Forum: Make insurers pay for third-party property damage if their client is clearly at fault
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The Motor Vehicles (Third-Party Risks and Compensation) Act 1960 (MV Act) does not require insurers to make insurance compulsory for third-party property damage.
For third-party property damage coverage, an insurer’s obligations arise solely from the contractual relationship with its policyholder.
The insurance contract requires its policyholder or insured driver to report an accident to the insurer.
While the rationale is sound in not-so-clear-cut motor accidents, it should not apply in all situations.
In situations where there is ample evidence clearly showing that their insured driver was at fault in an accident and is 100 per cent responsible for it, the insurers should be mandated to proceed with a third-party claim.
Nowadays, in-car cameras can provide clear footage of an accident. This can be used to determine if the insured driver was at fault in the accident and the extent of his responsibility.
Insurers can now choose to push the case away and claim that they will send reminders to their insured driver.
The most drastic actions insurers can take are to repudiate liability, cancel the policy, decline renewal of the policy and confiscate the no-claims discounts (NCDs).
None of these actions will encourage their errant insured driver to make an accident report.
And none of these actions protects the victim. They serve only to protect the insurer.
The victim will have to either claim from his own insurance policy or file a civil suit against the errant driver. The victim has to pay the cost of repairing the damage done by the errant driver, bear the increased premiums with reduced NCDs and also high legal fees.
The MV Act not only punishes the victims but also benefits the errant drivers and insurance companies.
Upon policy cancellation, the errant drivers can just sign up for another policy with another insurance company with no penalties.
Insurance companies benefit from charging higher premiums for those who claimed from their own insurance and at the same time they have no obligations to pay for property damage caused by their former clients.
The MV Act should be reviewed, with an added clause which requires insurers to pay for third-party property damage if there is sufficient evidence to show that their client is 100 per cent at fault.
Vincent Tan Zongxian
