Car Insurance ~ add-on cover.. woman given £400,000 bill for the hired Mercede

Motor Vehicle Insurance has been standardized – All India Motor Tariff codifies every aspect of automobile insurance.  There primarily are two policies – Liability only policy and Package Policy that would offer coverage for the own damage of the vehicle as well.

Standard wording of a Package Policy would read inter-alia :  the Insurer will indemnify the policy holder against loss or damage to the vehicle insured hereunder and/or its accessories .. .. .. ~ whilst this is direct indemnity – it would also be specified that the Company shall not be liable to make any payment in respect of :  a) consequential loss, depreciation, wear & tear, mechanical or electrical breakdown, failures or breakages .. …

Insurance is evolving all the time !  ~  unlike a few years ago when there were only 4 PSU General Insurers, now there are so many Insurance companies and plethora of optional covers are available on payment of additional premium.  Add-on plans, as the name suggests, offer insurance for several damages or events in addition to own damage and third party liability insurance.   

Perhaps one of the first and primary add-on in a Motor Insurance Policy is ‘Nil depreciation’ – you check with people, most would call it ‘bumper-to-bumper’ as if only Zero depreciation would provide coverage for ‘bumper of car’ !

To deviate a bit from the main topic :  a   bumper is a structure attached to or integrated with the front and rear ends of a motor vehicle, to absorb impact in a minor collision, ideally minimizing repair costs.  Bumpers ideally minimize height mismatches between vehicles and protect pedestrians from injury.  By some accounts, the  first bumper appeared on a vehicle in 1897, and it was installed by Nesselsdorfer Wagenbau-Fabriksgesellschaft, a Czech carmaker.   G.D. Fisher patented a bumper bracket to simplify the attachment of the accessory. The early bumpers  consisted a strip of steel across the front and back. Often treated as an optional accessory, bumpers became more and more common in the 1920s as automobile designers made them more complex and substantial. Bumpers offer protection to other vehicle components by dissipating the kinetic energy generated by an impact. This energy is a function of vehicle mass and velocity squared.  A bumper that protects vehicle components from damage at 5 miles per hour must be four times stronger than a bumper that protects at 2.5 miles per hour, with the collision energy dissipation concentrated at the extreme front and rear of the vehicle. Small increases in bumper protection can lead to weight gain and loss of fuel efficiency.

Getting back – the regular Package policy offers indemnity i.e., parts would be subject to depreciation going by the usage and often described in the schedule of the policy itself.  The ‘Nil-dep’ add-on would provide indemnity without deduction for such depreciation for replaced parts.  The policy holder by availing this add-on would be getting ‘new for old’.  Then there are other add-on which provide – free pick-up, fixed allowance for the period the vehicle is disabled, substitute car for the period the vehicle is still undergoing repairs arising out of a valid claim and more. 

photo from twitter (illustrative)

With this lengthy introduction, read this interesting article in MailOnline ~  a woman was given a £400,000 bill for the hired Mercedes she drove while awaiting an accident claim judgment.

Susan Harries drove her Audi, worth £10,000, into a parked Honda in Sutton Coldfield, Birmingham. For three years, Mrs Harries hired a Mercedes C220 costing her £300 per day and was driving it awaiting accident claim judgement. In total, the bill came to £400,000. (Rs.3.70 crores approx. !!) She rented the car through an independent firm that offered to cover the cost of the rental, but only if she was not to blame for the crash. These sorts of firms can approach drivers after an accident offering them cut-price deals while their insurer works out who is to blame.

They typically claim the cost of the hire from the at-fault driver's insurer, but only if the person who takes out the policy is not at fault. If they are at fault, they need to pay the bill themselves. Many people opt to use these companies if getting a hire car through their insurer would impact their no claims or if their excess is too expensive. For three years, Mrs Harries hired a Mercedes C220 costing her £300 per day. In September, Mrs Harries appeared in Nottingham County Court  accusing Kevin Baguley of reversing his Honda into her path.  The crash was found to be because of Mrs Harries's 'negligent driving', Nottingham County Court heard.  A judge said that the four separate witness statements Mrs Harries provided to support what she claimed turned out to be connected to the car recovery company she used. These witnesses put her in contact with the independent firm that loaned her the hired car.

Richard Hiscocks from insurer Aviva told The Sun that Mrs Harries's case 'highlights how far credit hire organisations are willing to go to pursue profit.'

.. .. people and their ways !!

With regards – S. Sampathkumar

15^th Nov. 2o19