Sep

How to avoid insurance claims being repudiated

2010-09-25 16:34

Have any of your vehicles been in an accident and the claim you put into your insurance company is repudiated? Don’t feel alone. According to Chris Barry, managing director of Heavy Commercial Vehicle Underwriters (HCV), client loyalty is no longer a factor for most insurance companies as they are constantly searching for ways to cut costs and keep premiums low.

“Operators may not realise that if they do not comply with certain policy fine print , and responsible operational procedures – their claims can and will be repudiated,’ he says. Given this, Barry has issued the following tips to help heavy commercial operators to minimise their risk of insurance claim repudiation.

(1) Modifications

Operators are urged to inform their insurance company of any planned vehicle modifications. The terms and conditions of their policy may state that the vehicle must comply with the manufacturer’s specifications. “If a vehicle is “chipped’ or modified without the insurer’s consent, it gives the insurer a valid reason to refuse to pay a claim if the vehicle is involved in an accident,’ says Barry.

2) Roadworthiness

Policy fine print also requires that the vehicle is roadworthy, therefore regular maintenance is crucial. “For example, incorrect tyre pressure not only renders a vehicle unroadworthy but can also be very dangerous. It affects braking, steering, road holding and the general stability of the vehicle. Operators should check tyre pressure on a regular basis to reduce the risk of having an accident. Simple maintenance procedures like this will prevent repudiation,’ he advises.

iobs-insurance2(3) Driving under the influence

A more obvious one is that driving under the influence of drugs or alcohol is grounds for repudiation. Studies show that alcohol hinders a driver’s psychomotor skills (movement controlled by the brain). “Operators are advised to make it clear to drivers that they can be instantly dismissed if they drink and drive. If a drunk driver causes a fatal accident, not only will the insurance claim be repudiated but manslaughter lawsuits may be filed.

The operator will suffer severe financial losses and have the death of innocent road users on his conscience. Similarly, drugs can affect the driver’s ability to control the vehicle safely. Prescription drugs are just as dangerous as recreational drugs,’ says Barry.

iobs-insurance3(4) Professional Driver’s Permit

He also stresses that a photocopy of the driver’s Professional Driver’s Permit (PrDP) is not sufficient to protect the operator from repudiation. The driver may have been previously disqualified which means the operator has employed an unlicensed driver. By regularly checking licenses, operators can ensure the vehicle’s insurance is not invalidated.

(5) Research before signing

Before going on cover, operators should research the repudiation history of their chosen insurer. “Many underwriters distract customers with no claims bonuses and value added benefits, without mentioning their reluctance to pay out when a claim is made,’ explains Barry.

(6) Understand the contract

Operators are encouraged to ask questions about their contracts to make sure they understand all the fine print. “HCV has made policy wording easy to understand so that our policyholders know exactly what we expect from them to ensure their policy is valid at all times,’ assures Barry.

If operators follow the terms and conditions of their insurance contract, repudiation is unlikely. Should a situation arise where theoperator disputes the repudiation of a claim, they can contact the Insurance Ombudsman to investigate the situation.

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