The smart approach to personal injury coverage
QUESTION: I am a high school principal. Past students living in North America have donated a 23-seat Toyota Coaster minibus to the school. It will be used to transport students to school-related events across the island. Your recent article headlined ‘Motor insurance law shortchanging accident victims’ caught my attention. Can the faults in the law impact the school in the event of accidents in which several students were injured while on the bus? What would be the main effects? Are solutions available in the insurance industry that offer protection in case of an untoward event?
INSURANCE HELPLINE: Thanks for giving me the chance to return to the article I wrote two weeks ago. You understood it. This is despite the huge photo and the small chart. The visuals should have been the other way around. The data in the chart was more important than the photo. Had that been done, the answers to two of your questions would have been clearer and more readers would have understood the key points in that piece.
For the benefit of those who may not have read the article, or not have picked up the key parts, I’ll begin by providing a summary of the law. Section 5 (2) of The Motor Vehicles Insurance (Third-Party Risks) Act says “Motor policies must provide ... in respect of death or bodily injury claims ... liability to any one person for a sum of not less than one million dollars; and ... total liability of not less than three million dollars, in relation to each motor vehicle insured under the policy, arising out of all such claims ... (the) limits for claims for property damage in Subsection (3) are $500,000 any one person and $1,000,000 any one accident.”
The law was passed during the first half of the last century.
It did not contemplate that vehicles would carry more than three passengers. Owners of public passenger vehicles like your school sports utility vehicles, which can seat eight passengers, and all other vehicle owners are at risk. Institutions that enter into agreements to exchange students with their counterparts in North America face high levels of exposure.
One or more passengers in a single vehicle, plus persons outside the vehicle can be injured in the same accident where drivers are at fault. Personal injury claims can easily exceed the limits stated in the law. These are reasons to worry.
Additionally, judges are not obliged to use 80-year-old rules to calculate personal injury claims that come before their courts nowadays. Settlement formulae for these kinds of claims, unlike many of our laws, are constantly being changed. Judges are called learned for a good reason. They are required as part of their jobs to keep informed about presentday trends in the legal and other environments.
The judge in the article I wrote two weeks ago was not shy about making a $36.2-million award to an 18-year-old female who was seriously injured in a car accident four years ago. He used 21st-century rules to put a value on the losses that she will suffer for the rest of her life.
Another cause for worry – especially for companies, institutions like schools, and persons with resources – is that lawyers can pursue them in the courts to seize assets to sell to recover money for claims that exceed insurance policy limits. To cite one example: a few years ago, a lawyer obtained a court order to seize property from the stateowned bus company. This was done to force the company to pay a judgment debt that arose out of a motor vehicle accident. The action succeeded.
Motor policy limits in other Caribbean countries that have a legal history like Jamaica have limits that are much higher than ours. This is either because the exchange rates of their currencies have remained relatively stable when compared to US dollars, while ours has declined steadily over the years. Another reason – which is the one I choose to believe – is that the parliaments of these countries have recognised that sticking with limits that were set during the colonial era simply does not make any sense.
Insurance companies can provide easily provide increased limits for personal injury claims from third parties and passengers as other countries have shown. A representative from one has told me that his company can routinely offer limits of up to $10 million per person.
US visitors to Jamaica use our public and private transport system to get around. They bring expectations of compensation based on what happens there when they get injured. My suspicion is that the legislators in Barbados, the Cayman Islands and The Bahamas – tourist destinations like Jamaica – took this factor into account when setting the insurance limits in their respective laws.
Progressive institutions like your school should not wait for the limits of our law to change. They should move aggressively to buy higher limits now because it is the smart thing to do.
I Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to: aegis@flowja.com