Jamaican insurers getting tougher in post-JDX age

Question: My friend has a car that I drive. It was involved in an accident in March of last year. I was at fault. A pedestrian who alighted from a shuttle taxi ran across the road in the vicinity of Victoria Mutual along Half-Way Tree Road. A claim was made for damage to the vehicle. The company also paid the pedestrian's claim. A few weeks later, a bus backed up into the front of the same car. This occurred near the transport centre in Half-Way Tree. Since the damage was superficial, the bus driver and I went our own way. Sometime afterwards, I received a telephone call from the insurance company while I was on a trip out of Kingston.

They enquired about an accident about which I knew nothing. I told them about the collision with the bus and was advised to report it. Frankly, I forgot to do so. When the policy expired, the company refused to renew it. They said that this was due to non-disclosure of an accident. Also, an investigator reported that the vehicle was being used for company business. The car is now parked because it does not have insurance. I really feel stressed and very depressed because I have messed up my friend's life. I had another accident and a vehicle was stolen from me previously. I am told that my name is in the black book of insurance companies. Can you help?

- deattitude1@yahoo.com

Help-Line: The problem that is now facing you and your friend began in 2008. It started when she bought insurance with her ex-insurers. Their refusal to renew should be seen in the context of what took place at the start of the contract, your two collisions last year, your failure to file a formal report about the second one, and your personal insurance/claims history.

These factors played a critical part in the insurer's decision. Had you or your friend done a Google search to find out the basis of premium charges for this type of coverage before buying motor insurance - which our laws say is compulsory - it is very likely that this problem would not have arisen.

Sadly, some motor insurance consumers are now finding out the hard way that 20th-century thinking and behaviours are not always appropriate for these times as insurers begin to adjust to a post-JDX world.

Your friend's ex-insurer's response to my request for information about this case was quick and hard-nosed. Here is what a company official said:

1. "We discovered after the first accident that he (you) was a regular driver of the vehicle and had partial custody. His email to you confirmed this. Our proposal (application) form requires regular drivers and the person who will have custody of the vehicle to be declared. This was not done."

My comment: It is being politely suggested that the person who completed and signed the application for insurance accidentally or intentionally misstated the facts about the risk that was being proposed and about the person who would be driving the vehicle. It would seem that the company assumed that the applicant who signed the form was the principal driver. That misstatement of fact - accidental or otherwise - gave the insurer the legal right to avoid the contract. For some reason, the company failed to exercise that right.

2. "His (your) loss experience was not good. He had three losses (including a theft) between 2005 and 2008. We were never given the opportunity to underwrite him. You will have seen from his correspondence that he was involved in two accidents in March 2010 while driving the insured's vehicle."

My comment: The company has linked its inability to "underwrite" you with its first argument. That is, because they were unaware that you would be/were a regular driver when the insurance was proposed and did not know about your insurance/claims history at that time, they did not have the opportunity to refuse to insure you or to charge a much higher premium than they did.

The two accidents in which you were involved last year certainly did not help. The insurer's argument, which is based on the practice and application of insurance law, is very sound.

3. "At the inception of the insurance in 2008, the applicant (your friend) described her business/occupation as a housewife. Our investigations determined that she was a part-time owner/operator of a business and that you, the regular driver, work in that business and that the vehicle is (was being) used for company business ... . This has underwriting implications, but this information was never disclosed to us."

My comment: Once again, I can find absolutely no fault with their conclusion, assuming that it is based on facts.

4. "The accident involving the bus on March 31 was not reported to us, despite contact having been made by us after the receipt of a demand letter from another insurer. Despite the non-disclosures, we loaded the policy (premium) for business use and considered continuing the insurance excluding the regular driver. However, the no report was the nail in the coffin. We consider this an unacceptable risk."

My comment: The contents of the demand letter are quite significant. It suggests two things. You were at fault, or at best, were partly to blame for that collision. The second is that even though you described the damage as superficial, the bus owner was expecting the ex-insurer to pay for repairs.

In the pre-historic days before every person in Jamaica owned a smartphone, I could, perhaps, have understood your omission not to file a report about this collision.

However, when I recall the fact that many phones are equipped with cameras (still and video), SMS/text, messaging systems, electronic diaries, voice-activated notes, plus lots of other smart applications, I find it very difficult to believe that you forgot to report the mishap after a company representative contacted you.

Contracts of insurance are special. Buyers are expected to always tell the truth. The duty does not stop there. They are required to disclose all of the facts that are material to the contract. Material means that the buyer should disclose all of the information that will influence the company's decision whether to accept the risk, and how much premium to charge.

Visit the ex-insurer's office. Speak with a senior official. Admit the error of your ways and beg for mercy - seriously.

Disclose all the relevant information to them and then ask for a 'bligh'. With all that has taken place, do not expect them to welcome you back with open arms.

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