The Motor Insurance Policy Some Fundamentals On Motor Insurance Coverage By Ramnarine Mungroo LLB (Hons) LPC, ACII, Attorney – At – Law & Chartered Insurance Practitioner
How to ensure that you have insurance protection when using a motor vehicle?
In Trinidad & Tobago, motor vehicle insurance is governed by the Motor Vehicles Insurance (Third-Party Risks) Act Chapter 48:51 as amended, (“the Act”). Section 3 (1) of the Act requires that ‘the user’ of a motor vehicle must have in effect a policy of insurance covering the user’s liability to third parties and failing to arrange such a policy, he is liable to a fine of five thousand dollars and to imprisonment for two years disqualified as a driver for a period of three years from the date of conviction
Third party insurance covers the user of a motor vehicle for any loss or damage caused to persons or property for which the user becomes legally liable. The law requires that all third party insurance policies must have certain minimum cover as follows:-
a)For claims involving death and/or bodily injuries; payment of up to one million dollars per claim, and a maximum limit of 2 million dollars for all claims arising out of one accident.
b)For claims involving property damage payment of up to $500,000.00 per claim and up to 1 million dollars in total claims arising out of one accident.
One must be cognizant of the fact that in the event that the legal liability for a claim exceeds the limits specified in the policy of insurance, that the owner and/or user, shall be held legally liable for all sums in excess of the policy limit and for this reason, the prudent user of a motor vehicle should select a policy with higher limits of liability which is widely available.
One of the main issues engaging the attention of civil courts for many years ,is the question of whether the person using the vehicle is considered an authorized driver under the terms of the insurance.
Generally, a policy of insurance can be arranged to cover ‘open driving’ which means that all persons using the motor vehicle with a current valid permit, would be covered under the policy. This type of coverage would be the most expensive since the risks to the insurer is unfamiliar and quite wide.
Alternatively, coverage may be arranged on what is known as a ‘restricted driving policy’. This limited form of insurance would cover you (the insured) and other drivers who are over 25 years of age with two(2) or more years driving experience. The risk of having this type of insurance is that persons who do not meet the criteria would not be covered by the policy.
In the event of an accident in which the driver was held to be an unauthorized driver, the insurer may be obligated to settle the claim under the Act and seek recovery from the insured.
And finally, one can arrange a ‘named driver’ only policy. This policy covers only the persons named in the Certificate of Insurance and on the policy. Anyone driving other than the named persons would not be covered and the insurer would not be liable to pay for any claims caused by persons not named on the insurance. Even though the insurer has denied the claim the owner of the vehicle may still be liable to the third party(s). The issue of a named driving policy was recently determined by the Privy Council, who held that the insurer was not on risk and had no liability for the claim.
It is to be noted that, except in the case of a ‘named driver’ policy, once the person driving the vehicle had a valid license, the insurer is not at liberty to resist liability on the basis that the driver was under the age limit or for lack of driving experience. This is in compliance with Section12(1) of the Act. However, where the insurer is required to make a payment under the Act, they have the rights under the contract to seek reimbursement of all expenses including legal costs.
Another important point to note has to do with the use of the motor vehicle at the time of the accident. For private vehicles, the standard cover is ‘social domestic and pleasure purposes’ and for use in connection with the policyholder’s business. Where the motor vehicle was being used for a purpose not covered by the policy, the insurer would have the option to deny liability for the claim
INSURANCE COVERAGE – MOTOR INSURANCE
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