QUESTION: I am buying a new Toyota Camry. I have 40 per cent no claims bonus on my old car. How would you suggest that I go about arranging insurance on my new car? What are some of the things that I should and should not do?
R.B.,
Kingston 6.
ANSWER: A friend of mine decided recently to change his computer. This was after many problems with an eight-year old machine and a 20th century operating system. Eight years in the world of IT is like 50 years in a man's (or a person's, to be gender neutral) life. My friend almost ended up buying a "bang-belly" computer. One with a super-fast processor but with not enough memory. Luckily for him, he was "saved" by sound advice from his brother. I hope that I can help you avoid the "bang-belly syndrome" that also afflicts insurance transactions.
The 2003 Toyota Camry is a top-of-the line motorcar. I don't know how much it costs, but I would expect it to be at least two million bucks. When one spends this amount of money on a luxury car, one should do serious homework before making motor insurance decisions. With the rising rate of accidents (Omar Davies and the cops notwithstanding) and the growing number of uninsured vehicles on our roads, you could lose thousands of dollars in the wink of an eye. A top quality vehicle needs top-class insurance.
Many things contribute to top quality motor insurance. Some of the factors include (in no particular order) what the policy covers, the premium, the pre and post sales service, the claims service, the financial strength of the insurer and the insurer's willingness (either perceived or actual) to settle legitimate claims fairly, speedily and without too much hassle. Most persons ignore these product/service features. They behave as though all insurers are created equal but differ only on the premium they charge. Nothing could be further from the truth. I will discuss each factor separately.
SCOPE OF POLICY
A motor policy is not a motor policy, a motor policy! They may have similar names, resemble each other, but are very different when the fine print is carefully examined. Here are a few examples. The third party sections have different limits. The amount payable for personal injury claims to third parties varies between policies. Some are limited to, say $3 million any one person and $5 million any one accident. This means that if a third party were to succeed in claiming an amount in excess of the per person limit, the insured would have to find funds to pay the difference. Bear in mind also, that our courts recently made an award of $3 million to a peanut vendor injured by the police.
Limits for property damage are also different. Some policies contain a limit of $2 million. This means that if you made a mistake that resulted in the writing-off of a Toyota Land-cruiser (with an estimated value of $7.5 million) you would have to find another $5.5 million after your insurers paid the policy limit.
The message here is to find out all of the details of what the policy actually covers. When you obtain all of this information you can begin to make meaningful comparisons between the different policies of insurers.
THE PREMIUM
This one is a no-brainer. It should be looked at only after the scope of the policy has been carefully examined. Most persons tend to pay attention to this factor alone. Generally, they end up very disappointed and end up blaming everybody except themselves. In your case, make sure that you transfer the no claims bonus to the new vehicle. This will save you a bundle.
PRE-AND POST-SALES SERVICE
One can get a good fix on the quality of the service by talking with one's friends. Existing and former customers can provide very useful information about what to expect.
CLAIMS SERVICE
Do not believe the advertising hype and the nonsense that appear in mission statements. Check existing and former customers. What they say is far more reliable than what you see on TV or read in press advertisements.
FINANCIAL STRENGTH
This is a tough one. It is easier to get financial information about a foreign insurance company than about one operating in Jamaica. Why the secrecy? I would suggest that you talk to the Financial Services Commission about this.
WILLINGNESS TO PAY CLAIMS
This one is very different from financial strength. It speaks to the degree of willingness (or its absence) to settle legitimate claims fairly, quickly and without too much hassle. Some companies are very "tight" (to put it mildly) when it comes to paying claims. Others are generous. Once again, your friends can provide valuable help in avoiding problems in this area.
There are similarities between buying a computer system, a motorcar and motor insurance. The process should begin by getting accurate and reliable information before making any decision. I hope you enjoy driving your new crissas!
Cedric E. Stephens provides advice about risks and insurance. If you need free advice about risks or insurance, write to the Financial Editor or contact Mr. Stephens directly at aegis@cwjamaica.com
