Tuesday, June 25, 2013

Motor vehicle insurance insures against damage

Adana Bain
Student, Hugh Wooding Law School

Motor vehicle insurance policies insure against loss or damage arising from the use of motor vehicles. Under the Motor Vehicles Insurance (Third Party Risks) Act Chap 48:51, it is mandatory for every owner of a vehicle which is being used on a public road to hold an insurance policy to cover against third party risks—that is injury or damage caused to third parties as a result of an accident.

The driver of a vehicle must always carry the certificate of insurance in the vehicle as evidence that there is an insurance policy in force that covers personal injury and property damage in the case of an accident. Motorists are required by law to produce a valid certificate of insurance on demand by a police officer or a licensing officer. Failure to do so is considered to be “driving without insurance” which is an offence.

Selling a vehicle with the unexpired insurance is against the law; the new owner must purchase a new insurance policy. When a motor vehicle is sold, the seller must surrender the certificate of insurance to his insurer. Further, upon the sale of your vehicle you should ensure that ownership is legally transferred at the Licensing Office so as to avoid any unwanted liability.

Types of insurance policies: Comprehensive
This is the widest type of policy and covers loss or damage to your motor vehicle caused by an accidental collision, overturning, fire, lightning, explosion, riot, civil commotion, strike, malicious damage and theft. The policy also covers liability to third parties for bodily injury or property damage caused by you in an accident. Cover against losses caused by natural perils such as floods, hurricanes and earthquakes, is also available.

Restricted Coverage
These policies require that anyone who is permitted to drive the insured’s vehicle must be over the age of 25 years and have at least two years’ driving experience. Some insurance companies further restrict the use of the vehicle to drivers named on the insurance certificate only. A recent Privy Council ruling now means that where there is such a policy, coverage will apply only when the vehicle is operated by the person named on the insurance policy and no other.

Insurance companies will only cover young and/or inexperienced drivers upon the payment of an additional premium. Young drivers are persons under the age of 25 years. Inexperienced drivers are persons who have had a valid driver’s permit for less than two years or persons who have not been driving regularly, although they may have had their permit for more than two years.

Third Party liability
This is the minimum type of insurance policy required by law. Once liability has been established, an insurance company cannot deny a third party’s claim for property or personal injury arising from an accident. However, the company can refuse to pay you for damage to your own vehicle under a comprehensive section of the policy where you are in breach of the terms of your insurance contract. Where the company settles third party claims they can recover its payout from you personally.

• This column is not legal advice. If you have a legal problem, you should consult a legal adviser. Coordinator: Roshan Ramcharitar

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