theft rate.

Motor vehicle buyers are reminded that the cost of the car is not only the purchase price, as insurance and maintenance are also important factors to be considered - as well as the replacement cost in the cases of 'risky rides'.

auto@gleanerjm.com