When Insurance is no Insurance

I decided to comprehensively insure my car early last year. So I walked (by myself, with no one marketing it to me) through the door of an insurance company which was the subsidiary of a bank (at the time) and effect the insurance for which I paid the complete total annual insurance premium at once on the spot.

I walked away feeling great as the service appeared indicative of all the great things I had heard about the company.

Fast forward 9 months and a third party “brushed” my car. The damage wasn’t extensive but the front bumper became loose. I thought this would be a good time to test how efficient and responsive the insurance company was given that the damage was minimal. I hit the insurance company’s website, and downloaded their claims form. Noticed they required an estimate from a mechanic or an auto-shop, so I sent off some pictures via BBM of the front of the car to a mechanic I know who had worked on the car before. He promptly gave me a 19,000 Naira estimate.

I sent off the completed claims form by email to the insurance company and got delivery receipts from about 4 people (to a layman, it means the mail has been deposited in those persons’ inbox).

No other response. So I decided to see how long it would take for them to get back to me.

Fast forward 2 months (January this year) and I thought well, something must be wrong. Dug up the original mail, added a short note on top and sent it off again (copying another of their staff who had come to my office well after I had purchased the car insurance to market their services to myself and all my colleagues) Soon after, I got a call from one of the people on the initial list. She politely informed me that none of them could trace the original mail, but they will attend to the claim promptly.

Got another call shortly afterwards from the same lady informing me that the claim is too small and that they would only pay out on claims in excess of the “policy excess” of 50000 Naira (a figure based on the insured amount of the car) Well, since I am not in the insurance field, I had asked what question I could at the time I bought the insurance and policy excess wasn’t mentioned during the discussion. I only came across the term and figure of 50,000 about a month later when I received the policy document which was several pages and contained legalese and insurance-speak. So there I was up the proverbial shit creek without a paddle.

The lady explained further, that the agent who sold me the policy should have explained these things (true, so it was looking as if I should forget any idea of getting the claims paid. So I guess it’s now my fault – ignorance is no defense in law) Well, I suggested if they didn’t answer the claim for 2 months, then they should be willing to bend a little in the interest of fairness and customer service. The lady apologized for the delay (only) but no “bending” permitted, sorry.

So I informed the staff that I had intended to register the car with one of the big auto-shops around once it’s due for servicing, and that I know their repair estimate would definitely be higher than the one given by the mechanic. That wouldn’t work (I was informed) because that registration with the auto-shop would chronologically come after I had submitted the claims form (which no one responded to for 2 months) thereby making it invalid for the current claim. Besides the insurance company needs at least 3 service logs from the Auto-Shop to show evidence of an existing relationship (between the auto-shop and myself).

Oh, so let me get this straight: even if I had registered with this company but not serviced the car at least 3 times before the accident, they may still not have honoured the claim? What if I don’t drive the car much and thus see no reason to service the car 3 times in 9 months? I thought the need for servicing is based on how heavily a car is used and/or mileage covered – not just to satisfy the insurance company’s odd requirements? Is there an unholy alliance going on in there?

Why 3 service logs I asked? Oh, some people will get estimates from these auto-shops then go and actually carry out the repairs somewhere else much cheaper.
After thinking about this lame excuse, I realised that we are rightfully blaming the government for punishing us with subsidy removal for the crimes of a few greedy people, when local companies have been using the same argument as a get-out-of-jail-free card for the longest time. How does this relate to the excuse given above by the insurance company you ask?
Well, since the company is not going to pay me directly, but rather, pay the auto-shop, how can I then benefit from submitting an estimate from the auto-shop but then repairing the damage somewhere else by myself?

Even though I knew I had lost the fight, I was willing to give it one more shot and learn as much as I can against future transactions.

