QUESTION: My 1996 Nissan Bluebird crashed into a light pole three months ago. It is a complete wreck. The driver was employed by my mechanic. The vehicle is insured for $450,000. I filed a claim but my insurers refused to pay. They say the car was not insured at the time of the accident. I have a cover note that was in force at the time of the accident. The premium was paid. How can they say the car was not covered? I am a travelling officer; I need a car to do my work. Can you help me get my claim settled?
-- J.M., Black River P.O., St. Elizabeth.
ANSWER: I have heard of three cases like yours in as many months. There is a common thread in all of them. It goes like this. A customer takes his/her car to a " back/front yard garage" for repairs. Someone employed there takes the car for a spin. The driver, almost always male, gets in an accident and wrecks the car. He has no driver's licence. It also comes out that he operated the car without either the owner's or his boss's consent. The owner's insurer refuses to pay the claim. If truth be told, the real "villains" in these cases are the garage "operators" and their employees. They should foot the bill for your car -- not you or your insurer.
Your mechanic should pay for your car. The driver was an employee of his. Employers are generally held responsible in law, for the actions of their employees. The details you gave, suggest that the mechanic would be very hard put to say that he was not ultimately responsible for your loss. Move very quickly to get him to pay. Do not be afraid to threaten legal action if he fails to deliver the "bread."
Some motor insurance policies exclude liability or damage while vehicles are in the hands motor traders. The motor trade includes all those enterprises that either sell, repair or service vehicles. When vehicles are in the custody of garages and mechanics this exclusion operates. Motor traders are expected to buy separate motor insurance to cover the liability associated with the driving of customers' vehicles.
Many garages that operate in the formal sector buy motor trade insurance. The coverage provides protection in the event that customers' vehicles are damaged either on their premises or while they are being road tested. Informal operators seldom buy any coverage. This could mean one of several or a combination of things. The risks are borne by the operator or are self-insured. He will pay whenever something untoward happens. Alternatively, that the customer [or his insurers] will foot the bill since the operator is a "small man" trying "a ting". The third is that the risks are very remote or will never happen. Whatever the reason, the typical motor policy does not differentiate between those in the formal or informal sectors. It assumes that both sectors buy motor trade insurance.
There are three other points worth mentioning. Coverage under your motor policy assumes that the person driving is the holder of a driver's licence. Also that the person driving is doing so with the authority and permission of the insured. The final and perhaps most intriguing one is that there may be grounds to re-submit the claim. Could the loss of your car be considered as theft, assuming that the driver did not have your permission?
May I suggest that you contact an attorney to explore all of your options. Take along a copy of your policy, cover/note and any letters you have received from the insurance company. Best of luck to you and next time, remember to ask your mechanic if he has motor trade insurance. If he doesn't, make sure that you agree beforehand what will happen if something similar were to happen in future. Finally, note also that some policies give a limited form of coverage while the vehicle is in the custody of motor traders.
Cedric E. Stephens provides advice and information about insurance. If you need assistance or information to solve an insurance problem, write to the Financial Editor or contact Mr. Stephens directly at aegis@cwjamaica.com
