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Why your insurance claim may not be paid
When an accident is caused by your negligence, say driving when drunk, the insurance company may not compensate you in such a situation because you wilfully caused the damage. file photo
What you need to know:
Insurance claims are settled on the basis of proper verification and terms of the policy. Here is why your claim might not be paid, writes Roland D. Nasasira
In the first week of January 2019, Sam Musoke’s car was knocked by a truck and the bumper fell off. In the incident, one of the headlights also broke. Because his BMW X3 was comprehensively insured, he ran to his insurance company to file a claim.
“I got all the evidence of the incident and when I notified the insurance company about it, they sent an assessor to look at my car. The company said they would pay my claim before mid-February,” Musoke explains.
Hermon Opiyo, the claims manager Insurance Company of East Africa (ICEA), says when you lodge a claim, it is assessed as to whether the conditions of the policy were met and this involves payment of a premium and not breaching any conditions. A premium is the amount of money paid against the risk for which you are insuring your car.
“If you take your claim to an insurance company too late to enable the insurer assess how much is to be paid, it may not be paid. When you breach some of the conditions, such as not paying the premium, the insurer will say your claim is not payable. It is, therefore, advisable to pay your premium and lodge your claim immediately,” Opiyo advises.
Documentation
Opiyo says before admitting your claim, the insurer advises on the kind of documents they want. If your documents are fraudulent or overly exaggerated and or you bring in a claim that did not happen, the insurer will say no to such a claim.
Most motorists’ claims are not payable because the documents they submit are inconsistent. This provides a challenge with the insurer. For example, if you do not have a police report, the insurance company may not pay the claim. In some cases, you may knock someone and run away and then claim payment for damage to your car.
“If you do not avail a police report, the insurance company does not pay. It is a condition precedent to the liability. As a claimant, you must have all the information requested for by the insurer and on time. When you submit it late, it means you are not honest about certain information you ignored or did not have the money and are trying to benefit out of it,” Opiyo clarifies.
Delayed payment of claim
Paul Kaganzi, a mechanic at Duke’s Garage in Naalya, says in some scenarios such as that of Musoke, an insurance may delay to pay your claim without giving you a satisfying explanation even after meeting all the requirements. On average, Kaganzi says your claim is supposed to be paid between 30 to 40 days from the day it is submitted to the insurance company.
In each and every claim you make, Opiyo notes that there is a condition that will require you to first meet the initial loss, say of Shs100,000. When you lodge a claim of Shs80,000, your insurer will not pay because as per the contract, it was guaranteed that you meet the first loss. It is called policy excess and is sometimes 10 per cent of the loss or value.
Fraudulent claims
The major reason your claim may not be paid is fraud. If you lodge your claim say of Shs8m and it is Shs500,000, if the insurer carries out investigations and finds out that you were lying, they will decline to pay.
Some incidences happen where someone lodges a claim for an incident that did not happen. For example, if you insured your vehicle and sold it, but remembered that you had insurance, when you claim that your vehicle was stolen, when the insurer investigates and finds out that you sold the vehicle, they will not pay. It is advisable to notify your insurer immediately because in aspects such as the liability claim, the insurer stands in your position to defend and assist you at police.
“When you tell the insurer after three weeks when you have already been arrested, the information is already distorted. You deny the insurer an opportunity to investigate,” Opiyo concludes.
Paperwork
Kaganzi says sometimes insurance companies require lengthy or detailed paperwork. If your car, for example a Mercedes Benz is knocked, when you go to your insurance company for a claim payment, they may ask for three other quotations from three different mechanics yet they are aware that locally, it is only Spear Motors that has the capacity to repair Mercedes Benz vehicles and the related costs.
In some cases, insurance companies may also employ unprofessional assessors. These assessors may come to assess your car and they go back only to file a wrong report.
Inadequate explanations
Insurance companies may also negotiate the policy without explaining to you the limitations and exclusions of the coverage at the time of paying for the policy. “When you go with a claim, you may be told that the claim you are raising cannot be covered yet the company did not explain to you everything at the start when you were insuring your car,” Kaganzi says.
However, what is important to note is that your insurance claim may not be paid as a result of your own fault. When an accident is caused by your negligence, say driving when drunk, the insurance company may not compensate you in such a situation.
Proof
When you are involved in an accident and sustain injuries, get medical assistance. You will use the treatment or hospital discharge letters and other documentation to back up your claim. If your vehicle is damaged, it is important to have photo evidence of the incident to show the damage to your car or the car you have knocked. Remember to get statements of witnesses at the scene. Make sure you also get a police report.
The law
If one decides to go legal after a failed motor vehicle compensation, “it starts with writing a notice of intention to sue to the insurance company detailing all you have done towards fulfilling the company’s requirements. They should respond within 14 days”, Gloria Mutua, a legal officer with Munu Technologies Associates, says. If they do not respond, “your lawyer will serve them with a plaint, a document that outlines your grievances and what you want them to do,” she adds.
They should respond within 14 days. Thereafter, court fixes the case for hearing. “The first time, the court will send you to a mediator to settle your case without a lawyer or judge, “However, if the case is not settled, you will go back to the judge for a full hearing,” she explains.
Get familiar with insurance jargon
Understanding commonly-used terms used on the car insurance policy will help you know your coverage better. So, before you begin searching for the right car insurance policy or insurance company, go through the following list of auto insurance jargons:
First-party and Second-party: The very first thing you will come across when you buy car insurance is your role as a buyer. The owner of the car, who is buying insurance, is referred to as First Party. Similarly, an insurance company which is insuring the car becomes the Second Party.
Third-party (TP): Third party is any person or an organisation who is affected by the insured car, say, in an accident. For example, during a collision, owner of the other car in question becomes the third party.
Own Damage (OD): Any damage to the insured car or injuries to the owner of an insured car is termed as Own Damage.
No Claim Bonus (NCB): If the owner of the insured car or third-party does not raise a claim in an active policy year, the owner will be entitled for a discounted premium on the next renewal. Also, it is possible to get this bonus transferred if you have sold an old car and bought a new one. Check if your insurer offers this transfer.
Insured Declared Value (IDV): The current market value of car is the Insured Declared Value. IDV includes depreciation.
Add-on/Rider: Additional coverage options available with a Comprehensive Car Insurance Policy.
Claim Settlement Ratio (CSR): The ratio of number of claims settled to the number of claim received in one year by an insurance company.
Claim: Requesting an insurance company to pay for the insured damage or compensation with respect to the purchased insurance policy.
Depreciation: Reduction in the monetary value of the car with time.
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