Why motor insurers 'cherry-pick' clients ... And get away with it
Published:Sunday | January 31, 2010 | 12:00 AM
Insurance Helpline With cedric Stephens
I have a motor car with a PPV licence. It is comprehensively insured. It was involved in a recent accident. The driver at the time was not the named driver. I cannot drive and do not have a licence.
My husband is overseas and the car needed to be serviced.
The insurer is not honouring the claim. They say the driver was unauthorised. I am very concerned that the claim was not paid. The vehicle was being driven by a person with a valid driver's licence. Can you please explain why the claim was not paid?
Answer: Last week's article, 'Women drivers often need backative' caused a howl of protests.
One protester was a Jamaican living in the United States (excellence3@verizon.net).
She has bitter memories of the late Michael Manley and the political rhetoric of the 1970s.
"Regressive, moran (sic), neanderthal, idiotic, hustler, ignorant and chauvanist (sic)" were some of the words that she used to describe me.
Another (altwill@hotmail.com) - who also did not identify herself by name - strongly disagreed with the advice I gave.
The insurance company should have paid the victim and "sorted it out with the truck owner," she said.
She wondered whether I was being "paid-off" by insurance companies.
Readers of this column are free to question my opinions. However, I will not enter into conversations with or reply to persons who write to me and do not disclose their names - especially if they are nasty, cannot spell, know zilch about contract law and have never read an insurance policy.
Last Sunday's question and the one the week before have some connections with yours.
insurance policies
The answers to all three are to be found - to a greater or lesser degree - in the insurance policies.
In other words, my responses to those questions as well as yours were not plucked out of the air as one critic implied.
Your problem arose because you were unfamiliar with the terms of the policy when you authorised a person your insurers did not know to drive the car.
Here is a sample of some of the things that the policies may say in the fine print about the drivers of insured motor vehicles:
1. Drivers should hold valid permits.
2. Persons who are 70 years and older who hold driving permits are not automatically considered eligible to drive.
3. Driver's licences or permits should be appropriate for the type of vehicle. This means that if the regulations require that drivers must have a general licence for a particular class of vehicle, a private car licence will not do.
4. Persons who are less than 21 years old who have driving permits or who have held licences for less than two years are not automatically considered eligible to drive.
5. Drivers other than the policyholder, who are operating the insured vehicle, should do so with the authority and consent of the owner.
6. In order to obtain protection, dri-vers should comply with the general terms and conditions of the insurance contract as though they were policyholders.
7. Liability for injury, loss or damage is excluded while the insured vehicle is being used for a purpose which is not insured; driven by anyone who is disqualified from driving or has not held a driver's licence; or is prevented by law from holding one.
Each insurer develops its own set of rules about which groups of drivers it prefers to insure and which group it dislikes.
The message is quite simple.
The typical motor policy protects only some licensed drivers.
In the article that was published on January 17, that insurer deliberately excluded people 70 years and older who were not customers when they reached three scores and ten.
Insurers generally ask for specific information about drivers - for example, name, age, business or profession, driving experience, accident history, health status and insurance history - when applications for insurance are being made.
This information is used to decide whether particular drivers meet the insurer's requirements and if so, to calculate how much premium to charge.
Insurers are sometimes very specific about who can drive a certain kind of vehicle.
They name the drivers. The names of the persons are printed in the policy and the certificate of insurance. When there is an accident, the insurer is under no legal duty to pay claims if the person who is named is not driving (see item 6 above).
Companies that transact motor insurance have to receive permission from the authorities before they can do so.
Motor policies have to comply with the Motor Vehicles Insurance (Third-Party) Risks Act.
The insurance regulators even have the power to tell insurers what they can or cannot say in their policies. The conditions that insurers impose in their contracts about drivers, it can be argued, are implicitly sanctioned by law.
It is, therefore, very unlikely that your insurers can be forced to pay your claim if the person who was driving your car at the time of the accident was not the person named in the insurance policy, even though he had a driver's licence. If you believe that I'm an idiot who is writing nonsense, talk to your lawyer.
Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, email: aegis@cwjamaica.com or send text (SMS) message to 812-7233.