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Sunday, May 3, 2015

Total loss claim of automobile ~how easy it is for the policy holder ?!?

Insurance in Western World is advanced, especially in Europe, specifically UK – there so much of technology in use – settlements are made faster and policy holders are kept happy .... perhaps not in all cases !!

There are so many vehicles on road in every city - automobiles are insured under Motor Insurance Policy.  In India, known as Package Policy (now), the Policy provides indemnity to the Insured against loss or damage to the vehicle caused by a set of perils, so described in the Policy. The coverage is subject to exceptions and terms and conditions, which will have a bearing on liability and the extent of indemnification. 

Motor Insurance in India cannot be transacted outside the purview of the India Motor Tariff unless specifically authorized by the Tariff Advisory Committee.   The insured value i.e., sum(s) insured in other types of insurances is modified to be known as  -  Insured’s Declared Value (IDV.  The IDV is  fixed at the commencement of each policy period.   The IDV of the vehicle is to be fixed on the basis of  manufacturer’s listed selling price of the brand and model as the vehicle proposed for insurance at the commencement of insurance /renewal and adjusted for depreciation.  Thus the IDV should ideally represent the market value of the vehicle and in case of a Total loss [or Constructive total loss – whence the aggregate cost of retrieval  and / or repair  of the vehicle subject to terms and conditions of the policy exceeds 75% of the IDV.]

Sec I of the Package Policy covers Own damage i.e., loss of or damage to the vehicle insured.  The Insurer will indemnify against loss or damage to the vehicle arising out of perils named in the policy which include : fire, burglary, riot & strike, flood, hailstorm, frost, accidental external means;.........  Modern day Insurers offer so many ‘add-ons’ which include ‘alternate vehicle for use’ and so on !

An insured vehicle parked in a public place, rammed by another car – very badly damaged ending up to be a Total loss – accident occurring with the policy period – should be a ‘hassle-free’ settlement – so one thought !!

Here is the harrowed experience of a claimant as detailed in MoneyMail.  A mum and her teenage son have faced a year-long battle with insurers after their cars were written off while parked on their own driveway. Sixth-form student Josh Coultas and his mother Jaki Cowling were sitting in their front room when they heard a loud bang outside.  Looking out the window, they saw his red Ford Fiesta, which had been parked on their driveway, was in a neighbour’s garden. And his mother’s blue Renault Clio, which had been on the kerb, was also further down the street.

A BMW they didn’t recognise was smashed into a neighbour’s front window. The driver and passenger fled.  ‘The scene was carnage,’ says Jaki, 45. ‘It just didn’t make sense to look at. I was in complete shock. There was an elderly woman shaking who was stood by the car when it happened, and Josh went straight over to comfort her.  ‘I went mad. I was shouting. The driver and his passenger didn’t even say sorry - they just ran off.’ The police were called. The driver of the BMW later turned himself in, and was convicted of dangerous driving.


Jaki and Josh made a claim under a multi-car policy with Admiral, which cost them £335.39 a month. They assumed that, as neither of them were in the vehicles at the time of the collision, it should be straightforward. Josh’s car was declared a write-off at the scene. Jaki’s was taken away for assessment at a garage. However, Admiral would not pay for a courtesy car until the garage had assessed the damage. She had to pay for one herself at a cost of £50 a day. Two days later, her car was written off, too.

 After becoming sick of waiting for Admiral to process their claim and needing cars for their daily commutes, Jaki and Josh went out to buy new vehicles.  Josh, 19, replaced his 2001 Ford Fiesta with a 2005 Renault Clio, costing £2,135. Jaki, a waitress, bought a 2012 Renault Clio for £8,825 to replace her 2010 model. But when Admiral came to pay them cash for their cars, Josh was awarded just £100 after his excess of £600 was deducted. Jaki, meanwhile, was given £4,515 towards the cost of a new car, after her excess of £310. Both say they are out of pocket.

But insurers will only pay out enough money for the policyholder to replace their car like-for-like - with the same make and model, and similar mileage. After being convicted of dangerous driving, the BMW driver was ordered to pay Jaki and Josh the cost of their excesses on their insurance policies.  To date, Jaki says she has received a payment of £8, while Josh has received £16.

Meanwhile, Jaki and Josh have been passed from pillar to post by Admiral and Aviva, which insured the BMW. The registered owner of the BMW was not the driver involved in the crash. Admiral and Aviva argued over who should foot the full bill for the claim. Aviva also disputed the identity of the driver - despite his prosecution. After being contacted by Money Mail this week, Aviva accepted its customer was liable and agreed to pay the excesses for Jaki and Josh. An Aviva spokesman said: ‘The circumstances of this claim are unusual in that our customer was not the person driving the vehicle at the time of the accident. Now that we know who the driver was, we are able to settle our part of the claim immediately.’

After being contacted by Money Mail, Admiral offered to pay Jaki £5,080 for her new car and raised Josh’s payout to £820. It also admitted that it made an error in assessing Josh’s excess, which should have been £350 and not £600. Admiral is looking into the costs incurred by Jaki in paying for a hire car. It says she was entitled to a courtesy car for the time when her vehicle was in the garage.

An Admiral spokesman said: ‘We are sorry that Mrs Cowling is upset with our handling of her claim. It certainly wasn’t our intention and we are always disappointed when a customer has reason to complain about the service they have received. ‘This matter has certainly taken a long time to settle, but we are still waiting for Aviva to forward their documentation to us and for the police report. ‘Once we have completed our investigations we will look at compensating Mrs Cowling and Mr Coultas for any distress caused as a result of how we have dealt with the claim.’

It happens ~ not the accidents !! – rest of the things too !!!

With regards – S. Sampathkumar
24th Apr 2015.


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