For two years, Ama has been consistently paying the annual insurance premium on her car but in October this year, she kept postponing the renewal of her insurance until she was involved in an accident.
The insurance company refused to pay her claim.
It was one of those days when John was left all alone at home with nothing to do. Boredom set in but with his friends’ encouragement, he jumped into his parents’ Range Rover Sports. A few minutes into the jolly ride, a taxi driver ran into the vehicle, leaving it mangled. The occupants escaped serious injuries.
His mother was angry but his father calmed tempers, full of hope that the insurance company would either take care of the repairs or replace the car. It never happened. The reason was simple. John’s licence had expired.
John’s sister, Joan, arrived home with another accident tale. Her drunken boyfriend had crashed her car but the insurance company refused to pay the claim.
The scenarios above are just illustrations but in reality, no insurance company will pay claims for those avoidable errors.
When you are making an insurance claim after a car accident, you may be counting on the money coming in from that claim in order to pay your medical bills and other costs. Unfortunately, things don’t always happen that way, and sometimes your insurance claim is denied. When this occurs, it is important to understand exactly why it was denied. Every situation is treated differently, of course, but below are some common reasons that insurers give for denying claims.
Driving under the influence of alcohol
As drink-driving is a crime, an insurance company will deny liability when you turn at their door for claims.
“Driving under the influence of alcohol is not admissible. If it is established that the driver involved in an accident drove under the influence of alcohol, no insurance company would settle the claim,” the Head of Marketing of Metropolitan Insurance, Mr Mahmoud Aduna, told the Daily Graphic.
So what if you’re a passenger. Yes, you read that right! You can even be punished by insurers for being an innocent passenger with no involvement in the driving error.
If you are injured in a vehicle accident but the insurer alleges you were aware that the driver was drunk and yet got into the car with them, an insurance company can refuse the payment of claims.
Insurers have successfully argued that a passenger in these circumstances has contributed to their own injuries in the same way as when a passenger does not wear a seatbelt.
This notwithstanding, Mr Aduna said there was a compensation fund operated by the National Insurance Commission (NIC) for such passenger(s).
“If the passenger applies to the NIC, his case may be considered because the assumption is that it is not the fault of the passenger,” he said.
Driving without a valid licence
There is no difference between a driver without a licence and one with an expired licence.
Insurance policies require that the driver of the insured vehicle be “authorised and qualified by law” to operate that vehicle. Therefore, if you are the owner of the vehicle, you must also be authorised and qualified by law to drive it. Also, you must confirm that anyone who drives your vehicle is qualified by law to drive it.
According to Mr Aduna, if you own a vehicle, you breach your insurance if you permit someone that is not authorised or qualified by law to drive the vehicle to do so. So in the case of John, the insurance company was justified not to pay the claim.
When your policy expires
An insurance company is not a ‘susu’ collection point. If your policy expires and you refuse to renew it, no insurance company will fulfill any financial obligation towards you.
Just as you can’t travel with an expired passport or drive with an invalid driver’s licence, once your insurance policy expires, if you decide to drive around, you will not receive any compensation if you are involved in an accident.
Mr Aduna summed up the implication, “once the policy expires, there is no obligation from the insurance company towards you.”
If you are injured while driving in breach of your insurance, the insurance company will refuse payment under your policy.
In other jurisdictions, there are rare situations where an innocent breach of your policy may be forgiven by the insurer, but they have sole discretion in deciding whether to forgive your breach.
The only requirement is that their decision must be made in good faith. It is unlikely that an insurer will forgive a breach if you aggravate it, for example, by providing false information or withholding important information from the insurer.
Type of insurance
There are two main types of motor insurances—comprehensive and third party. The type of insurance you have determines your claim. You cannot make a comprehensive damage claim when you have a third party insurance.
Apart from all the reasons given above, Mr Aduna stated that it was important that policy buyers know where to buy their policies because there were unscrupulous people who sold fake stickers to others.
“It is important to cross-check from the insurance company if you buy the policy anywhere other than their offices, so you can confirm the policy certificate. Otherwise, you’ll just buy a fake sticker.
“You may be driving in town without problems but the reality will stare you in the face when the unforeseen happens. Cross-checking is very important,” he added.