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Opinions of Tuesday, 23 June 2020

Columnist: Elsy Adadey

What value do you place on your car?

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One wonderful afternoon l was driving towards the central business center of Accra when l saw a brand new black Chrysler 300. Immediately l saw the vehicle l said to myself, “wow” this car is really nice. As l kept driving l was eager to see who the driver was.

Fortunately, at one of the traffic lights, we happen to stop adjacent to each other as the traffic light turned red. I rolled down my window and waved at the driver, he also rolled down his window and waved back at me.

Then l said to him you have a nice car, he nicely smiled and said thank you. Just after he made that statement the traffic light turned green and we all drove off. I must confess l wish l was driving that car! As l kept driving, one thing kept lingering on my mind: what type of Insurance cover will this young driver have for his car? Will it be a third party cover or comprehensive cover?

I know most people have third party cover or comprehensive cover on their vehicles but have no idea what it really means. I conducted a survey among a few of my friends to assess their understanding of this subject, and to my surprise, most of them said they have the Insurance on their vehicle to stop the police from harassing them.

Few of them also said they have the Insurance for the Insurance Company to replace their vehicles when it is involved in an accident. These two major views expressed by my friends mean that as Insurance professionals, it is important we educate everyone to better appreciate the value of Insurance.

It is estimated that over 40,000 vehicles are registered annually in Ghana. This means that between the year 2000-2020 over 800,000 vehicles have been registered, and by law, all of them are expected to be Insured. ‘How many of these vehicles have motor insurance and how many of the owners understand the type of coverage they have bought?

Now the question is: What is Third Party Insurance Cover?

Third-Party Insurance cover is simply the most basic and most affordable form of motor insurance. It is also the minimum form of motor insurance required by law in Ghana to use a motor vehicle.

Just as the rich may decide to modify some of the features of the vehicle, the average person may just want to buy a car with standard features without any additional cost. This means that if you have a third Party cover, you have fulfilled the requirement of the law and as my friends said, they wouldn’t be harassed by the police.

By now, I am sure you are wondering what the Third Party policy covers.

Insurance is a legal relationship established between the person who takes the Insurance and the Insurance Company. The two are considered as two parties, this means that any person outside these two parties are third parties to the contract.

I can liken it to two people in a marriage recognized under the laws of the Country. In the event of any dispute, they may invite a third party to intervene. This may be a family member, close friends, pastors etc. Though there are others involved in mediation, the law recognizes only the two parties in marriage.

Now bringing it back to Insurance, no Insurance contract names any individual as a third party, but the contract recognizes anyone who suffers injury or property damage as a result of an accident in which the person who took up the insurance is involved, a third party. Third parties include other motorists, pedestrians, passengers, etc. For instance, carelessly opening a car door into a passing vehicle can cause damage to it. Likewise, careless reversing can make you run your car into another person’s house or car.

The third-party insurance covers the financial cost of damages and injuries to such third parties.

When damages occur, the law enforcement agency which is the police determines who is at fault, for the damages to be repaired by the culprit’s Insurance Company. In the case of injuries to persons, compensations are given.

A broken leg, arm or eye cannot be replaced like the car light, bumper or any part of the car, hence the need to compensate victims. The injuries suffered can cause total/permanent disability or death to victims. This is what is covered under the personal accident cover. This is a provision that every Third Party Insurance covers mandatorily.

Though this is the minimum mandatory cover, the policy can be extended to include fire and theft. This is called Third Party Fire and Theft policy. Most people have lost their cars through fire and theft, hence it has resulted in the addition of features to include those as well. (Please talk to your insurer to enquire how you can access this additional cover).

It would be great for you to check how much is stated on your Insurance policy so that you can appreciate the value you have placed on third parties. By so doing, you can also ascertain if it is sufficient or not.

With this understanding, l am sure the next question on your mind is: what is Not covered?

There have been several instances where people assume that once they have an accident the Insurance Company must compensate them. In many instances, they get disappointed to know that their insurance does not cover what they expected.

I simply want to indicate that the third party insurance cover does NOT include repair costs to your vehicle. Your regular servicing and repairs are not covered. Worn out brake pads, oil filters, lower arm bushings, worn-out car tyres and so on are not covered.

I recall receiving a client in our office a few years back. This client indicated that he had to travel to Kumasi for a funeral, hence a request for the Insurance Company to pay for the servicing of his vehicle before the trip.

He believed he had the right to make such a request because he had paid his premium for over seven (7) years without any claim. I remember vividly the look on his face when l explained to him that such events were not covered under the insurance policy. I am sure if he understood what was covered, he wouldn’t have made that request.

The “Third Party Insurance Cover” only covers accidental damages to third party life and property. This means that if your motor vehicle or motorcycle is for instance worn out, you would have to bear the cost of repairs.

Insurance provides financial security and peace of mind. It is important you read your policy document to be well informed.

Are you still wondering the type of Insurance cover the brand new black Chrysler 300 will be having? Will it be third party insurance cover or comprehensive?

Watch out for more information about Comprehensive Insurance in our next article. Please stay safe and exercise care on the road because every life matters to their families and the nation.

Elsy Adadey is an experienced Insurance Professional with extensive expertise in Business Operations, Corporate Communication, Marketing and Event management. She is a member of Chartered Insurance Institute, UK.