Insurance Helpline with Cedric Stephens

Question: I work with a bank. In May last year, I bought a Honda motor car and insured it for $1.3 million. At around the same time, I took my driving test. I failed. My brokers told me that insurance required a licensed driver. They also said when I passed the test I would get coverage.

My boyfriend's mother was the licensed driver. The car was kept between Montego Bay and Mandeville. On July 7, 2007, my boyfriend's mother transported her son and me to the Golf View Hotel in Mandeville. She returned home and parked the car. A friend dropped us home later where I saw my vehicle. The next morning it was missing. Another vehicle was also stolen. The losses were immediately reported to the police. I also reported my loss to insurers.

In October, the brokers told me that the insurers discovered that I was the 'actual and active' driver of the vehicle even though I did not have a licence. This was not so. The car was not even kept where I lived. It is mainly in Mandeville. The insurers told my attorney the same thing. They denied liability because the policy had been breached.

I know it is against the law to drive without a licence. I did not drive the vehicle because I did not have a driver's licence at the time. The insured driver was in charge of my vehicle on a daily basis. I have used public transportation to get to work daily while my vehicle was in Mandeville.

- KW, Montego Bay, St James.

Answer: You have refused to take your insurer's 'n-o' for an answer even after contacting the Financial Services Commission, an attorney and the Consumer Affairs Commission.

Now, after all of that effort, your claim remains unpaid seven months later. I am happy you decided to email me.

After speaking with you and reviewing the papers your brokers sent me, I believe that your insurers were wrong.

The insurers seem to be more intent on protecting their interests than giving you the benefit of the doubt. In my opinion, your claim should be paid. That is, of course, dependent on your ability to disprove the insurer's argument that you were less than honest about the use of the vehicle.

Dishonesty

The subtext to this claim is dishonesty. There are several reasons for this. Insurers are worried about what they say is the rising incidence of claims involving stolen motor vehicles. Many of them are false. The theft of your car occurred only three months after the insurance had been bought. It took place other than where you said the vehicle was "usually kept overnight".

The "discovery" that "you are the actual and active driver of ... the motor vehicle despite the fact that you do not possess a driver's licence" was another big, red flag.

The non-payment of the claim should be viewed in this context. Your insurers are in business to make money. Their profit on motor vehicles fell by nearly 40 per cent between 2005 and 2006. The non-payment of big, suspicious claims is one way to curb claims costs and to improve their bottom line.

Insurers have two options in cases of dishonesty: When a false statement has been made in an application (or proposal), they can refuse to honour the policy; where fraud can be proved in relation to a claim, all policy benefits are lost.

Option One was used in relation to your claim. Insurers said in their letter dated October 8, in a round-about way, that you are a liar. That conclusion was made because your proposal said (a) you would not be driving; (b) your boyfriend's mother would be the main driver; and (c) the vehicle would not be used by learner drivers. The person who investigated the theft of your car was made aware of this. All he had to do was to find 'the evidence.'

You told me that the "investigations" were conducted in a less than professional manner. Also, that you can get independent evidence from several sources to confirm that you were not the "actual and active driver."

If you can do so in writing, this should go a far way in persuading insurers to change their minds and to pay your claim. It should also strengthen the weight of the affidavits you sent them.

At that stage, insurers will have to settle your claim or provide additional proof that you did not tell the truth and are in a conspiracy with other persons to defraud them. I sense that when they see the evidence they will, like me, believe you. Keep up the good fight.

Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel contact Mr Stephens at aegis@cwjamaica.com