INSURANCE TRAK FOR THE UNWARY
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Just what sort of claims might you
have to face? BY JOHN C. VANN, FCII ALL of us, I suppose, are surprised at some time or other about the amazing ignorance of simple insurance requirements that some people display. It is safe to assume that all but the newest of newcomers to road transport realizes the need for minimum insurance cover according to the Road Traffic Act. But there is more to it than that.
The only compulsory insurance is cover against any valid claim by a third party for personal injury. This insurance has to be unlimited in amount. It means that if your vehicle knocks down, say, an old man as he's crossing the road and injures him, you must have an insurance against any claim he makes for his injuries. Even then, it doesn't mean the man's claim will automatically be met. He, or his solicitor, must prove negligence on your part or your driver's part before your insurers will pay the damages agreed.
That restricted type of insurance is known as Road Traffic Act (or R.T.A.) cover. But the vast majority of commercial vehicle owners are not content merely to have this minimum cover. It is really only found in practice where an individual or firm has a shockingly bad claims record or where a string of serious convictions have been recorded. In such circumstances R.T.A. cover is the only insurance which may be offered.
The next stage is full third party insurance. As the law is concerned with third party personal injury only, it follows that any damage your vehicle causes to property of any kind belonging to somebody else need not be insured. Yet a heavy lorry, for instance, can cause a tremendous amount of damage to property. Your driver may absent-mindedly clout a parked Bentley and convert it into a chewed-up mass; or a runaway lorry could partly demolish a house.
That's where the full third party insurance comes in useful; it covers not only your legal liability for personal injury to a third party but also damage to his property. Once again, though, for a successful claim to be launched, negligence against you or your driver must be proved.
So far I have discussed injury or damage to other people or their property. What about the vehicle itself? You can add fire cover and/or theft cover to your third party policy; but the two usually go together to make up "third party, fire and theft". The usual charge for fire and theft for a commercial vehicle is 12s. 6d. per £100 on the insured value.
The major snag with this type of cover is that, apart from damage due to fire or theft, you've no cover for accidental damage in general. This means that if your lorry is mixed up in an accident and gets knocked about a bit, there's no cover for the damage under your insurance. But all need not be lost. If there's another vehicle involved and the other driver can be pinned with the blame, then your repair bill can be passed to him or his insurance company.
If, on the other hand, you skid on a black patch of ice in midwinter and land up in the ditch, with no other vehicle within miles, then it's just too bad. In that event, you'll have to stand the cost of the repairs yourself—if you've only got third party insurance.
It really boils down to a consideration of what your vehicle is worth. If it's an old stager, merely worth the proverbial song in hard cash (though still valuable to you), then third party or third party, fire and theft cover, is probably the most sensible cover to take. But if it's worth a reasonable cash amount, you'd be wise to think about comprehensive insurance for your vehicle.
Or you could look at it like this. Suppose your lorry (or coach) is valued at £500 on the open market. If it's a write-off, you stand to lose up to £500. Can you afford such a loss if the worst happens? Alternatively, are you prepared to risk it and hope you don't have an accident? This is purely an individual decision, depending on your general outlook and temperament. You could be penny wise and pound foolish by taking the much cheaper third party cover as opposed to comprehensive. But you have been warned!
The widest cover, of course, comes under the comprehensive policy. The main attraction here is that Any accidental damage is covered. The premium is, as to be expected, much higher than for third party insurance; in fact, very broadly you can reckon it will be from two to three times as much.
The exclusions are worth looking at. You don't get cover for any loss of use. If your vehicle is off the road due to accident, and you have to hire one while your repairs are being carried out, you'd be wasting your time claiming from your own insurers. If the other driver is to blame, you could claim the hiring cost from him or his insurers.
The answer would be: "No", if you claimed for wear and tear. You'd get the same reply for any claim for mechanical or electrical breakdown, failure or breakage. Such items are not insurable.
However, under a comprehensive policy you'll find damage by frost is included. But don't get the wrong idea here. This part of the policy wording should be read in conjunction with Condition No. 5, usually found amongst the small print at the back of the policy. This Condition says the insured person shall take all reasonable steps to safeguard every vehicle from loss or damage and maintain them in efficient condition. But what are "reasonable steps"? The insurance companies do not define this term. So you have to make an intelligent guess!
