The most unethical aspect of motor claim settlement

Monday, 5 November 2012 11:08 -     - {{hitsCtrl.values.hits}}

By Anthony J. Perera

With the advent of innovative ‘On the Spot’ and ‘On the Scene’ assessment systems of claim settlement, even the most prestigious insurance companies have started sidetracking their obligations towards the innocent third party.

If the vehicle waiting at traffic signals is hit from the rear side, it goes without saying that the driver of the vehicle at the back is at fault and therefore it becomes the responsibility of the insurer of the vehicle at fault to repair the damage caused to the stationary vehicle. Due to the bad habit of ‘tailgating’ in heavy traffic, accidents of this nature are very common now.

The current practice with the insurance companies is to insist on a ‘court award’ or a judgment before entertaining the ‘third party’ claim, which no one will dare to attempt, unless there is personal injury or death.

It’s a well known fact that going to courts is the most cumbersome and time-consuming process. Knowing so well that not even one out of a thousand have gone to courts so far (and would not happen in the future as well), the insurers who are actually responsible for the loss caused to the innocent victim’s vehicle take undue advantage by insisting on a ‘court award’.

If the innocent victim does not hold a comprehensive policy, then he will have no alternative but to do the repairs himself. On the other hand, even if he holds a comprehensive policy and his insurers agree to pay, he will invariably suffer loss or reduction of his hard-earned ‘No-Claim Bonus’ and will have to bear the first portion of the claim if there is a ‘Voluntary Excess’ or a ‘Compulsory Excess’ under the terms of the policy.

It is most unethical on the part of the insurance companies to shirk their responsibility in this manner, under the cover of ‘Court Award’ when there is concrete evidence that their client is responsible for the damage to the third party, which in turn becomes the their responsibility (vicarious liability).

If they have satisfactory evidence that their insured is at fault and the ‘third party’ is innocent, there is nothing (other than their ulterior motive) to prevent the insurers of the vehicle at fault from compensating both parties

Finding of the Police investigations/report should be sufficient to admit liability for third party claims. It has now come to a point where the public and higher authorities should call upon on the insurance companies to alter their attitude and honour their obligations in a businesslike and gentlemanly manner. Let them live up to their massive advertising campaigns promising ‘fair play’ at all times, in all their dealing.

Please let the concerned authorities consider the feasibility of incorporating the following amendment (or similar wording) to the Motor Traffic Act:

“In the case of a motor vehicle accident causing damage to third party vehicle or other property by a negligent driver, findings of the Police investigations at the scene of the accident and the Police report should be taken as the basis to hold the registered owner of the offending vehicle, and if insured, the respective insurers conclusively liable for the damage caused to the innocent ‘third party’ vehicle or other property.”

As an alternative, if both vehicles are insured under comprehensive terms, they can revert to the colonial day ‘knock for knock” agreement in terms of which each insurer undertakes to repair their client’s vehicle even though the damage was caused by another vehicle insured by another insurer.

This system will maintain equilibrium between the losses and gains of each participant insurer, as when they are burdened with a claim for which they are not actually responsible, they are at the same time absolved from paying a claim for which they would have otherwise been responsible.

(The writer has been working in the insurance industry locally and globally since 1957 and can be reached via email [email protected].)