Becki Patterson, Business Writer 
When it comes to car insurance, the devil is in the details. The cost of disregarding the finely printed clauses on policies or glossing over them is one that policyholders eventually come to pay for.
In a circular to policyholders, the Insurance Company of the West Indies Limited (ICWI) reminded policyholders that they should declare "any intention to allow any persons under 23 years old or any persons over 70 years old to drive your motor vehicle."
Similarly, they were to advise if a driver whose licence was less than one year old would be operating the vehicle being insured.
ICWI president, Paul Lalor, told Sunday Business that they had found that the under-23-year-old drivers as well as those over 70, carry a higher accident risk, possibly due to lack of experience or health conditions, respectively.
As a result,policyholders allowing the use of their vehicles to drivers in these categories must declare them when seeking coverage.
Ostensibly, this is to allow the company to price the risk into the premium. Otherwise, claims on risks that insurers generally have not underwritten will not be honoured.
Neglecting the limits of liability on a vehicle or disregarding the confines of coverage can lead to a claim being refused, or premiums shooting up.
Lalor explained that one way of ensuring appropriate coverage to premium rates is to state the uses and users of the vehicle.
Common mistake by policyholders
Another common mistake policyholders make that affects the cost of insurance, he said, is to keep the value of their vehicles the same every year, therefore, paying the same premium when in reality, the standard 10 per cent depreciation has occurred.
When, therefore, a claim is made to the company, an adjuster begins to calculate based on the value of the vehicle at the time, not on the figure carried forward from the year before.
For example, if a car valued at $700,000 in 2005 was insured at a premium cost of $35,000, its book value would have fallen by about 10 per cent to $630,000 in 2006 and the premium should, therefore, be about $31,000.
But, if the policyholder keeps the value at $700,000, then the premium will be the same for each year the worth of the car is not recalculated. However, in the event of an accident, the claim will be calculated on the depreciated value.
Ignorance of this window would be one reason insurance premium rates never seem to go down, Lalor said, speaking broadly.
High incidents of insurance fraud and car theft also impact rates. Lalor noted, too, that the industry also has to make adjustments to its costings to keep pace with "all factors affecting the economy that equally affect the insurance industry."
business@gleanerjm.com
