Are unregistered motor-insurance schemes okay?

Insurance Helpline - With Cedric Stephens

Question: My car was parked off the Breadnut Hill Road, near Paradise, Ocho Rios, at about 5 p.m. on January 19, 2009. This was to allow traffic to pass because the road is narrow. The rear end of a garbage truck hit my car. Its rear bumper was pulled off; the rear light and fender were also damaged. The truck driver and I reported the collision to the police. I also notified my brokers and its area manager. The repair estimate which was J$120,000was adjusted to J$90,000.In June, I signed an amended third-party release from the truck's insurers for J$50,000. To date, I have not received any money. In August, my insurers paid me J$40,196.30. I have bought most of the parts but my vehicle still remains unfixed. This expense was never a part of my budget. Repeated calls to my broker yield only promises. Are they hoping that I will forget the accident? Please let me have the benefit of your advice.

- cosparris@hotmail.com

Answer: Something must be "radically wrong", to quote my late mother, with the insurance claims process. There is absolutely no good reason why a claim like yours should remain unsettled for over 20 months in the 21st century - even in a developing country like ours.

I tried to seek details for the poor handling of your claim from your ex-insurers, the third party's insurers, and the garbage collection agency. All three parties have indicated that they received the email I sent them seeking information. Only one, your former insurers, supplied the information in time for publication. If it is accurate, I now know why 15 months after you signed the release for J$50,000 the money still remains unpaid.

ex-insurer's response

This is an extract from your ex-insurer's email: "... Details of the claim were forwarded to (the insurers of the truck) on the 07/05/2009. A follow-up was done regarding settlement on the 14/05/2009 of which a release for $99,466.69 was received on the 09/06/2009.

"The release had a notation that (the third party's insurers) would indemnify (us in the sum of) $49,490.39. (The garbage collection agency) has a Third Party deductible and would, therefore, pay the difference of J$50,000. The insurance broker was sent the release as a scanned document via email 9/06/09 which they returned directly to (the other insurer).

"A cheque for $49,466.69 was receipted by our accounts dept. on the 02/07/2009 and we deducted the assessment fee of $9,270.39 and a cheque for $ 40,196.30 was processed on the 10/7/2009 and forwarded to (the brokers) for the insured's benefit. In the interim we have been unsuccessfully following up (the truck's insurers) for the balance of $50,000 ... . Today we contacted (them again and learnt that) they are having challenges collecting same from their Insured ..."

The translation: the garbage collection agency seems to be self-insuring the first $50,000 of its motor insurance liability risks. This means that it has agreed to pay all claims for which it is legally responsible up to that amount from its own resources instead of transferring those risks to its motor insurers, like most persons and companies do.

Claims higher than the limit would be paid by the motor insurers less, of course, the agreed deductible or excess. This type of arrangement is usually entered into to save money. Well-run companies earmark funds in their budgets based on historical and other data to pay their portions of the claims as and when they arise.

Are the difficulties the insurers are having in collecting your money linked to those that some members of the nursing profession are having with respect to the payment of their wages?

The agency does not appear to have the money to pay your $50,000. Our lawmakers drafted the Motor Vehicles Insurance (Third-Party) Risks, Financial Services Commission and Insurance Acts to, among other things, create a framework within which the victims of accidents were assured some measure of compensation in the event that they suffered injuries or their property was damaged due to the carelessness of other road users.

It is wrong that an entity like a garbage collection agency can partly bypass that system and the spirit and intent of these laws without sanctions.

Since you do not appear to belong to a powerful trade union that advocates on behalf of its members, your chances of getting paid soon seem quite slim. May I suggest one or both of the following: seek the help of your member of parliament; and/or retain the services of an attorney.

Good luck!

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