How does this tie up with frost damage? Well, if you don't take reasonable steps against frost, you'd probably get a frosty answer from your insurers if you put in a claim for a cracked cylinder block. They expect you to use anti-freeze. It would be far better if they stipulated this in the policy wording; you would know where you stood.
You may wonder whether draining the radiator is sufficient. Would this be classed as "reasonable steps"? If this rather cumbersome method is adopted every night, it's very difficult to make sure every drop of water drains from the system. If damage to the engine by frost does occur, it's fairly obvious that all the water has not been drained out. Then the insurance company can turn round and say the precautions you took were not adequate. No, it's far better to play safe and use anti-freeze. You can then look any insurance claims man straight in the eye if' frost attacks.
What about trailers? If a trailer is pulled behind a commercial vehicle, extra premium is payable. In addition, the insurance certificate has to be amended to include trailer cover. So if you intend to pull a trailer behind your lorry, see about the insurance first.
It's different if you tow a disabled vehicle. The policy wording specifically allows an operator to tow any one disabled mechanicallypropelled vehicle. Cover is given against any third party claim for damage caused by the vehicle being towed. For instance, if the towed vehicle sways and crunches a bollard, any ensuing claim from the local council will be dealt with by your insurers. This is always provided the vehicle is not being towed for reward. If the vehicle is damaged while being towed, there's no cover under your policy for such damage.
Premium rating Turning to premium, how is this arrived at? For commercial vehicles the method of rating is based mainly on the carrying capacity (not the unladen weight), the garage district or towns in which used, and the type of licence under which the vehicle operates. The trade sometimes can affect the premium, but not often.
Note that for some unknown reason the value rarely affects the premium. Whether your lorry is worth £.100 or ,E1,000 under a comprehensive policy, the basic charge is the same. When the value rises over £1,000 some companies, but not all, do charge extra.
An important point to watch is that the policy states the occupation of the policyholder and the trade or business for which the vehicle is to be used. It goes further. It stipulates that the vehicle shall not be used for any other business than that stated. See the implication? If you have two business activities and you use your lorry for both, do make sure you have both businesses mentioned on your policy. Otherwise, if one isn't mentioned and a claim arises while your lorry is being used in that business, your insurers could quite readily repudiate your claim.
Now for some possible ways of reducing the premium. One way is for you to bear the first £10, £25 or even £50 of any accidental damage claim. If you have your own workshops it is often a good and profitable plan to take a high excess and so earn a higher discount. These discounts range from around 15 per cent to as much as 25 per cent, so they are well worth considering.
Another premium-reducer is the no claim bonus, and different insurers have different scales of bonus, don't forget. Some companies give a maximum bonus of 25 per cent after three years free from claims, but others go to 35 per cent for commercials, while one office offers 40 per cent if you've a good record behind you. And there's no loss of bonus if you transfer insurers, provided you can supply proof, of course.
If you have a fleet of lorries, there's always the possibility you'll be able to obtain special rating. This is known as fleet rating. The minimum number of vehicles to qualify is usually ten; but the main factor after that is your claims record over all your vehicles. If this is poor, indicating plenty of claims (particularly over the past three to five years), your chances of fleet rating are slight. But if your record is reasonable, there's every possibility you would qualify for this special rating.
How does it work? Normally you begin with the gross basic rate of premium for each vehicle, depending on the carrying capacity and class of licence under which it runs. Then what is called the fleet discount is deducted. This may be anything from about 20 per cent to 40 per cent and it applies to all the vehicles, irrespective of whether any particular one has been involved in an accident during the past year. This, in fact, is the great attraction of the fleet discount rating system. Further, if your record is extremely good an additional discount of, say, 10 per cent is sometimes given for each vehicle which has not been the subject of a claim during the past insurance year.
Every case on a fleet rating scheme is carefully watched. The terms are considered at each renewal. If the record remains reasonable, it's unlikely the terms will be amended. But if claims begin to appear too frequently and the loss ratio (i.e., claims compared against premiums) rises, more stringent terms will be likely to be imposed.
