Insurance Helpline and With cedric Stephens

Question: A truck got out of control and ran over my car on Spur Tree Hill on July 28, 2006. I sustained multiple injuries, spent weeks in the hospital and months at home. I am very lucky to be alive. The truck was insured.

My car was comprehensively insured with another company. After seven months, the third party insurers refused to pay my medical costs. They cannot find out if the driver had a license.

My insurers, while agreeing to settle the claim for my vehicle (less the excess), have refused to pay my medical bills. The truck owner apparently migrated two weeks after the accident. I have not been paid one cent for my injuries.

If my car was comprehensively insured, shouldn't my insurers cover my medical expenses and try to recover from the third party's insurers? If the truck was fully insured at the time, why are its insurers refusing to pay? Why do I have to find the driver/owner and try to sue them? I bought a fully comprehensive insurance to avoid problems like these.

- K.S., Manchester

Answer: A factory owner recently shared information with me about his $1.7 million 'insurance course'. The training, he said, was short, rigorous and post-graduate level - his insurers offered $300,000 to settle his $2 million Hurricane Dean claim.

That experience taught him many things about insurance.

Your training started nearly 18 months ago. When it ends and the physical, emotional, financial and other costs are tallied, you may find that the price of your lessons will be more than the businessman's.

Lesson No. 1:

The term comprehensive is an adjective. One of its meanings is 'including much'.

The two definitions in my Oxford Dictionary are very clear. There is nothing to suggest that it means 'including everything', like the popular phrase 'all-inclusive' (used in party circles and in the hotel industry) implies.

Comprehensive motor insurance policies provide protection against 'many' things. One is limited coverage for medical expenses. At the same time, many things are excluded. There are no 'fully comprehensive' policies.

Lesson No. 2:

Companies that sell motor insurance have to get permission from the insurance regulator. That body supervises everything insurers and others in the industry do. One of those things includes the policies that are sold to the public. In addition, policies must comply with the laws passed by Parliament. One law is the Motor Vehicles Insurance (Third Party Risks) Act.

Lesson No. 3:

In order to understand the actions of the third party's insurers, it is necessary to read Section 18 of the law. It sets the basic rules for motor insurance. The first part forces insurers to pay claims where otherwise they may have been "entitled to avoid or cancel" the policy.

Sub-section 3 of the same section of the law, however, shuts the door that Sub-section (1) opened.

Cases where the contracts were obtained by "the non-disclosure of a material fact or by a representation of fact which was false; or if he (the insurer) has avoided the policy on the ground that he was entitled to do so," can be refused.

The third party's insurers have not denied that they insured the truck that ran over your car. They said they need proof that the driver was licensed.

If there was no licence, they can avoid paying the costs you incurred as a result of the accident.

The bottom line: The truck appears to have been uninsured when the accident took place, even though it had a valid certificate of insurance issued by an approved insurer.

Lesson No. 4:

Most comprehensive motor policies provide limited coverage for medical expenses. A reliable source tells me that your insurer's policy offers a maximum of $15,000. In addition to that amount, plus the money you were paid for the damage to your car, they do not owe you one cent more, even though you nearly died.

Lesson No. 5:

Many victims of accidents fall through 'the cracks'. They suffer injuries - many of them fatal - and economic losses, without the hope of recovery. Situations like these happen because there is no 'safety net' in place to assist victims like you.

Law makers and the insurance regulators know what should be done to solve this problem. It does not only involve the insurance industry.

consult a lawyer:

Do not take my word as gospel. I am just a simple layman. Consult a lawyer.

Cedric E. Stephens provides independent information and advice about risk and insurance. For free information or counsel, email the Business Editor: business@gleanerjm .com, or Mr. Stephens: egis@cwjamaica.com