Sunday 29th January, 2006


Optimism in liability insurance

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Last week, two wonderful women, who have been around for almost 80 years swam in the Gulf of Paria, yet again! They have been swimming together for some 30 years, and their longevity remains testimony to the mystery and resilience of women.

On the other side of the coin of life, in tragic circumstances, a lone woman fainted on the side of the highway as she lamented her loss: her husband and sole breadwinner of the family. He had been killed when a motor vehicle sped off the highway, out of control.

The news reporter said a major lament from this woman was that now, the duty of educating her children seemed to be impossible.

But one has to remain optimistic, even in the face of tragedy, and rightfully so, because of third party liability insurance.

In T&T, the law requires that every vehicle in use on the roads be covered by an insurance policy. It serves to compensate the loss of innocent victims in motor vehicle accidents.

And while insurance can never return anything equivalent to the value of the life that is lost, it does provide some relief from the economic hardship that results.

A typical, private motor vehicle policy contract may carry a limit in respect of death or bodily injury to any one person up to a maximum of $2 million.

This represents the maximum that a representative, dependant or the estate of the victim may claim, in typical circumstances.

In respect of a series of claims arising out of one event, the typical maximum is $4 million. Such a claim may arise as a result of hospitalisation, surgery and nursing home care.

In respect of on-the-spot emergency medical treatment, there tends to be a ceiling for liability set at $1,000 per victim.

In addition, there is a typical liability for legal fees incurred by the claimant, with a maximum in the vicinity of $10,000.

In assessing the compensation, for loss of life, for example, there is a tendency, in certain places to attempt to equate the quantum of money (liability) with the current monthly earnings of the victims.

Claimants should bear in mind that every piece of work constitutes earnings. Plus, the pension and gratuity entitlements need to be considered.

Additionally, an equitable calculation of earnings should be spread over what should have been the total remaining years of earnings until retirement.

As a simple calculation, other things being equal: assume a monthly income of $4000, which equates to $48,000 per year. Assume that the individual would have worked for another 20 years; that equates to a minimum of $960,000.

In addition, one should factor in cost of living increases, inflation, salary increases and other hardships. In effect, the starting claim should be in vicinity of $1 million.

The argument should centre on life expectancy and longevity, in the case of an innocent victim.

For the rest of us, we have to ensure that the laws that are enacted are equitable ones, which cater to our long view.

I salute, the two stately women whom I saw swimming in the ocean this week, and although they don’t know it yet, they are my new-found friends!

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