By Ravi Nanga
ONCE you are the owner of a motor vehicle and you intend to use that vehicle on the public roads, you are required by law to have a policy of insurance in place in respect of that vehicle.
Such a policy of insurance must be issued by a licensed insurance company and is required to cover liability up to $1million in insurance per person and up to $2 million in respect of any one accident.
Before you can be issued with a policy of insurance, an owner is required to fill out a proposal form. This is a form that must be filled out with great care as this form will provide the basis of the policy that will be issued and what will be the applicable premium that will be payable for that policy of insurance.
In providing a policy of insurance, an insurance company is agreeing to insure the risk that its customer poses on the nation’s roads and the higher the risk, the higher the premium that will be payable.
Accordingly, the insurance company will use the answers provided on the proposal form to determine the appropriate premium. Because of the importance of this proposal form, if a person is not honest in filling out the form and tries to minimise the risk involved in order to obtain a lower premium, should the insurance company discover the truth, they may be able to avoid the possible and leave the person without insurance coverage.
In accessing insurance coverage, you are required to decide what type of coverage you require. For example, there is third-party insurance and full comprehensive insurance.
In the case of third-party insurance, your insurance company will only deal with a claim from a third party and not from you. That is, in the event you are involved in an accident, if you are to blame for the accident, your insurance company will repair the other person’s vehicle or pay damages to a person who suffers injury in the accident, but will not repair your vehicle.
In the case of full comprehensive insurance, your insurance company will repair damage done to your vehicle, whether you are to blame for the accident or not. In the event you are to blame for the accident, your insurance company will repair both vehicles.
In the event you are not to blame for the accident, your insurance company will repair your vehicle and then seek to recover the sum paid to repair your vehicle from the other person’s insurance company.
The decision as to which type of policy is required is dependent on the type of coverage that a person requires. Further, a person can determine what level of coverage they require, and can choose the appropriate level of coverage.
For example, you can obtain wind screen coverage, which provides coverage in the event your wind screen is damaged or flood damage coverage or theft coverage.
Depending on the level of coverage you choose, that level will determine the cost of your premium.
Whether you have third-party coverage or full comprehensive coverage, when you access insurance coverage for the first time or you are a safe driver who has not made a claim, you will normally enjoy what is referred to as a “no-claim” discount.
This essentially means that once you do not claim on your policy of insurance and is regarded as a low risk, you will get the best insurance rates and have the lowest premium possible.
However, once you make a claim on your policy, you will lose that “no-claim” discount and your premium will increase. This discount can be earned again with time and once an appropriate length of time passes without a claim, the discount will be applied once again.
Under the terms of your policy, once you are involved in an accident, you must notify your insurance company, whether you are making a claim on your policy or not.
If you fail to notify your insurance company and you renew your insurance policy without informing the insurance company, that will constitute non-disclosure and may result in your policy being avoided. In addition to notifying your insurance company, a report of the accident must also be made to the national police.
In the event you are involved in an accident and you decide to make a claim on your insurance policy, you must be aware of what is the level of your “excess”. Your “excess” is that amount of loss that is not covered by your insurance policy. What that means is that your policy of insurance does not cover your full loss, but covers a certain amount.
The “excess” is determined by the terms of your policy of insurance. So, for example, if your excess is $2,500, and the damage done to your vehicle is valued at $10,000, your insurance company will pay you the sum of $7,500.00 towards the repair to your vehicle.
In obtaining and renewing your policy of insurance, it is very important that you read the proposal form very carefully and answer truthfully. In the event there are material changes to any of those questions during the life of your policy or when you are renewing, you must notify your insurance company of those changes. If you are in doubt as to what is material or not, it is better to err on the side of caution and advise your insurance company. Failure to do so may leave you unprotected.
Certificate of insurance
Once you obtain a policy of insurance, you will be provided with a certificate of insurance, which is to be kept in your vehicle as proof of your policy of insurance, and you will also be provided with your policy of insurance, which will contain the terms and conditions of your insurance, and will indicate exactly what is covered and what is not covered.
It is important to read this document and understand what are the limits of your policy of insurance. Further, in obtaining a policy of insurance, you must also decide on what level of coverage you require and advise your insurance company accordingly.
Ravi Nanga is an attorney-at-law
(Please note that this article is intended only to provide general information on the topic being addressed and should not be taken as providing legal advice. In order to be properly advised it will be necessary for an attorney to examine the relevant documents and obtain the necessary instructions before properly advising as to rights and obligations).