Times of Zambia | Third party claims

Published On July 12, 2016 » 2808 Views» By Bennet Simbeye » Business, Columns

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AFTER pausing to give coverage to the industry contribution to the Zambia International Trade Fair, today we return to our ongoing topic on claims processes.
We will look at third party claims.
For starters a third party in motor insurance is any person who gets
affected as a result of the usage of the insured motor vehicle.
The effect could be property damage or injuries/death.
Property damage could be another vehicle for example where you are driving your car and get involved in an accident and the other motorist is to blame.
Injury or death may occur to passengers, pedestrians, cyclists etc.
Let’s begin with property damage claims.
As we discuss third party claims it is important to note that a third party does not have a contractual relationship with an insurance company.
This being the case the insured should consent any claims on their policy by either completing a claim form or some other formal correspondence.
By consenting, the insured in principle gives his rights on the policy
to the third party. Without this consent the insured retains liability and the third party can use all means possible to seek compensation including litigation.
However once, consent is given the liability shifts to the insurer subject to policy terms/limits, I will explain this point further below.
Notwithstanding third parties being protected by law, the insured being the person liable, can choose either to use their policy to meet that liability or pay from their own resources.
This is an important point.
There are many cases which have been resolved without involving the police or the insurer, provided both parties are satisfied.
To process a property damage claim, the third party needs the following documents; an original police report, copy of driver’s licence, completed third party form, copy of the registration certificate book, copy of the insurance certificate, repair quotations etc.
What if the third party, though not in the wrong, does not have a valid insurance cover or a driver’s licence but seeks compensation from an insurer?
Well unfortunately the insurer has no legal provisions to punish offenders on such grounds.
All they do is to ensure that all parties involved have complied with the law.
In such cases the insurer will request for proof of admission of guilty and payment of the offence to the police. Once this is submitted then the insurer should proceed with the claim.
In the absence of such proof the insurer may refuse to honour the claim and the insured will equally be discharged from the liability.
The law should be complied with and applied fairly and reasonably.
Why should someone who doesn’t have an insurance policy benefit from some form of the insurance, it is unreasonable.
They need to be punished by the law and once that is done, then they can proceed to claim as advised above.
On that score when you consider the fine for using an uninsured vehicle you will find that it is almost the same as insuring it for third party for a year.
The best is to comply with the law by insuring your vehicle.
The same rationale on using an uninsured vehicle also applies to a third party without a valid driver’s licence.
After the above documents have been submitted, the insurer will now evaluate the claim and decide whether to repair or replace the same way they would treat the insured vehicle.
Whichever option the insurer settles for, they will only compensate within the policy limit mentioned above. On a standard policy, the property damage is K30,000.
If the loss is within this limit then the insurer pays and it ends there. However, if the damage is beyond the policy limit then the case will take a different approach. Let’s assume the third party vehicle in question is worth K50,000. The insurer will have two options.
The first option will be to pay the full limit and discharge themselves so that the third party can pursue the insured directly. In this case the insurer will pay the insured the K30,000 and then the insured will have to pay the third party the balance of K20,000.
The other option is where the insurer pays the insured the policy limit, in this case K30,000 and then the insured tops up a K20,000 to pay the third party in full i.e. K50,000.
There is one more aspect which is usually contentious in practice, this is the issue of the salvage. How should the salvage be treated if the third party vehicle is more than the policy limit? Details next week.