UNDERSTANDING INSURANCE (10) By Tarran Dookie
(A series of articles to aid your understanding of insurance.)
MOTOR INSURANCE (2)
THE PRIVATE MOTOR VEHICLE POLICY
SECTION 1 LOSS OR DAMAGE
SCOPE OF COVER
Cover is provided against loss or damage to the vehicle (including accessories and spare parts thereon)
a) By accidental collision or overturning or collision or overturning caused by mechanical breakdown or wear and tear
b) By fire or theft
c) By malicious act
d) Whilst in transit by road, rail, inland waterway, lift or elevator or by sea between any ports in Trinidad and Tobago.
The cost of protection and removal of disabled vehicle is covered up to the monetary limit on the policy.
a) The insurer may repair or replace the vehicle or pay in cash.
b) The maximum payable is the lesser of market value or the sum insured.
c) An estimate may include items of betterment. This may take the form of new parts replacing the old parts. The insured is required to make a contribution to the betterment that results.
d) Where parts are not obtainable settlement will be on the basis of the latest catalogue or price list.
Where there is a hire purchase agreement/mortgage on the vehicle cash settlement will be with the financier.
EXCEPTIONS UNDER SECTION 1
1) Consequential loss, depreciation, wear and tear.
2) Mechanical or electrical breakdown. (The insurer will not pay for this as it is considered maintenance costs. However, if an accident is due to mechanical or electrical breakdown the insurer is still liable for the ensuing damage.
3) Damage to tyres unless the vehicle is also damaged. (Insurers would not pay for puncture damage to tyres.)
SECTION 2 LIABILITY TO THIRD PARTIES
SCOPE OF COVER
1) Indemnity is provided in the event of death of or bodily injury to a third party or damage to third party property in connection with the use of the insured vehicle by the insured.
The insured is also indemnified under this section while driving a private car not belonging to or hired to him or his employer or partner. (In the UK there is a growing trend to cease this cover, and now some local insurers are no longer including it on their policies.)
2) Indemnity is similarly provided to any authorized driver (someone driving the insured vehicle with the permission of the insured). Passengers getting into or out of the vehicle may cause injury or damage to third parties or third party property and this risk is also covered.
3) Where someone entitled to indemnity dies (this would usually be the insured or an authorized driver), the company will indemnify his legal personal representatives. This cover is granted because where someone liable for an accident dies, the right of action that the victim (the third party) has does not cease but may be continue to be pursued against the estate of the deceased.
4) The company will pay all costs and expenses incurred with its consent.
Indemnity will not relate to judgments delivered in a court outside the geographical area or costs and expenses not incurred in and recoverable in the geographical area defined in the policy (this would be Trinidad & Tobago for local policies).
EXCEPTIONS UNDER SECTION 2
1) There will be no indemnity to persons mentioned under 2) or 3) above (under Scope of Cover) unless such persons comply with the terms of the policy where applicable nor if such person is entitled to indemnity under any other policy.
2) Death of or bodily injury to employees whilst in the course of their employment. (This is a matter for workmen’s compensation insurance.)
3) Damage to property owned by or in the custody of the insured. (This is so because this is the third party section and only covers liability to third parties.)
ADDITIONAL BENEFITS OR EXTENSIONS
COVERED AS PART OF BASIC COVER UNDER COMPREHENSIVE POLICIES (No additional premium is payable.)
a) Damage to garage by fire.
b) Medical expenses incurred following accident with insured vehicle.
c) Personal accident cover to insured or spouse (cover is usually limited to a maximum of about $10,000).
d) Clothing and personal effects (excluding money, jewellery, motor accessories and goods or samples carried in connection with any trade or business.
Monetary limits apply to these benefits.
COVERED UPON PAYMENT OF ADDITIONAL PREMIUM
a) Special perils: flood, hurricane, earthquake, riot & strike. (It must be pointed out that even if one has a comprehensive policy there is no cover for these perils unless it is requested and the additional premium paid.)
b) Windscreen breakage. (A windscreen may be broken otherwise than by collision such as by a stone and the windscreen breakage extension would cover such damage. No claim discounts are not affected by claims under the extension and generally there is no excess applicable.)
c) Personal accident in respect of un-named passengers. (Cover is usually limited to a maximum of $10,000 per person. Where the injured passenger receives this compensation, it does not preclude him from seeking further compensation or taking legal action against the insured or an authorised driver if deemed negligent.)
COVERED AS PART OF BASIC COVER UNDER ALL POLICIES
a) Motor trader’s clause: the insured is indemnified if loss, damage or liability arises while the vehicle is in the custody or control of a member of the motor trade for the purpose of overhaul, upkeep or repair. (This would provide cover while one’s vehicle is at a garage undergoing repairs or being tested by the mechanic.)
b) Manslaughter defence costs (up to the policy limit).
1) Where the vehicle is used outside the geographical area or outside limitations as to use or by someone other than an authorized driver.
2) Special perils (can be bought back); war risks.
3) Radioactive nuclear contamination; nuclear weapons material.