UNDERSTANDING INSURANCE (9) By Tarran Dookie
(A series of articles to aid your understanding of insurance.)
MOTOR INSURANCE (1)
HISTORICAL BACKGROUND TO LEGISLATION
Prior to independence in 1962, Trinidad & Tobago was a crown colony belonging to the British. By 1913 there were about 16.000 vehicles in Britain and while the First World War of 1914-1918 slowed down production, this picked up substantially after the war, so that by 1926 there were 1,715,000 motor vehicles registered and in the same year there were 4886 road fatalities.
Because of poor standards of driving skills and little road discipline, accidents soon became frequent on the roads of Britain. Vehicles damaged or destroyed were expensive to repair or replace. Furthermore, there was no provision for compensation for the victims of these road traffic accidents.
By 1930 the situation had escalated to such proportions that the government of the time introduced the first ‘Road Traffic Act’. The Road Traffic Act made it compulsory for vehicle owners and drivers to be insured for their liability for injury or death to third parties whilst their vehicle was being used on a public road. Motor Insurance had appeared sometime before this but it had not been compulsory. The 1930 legislation required every person who used a vehicle on the road to have at least third party personal injury insurance.
Being a British colony, similar legislation (The Motor Vehicles Insurance (Third Party Risks) Act was enacted in Trinidad & Tobago in 1934, even though the number of vehicles at that time was rather small. By 1951 there were about 23,500 vehicles registered in Trinidad. In 2000 this number had increased to about 316,000. Today there are over 400,000 vehicles on the roads of Trinidad and Tobago.
THE MOTOR VEHICLES INSURANCE (THIRD PARTY RISKS)
ACT, CH.48:51 as amended by THE MOTOR VEHICLES
INSURANCE (THIRD PARTY RISKS) AMENDMENT ACT 1996
The above-mentioned Act makes provision for the protection of third parties against risks arising out of the use of a vehicle or licensed trailer on a public road. A public road is defined as: ‘ any street, road or open space to which the public has access and any bridge over which a road passes and includes any privately owned street, road or open space to which the public has access either generally or conditionally.’
According to Section 3 the owner of a vehicle or licensed trailer is not to use or permit another to use such vehicle or trailer on a public road without the appropriate insurance in place.
According to Section 4 a policy, to meet the requirements of the Act, must be issued by an authorized insurer and must provide cover for third party death or bodily injury (including emergency treatment) and third party property damage. The minimum amount of cover required for death or bodily injury is $1,000,000 for any one claim by any one person and $2,000,000 for total claims arising from any one accident. The minimum amount of cover required for third party property damage is $500,000 for any one claim by any one person and $1,000,000 for total claims arising from any one accident. (Quite a number of local insurers offer higher limits than the minimum required. A few insurers issue policies that only meets the minimum requirements of the legislation and are in fact ‘Act only’ policies, whether they are called so or not.)
According to the same Section 4 the insurer must issue a policy and a certified copy of the proposal form to the insured within one week from issue of the certificate. (Many insurers do not adhere to this timeframe.) A policy cannot be issued for less than 6 months and includes a cover note not exceeding 30 days. A cover note cannot be extended nor a subsequent one be issued for the same vehicle during any period of 6 consecutive months. (Some insurers ignore this requirement of the Act.)
According to Section 8 conditions subsequent to a claim giving the insurer the right to deny liability shall be of no effect as far as third party liability is concerned. An example would be a failure on the part of an insured to report an accident to the insurer or late notification of an accident or claim. By virtue of this Section the insurer has to treat with the third party claim even though their insured committed a breach of the claims condition on the policy.
According to Section 12 certain restrictions on policies shall be of no effect in relation to third party risks required to be covered under the Act. These restrictions relate to (a) the age or physical or mental condition of persons driving the vehicle; (b)the condition of the vehicle; (c)the number of persons that the vehicle carries; (d) the weight or physical characteristics of the goods that the vehicle carries; (e)the times at which or the areas within which the vehicle is used; (f)the horse power or value of the vehicle;(g)the carrying on the vehicle of any particular apparatus; or (h)the carrying on the vehicle of any particular means of identification other than any means of identification required to be carried by or under this Act.
Where an insurer satisfies a third party claim but could have avoided doing so according to the terms of the policy, it is entitled to recover the amount from the insured.
Section 13 imposes a duty on insured persons to give information on the particulars of insurance effected to the person making a claim.
Section 14 imposes a duty on the insured to surrender the certificate within 7 days of effective cancellation.
Section 20 stipulates that the certificate must be on the driver’s person or in the vehicle for production to members of the Police Service. A driver shall give his name and address and those of the owner of the vehicle to a member of the Police Service upon request and produce the certificate. The owner must give the Police the identity of the driver if required.
Where an accident involves personal injury to another person the driver, who has not produced his certificate, shall report the accident at a Police Station within 24 hours of the occurrence of the accident and there produce his certificate. (This is not a ‘grace period’ as many erroneously believe. The stipulation is put because the accident is not related to mere physical damage but involves personal injury to someone. The driver can still be charged for not having produced the certificate in the first place.)
Regulation 4 of the Act states that a certificate must be authenticated by the insurer and shall be issued on or before the date on which the policy is issued or renewed.