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June 3 auto claims: Matters Arising

BY: Mawuli Zogbenu
Automobiles worth millions of cedis were affected by the June 3 floods, forcing insurers to pay huge claims

The recent news about some motor insurance clients being unable to access their insurance claims after the June 3, 2015 disaster is a source of worry to many an insured person / entity.

Some garage owners in the capital are reported to have allegedly persuaded their clients, whose vehicles were lost to the floods, to consider them as total loss (i.e. without compensation from the garage), describing the cause of the loss as a natural disaster or an act of God.

Victims who resorted to some of their insurers had the shock of their lives when their insurers showed them ‘the rule book’.

Instinctively, I felt very sad for those clients as the brand of vehicles involved were the luxury pretty expensive ones, and thus letting go could actually cripple some individuals and in some cases corporate clients.

Imagine a $90,000 V8 submerged in floods and no compensation! As I constantly posit in my writings, consumers have an equal responsibility to always take se

 

What we should know

In a previous article in this column, I posited that with motor insurance anytime you check in your vehicle for servicing or repairs with a garage, which could take some days or months, the insurance cover on the vehicle automatically ceases.

In this regard, it is the individual’s (insured/vehicle owner) responsibility to officially notify his/her insurers to either suspend cover on the vehicle and return premium or extend the expiry date of the cover by the number days the vehicle remains at the garage, since the insurer may not be obliged to pay claims that may arise while the vehicle is at the garage, in the custody of the service provider.

What should garage owners insure?

It is obvious that the insurers of the garages would not pay third party claims in the aforementioned situation, as the likely policy in place at the time of the disaster could be a standard fire policy with extension to cover flood and other allied perils.

The insurers would not in this circumstance assume a risk which is not catered for. It is, therefore, the duty of every garage owner to obtain a blanket public liability policy to typically cover the following:

- Professional Indemnity Cover – it is expected that these garages and service centers obtain a professional indemnity cover for all its professionals to protect them against any liability at law in the discharge of their duties.

- Public Liability Cover – garages or service centres of automobile companies owe motor vehicle owners a duty of care once the vehicle enters their premises and in their custody; hence, the expectation that they would have this cover to compensate any vehicle owner on account of damage to their vehicle (this may suffice in the June 3, 2015 case).

Do the garages/service centres know this?

Even though this information is made known to the well-organised automobile companies, some of them still go to the extent of issuing disclaimers as force majeure to the effect that they would not be held liable in the event of any direct or indirect damage done the vehicle and this includes while the vehicle is being road-tested.

While the primary focus of the disclaimer is against valuables kept in the vehicle at the time of the loss, nonetheless, most of the well-established auto firms take responsibility for accidental damage on customers’ vehicles during road-tests or any other damage during repair works.

Since most often the disclaimers are more against loss of articles or items left in the vehicles, customers must ensure that they take all valuables out of vehicles before they visit the garage.

Some automobile dealers who were spoken to cited the fact that it was not always the case that they did not want insurance but some insurers were not willing to provide cover for their garages due to the high risks associated with working in a garage.

Generally, motor accidents may be caused by the owner/user or someone else. At the garage, however, your motor vehicle could get burnt, damaged or carried away by flood.

In any event, once the loss occurred while the vehicle is at the garage, you will only get compensated if the garage has an appropriate insurance, as discussed above.

Many vehicle owners have had to suffer this fate in years gone by and many continue to suffer similar fate following the June 3 disaster.

For starters, the insurance stakeholders, particularly the National Insurance Commission (NIC), and Insurers, must engage with garage owners and provide them with adequate education on this all important issue, which could significantly transform their operations while expanding the insurance reach in Ghana.

Thus, it is imperative for garage owners to transfer the risks associated with their services to insurers, as their clients who may suffer losses on account of their vehicles while they remain in their garages.

That notwithstanding, garage owners must also take seriously the safety requirements within their premises as this would make it easier for insurers to accept the risks.

Similarly, the insuring public must always ensure they notify their insurer anytime they are going for repairs/servicing. This should be done between the day of handing over the vehicle to the service centre and the day it would be ready for delivery.

Besides, it is always important to have ‘Mathew Chapter 7 verse 7’ at the back of your mind. Ask questions! And please don’t be like that uncle of mine who went to buy a motor cycle and was taught how to start it but, out of excitement, he never bothered to find out how to stop it.

Until next week, this is ‘Insurance from the eyes of my mind”. — GB