So as part of my questions, I posed a hypothetical claim of 55,000 Naira and requested to know how that would work out. Well, the response was that the company is only liable for 5,000 Naira out of the 55,000 Naira?
Say what? You mean I get to pay 90percent (N50,000) of the repair cost? It made me want to say “I dey craze?” as the popular expression goes. But I think this must be a typo. Anyway, I had had enough so I didn’t bother seeking clarification on this (mute) point. Actually, it wasn’t a typo. the policy excess appears to be a fixed sum which is the amount of any claims you make that will be borne by you irrespective of the total amount of the claim. To throw more light on this: no claims entertained below the “policy excess”; for all claims exceeding the policy excess, deduct the policy excess from the total claimed sum, what is left is what the insurance company will pay you. So, what you want is a relatively low “policy excess” figure when purchasing an insurance policy. And that my friends, is “Car insurance for dummies in 24 seconds” 🙂

All that was on Friday last week. So, OK, remember that staff that came to my office before? When he found out during that meeting that my car was already insured with his company, he said he would be the one to handle the renewal when the current policy expires. There was also other equipment I wanted to insure and I had told him that once I get my hands on them, I would let him know.

Well, this morning I got an email from him. He basically stated the same thing his colleague had said on the phone the previous week – sorry, given your policy, no claims for you. The funny (to me, but probably not to him) is that in the same breath, he said he was still expecting me to setup the insurance for the equipment. What can I compare this to? Hmm. I think it’s like sitting down in a restaurant which requires you to pay upfront before your meal and ordering a whole chicken. Thirty minutes later, the chicken arrives alright but looks like someone caught a sparrow and roasted it. So you look at it in obvious dissatisfaction, called the waiter and made your unhappiness known in no uncertain terms. Well, another waiter was passing by and thought it was OK to say, that though you obviously don’t like the chicken and are definitely not going to eat it, but can he offer you their medium-rare house sirloin steak which is actually cheaper than the whole chicken (new payment upfront of course!)?

Well, since I didn’t ask enough questions (and the agent didn’t volunteer enough information on gotchas in the fine print – the devil is in the details after all), I thought there is still a possibility of doing business. So I responded to the staff’s mail explaining exactly how I thought the N50,000 policy excess was too high and that I had started shopping around and had found some of their competitors with policy excess lower than N20,000 and that I intend to ask a gazillion questions (and hopefully see the answers in print) before committing to another insurance policy. And that about the insurance for the other equipment, he should send me a sample policy for similar equipment so I can study it and see if it’s to my liking.

Ultimately, it looks like they parted me from my hard earned cash, but on the other hand, if the damage had been in the 10s or 100s of thousand Naira, I would have been covered but I may have ended up paying the bulk of the repair despite the fact that I had a comprehensive insurance on the vehicle. Well, they didn’t scr*w me, they just scr*wed themselves out of my future custom/business as I am going to at least try and see if I can get a better deal somewhere else. So, they have won the battle but lost the war. Sacrificing N19,000 for easy money of 7 or 8 times that amount paid steadily year after year as long as the car is functional. Which they may not even have to pay out on if nothing happens to the car (that is the Insurance gamble though, they make a lot of money if nothing happens during the period the “property” is insured if no claims are made, and yes they can lose money as well, but based on history, most insurance companies make tidy profits year-in year-out).

So, the new insurance company I finally go with may not be any better than the current one, but at least it would satisfy my sense of justice and fairness going somewhere else. Of course, there is always the possibility I will re-insure the car with the same insurance company discussed above (if I find out that they are the best of several evils), but that is not likely to happen!

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2 Responses to When Insurance is no Insurance

  1. Olumuyiwa Oluwasanmi says:

    Hi Tunde,
    this is crazy. As a small boy in business studies class I remember that the principle insurance worked on is utmost good faith or in latin “uberrimae fidei”. Wow, this is not business but stealing. This is the height of corruption as this is not honest business in any shape or form. Our society requires a lot of reform.

  2. babafemi says:

    hello sir,
    i remembered that my uncle which is a lawyer (big one) once said the only insurance to do for your car is the normal #500 third party, i said to myself, hmmmm, maybe because he can afford another one. not knowing he must have gone thro’ this too. as Olumuyiwa Oluwasanmi rightly said, its the height of corruption and its not business but stealing……..
    But will you say all insurance company are the same.

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