Competition is fierce among insurance companies. But you may not have the time or the energy to search around the market in an attempt to obtain more favourable terms. Your best bet is to consult a reputable insurance broker who knows the market inside out. He will be glad to advise you on your vehicle insurance, as he has the whole insurance field at his disposal and is not tied to one insurance company. He may be able to re-arrange your fleet of vehicles and get you much more favourable terms, especially if your record warrants a more competitive quotation.
And he'll deal with any claims you may have—but that's another story. Braking Chaos I WOULD like to draw attention to the number of methods adopted by tractor manufacturers to couple and apply the auxiliary, or third-line system, required by the recent C. and U. Regulations for articulated vehicles.
My firm requested from the outset that both Clayton and Westinghouse held consultations with the Ministry and 'SMMT and advised one system only to tractor manufacturers in order to obtain uniformity. But, as so often happens in British industry, lack of liaison between various manufacturers and authorities has resulted in chaos.
There are four different types of coupling—the old, smaller C type and the palm type, with shut-off taps (which are not legal because the tap may not be turned on, leaving the auxiliary trailer brakes inoperative); the old C type and the new, larger C type (specially designed for third-line braking).
Needless to say the two latter, correct-type couplings have only just become available in any quantity—much too late to be fitted from the start to make coupling uniform on any tractor or trailer. With reference to the method of operation, the only correct method, in our opinion, is the one which operates the third line by means of an air valve in the tractor parking brake system, because if the driver finds himself without a service system through a brake line or diaphragm failure, his natural instinct would make him apply his tractor hand brake.
The next best system is the dual treadle valve, where the driver pushes the pedal down fully to operate the third-line system. The system using a trailer hand-control lever to operate the thirdline system is not very suitable, as many of our attic drivers are accustomed to using this hand control on the old system, and the time lag on third brake line (being single line) makes the handcontrol system unsuitable for use in the same circumstances as in the past.
The last method of third-line-braking operation seems to be the most popular. Some manufacturers are fitting two hand controls—one for standard operation and one for the third line— which is most confusing to the driver.
During a recent meeting between the management and top drivers of one of our customers, the chief designer and staff of a well-known tractor manufacturer and ourselves—held in order to deal with complaints of tractor brake linings wearing out every 7,000-8,000 miles, and lack of vehicle control when the hand control valve operating the third-line system was applied—the chief designer's answer to our customers' complaints was that he should educate his drivers.
The drivers' reply, with suitable adjectives, was to the effect that the designer should accompany them on a trip to South Wales with a fully loaded trailer and then his remarks would not be quite so funny when he saw the skill required to control a vehicle equipped with the new-type braking system.
Another well-known manufacturer has now come out with a real beauty—operating both systems simultaneously with the footbrake. Pity the poor old compressor trying to keep both systems supplied during frequent brake applications in traffic.
We are, no doubt, a voice crying in the wilderness, appealing for standardization on the most important part of a goods vehicle—namely, the equipment which stops it.
G. E. WOOLDRIDGE, Managing Director, M. and G. Trailers, Lye, Worcs.
Green Line Livery I WOULD like to congratulate you on the new format of your excellent magazine. All too often these days an improvement is closely allied to an increase in price, but not so in your case. Although a student of passenger transport, I find your publication most interesting and informative. Keep up the good work.
However, I would point out that under the heading of "Green Line Livery—No Decision" (January 7 issue) F.K.M. is wrong in his assumption that London Transport rehabilitated one of the RF class following introduction of the RC class. The vehicle concerned is RF 136 and was noted at Chiswick Works in its new livery long before the introduction of the RC.
B. E. ARNOLD, Hainault, Ilford, Essex [Mr. Arnold is partly right and partly wrong. RF 136 was, apparently, first painted in the new livery in September. This was before the actual introduction of the RC class, but long after the decision had been taken on the new livery for these vehicles. Since that time, further experiments have been carried out on RF 136 and, incidentally, still no final decision made.—Ed.1