Motor Policy is one of the greatest demanded insurance policies in Kiribati. Majority of businesses underwritten is derived from this class of insurance cover. To the same effect, the majority of claims entertained are also mainly from this class of insurance cover.
The Kiribati Insurance Corporation provides the following under the Motor Policy:
1. Motor Vehicle Comprehensive Cover
This consists of two parts to the Cover:
a. Own Material Damage
This refers to damages arising out of the use of own vehicle. Damages could be sustained involuntarily by the owner/Insured or through an accident by another party.
Normally, when claims incurred fall under the standard policy terms and conditions, the damages to the vehicle of the Insured is indemnified up to the amount of the vehicle value insured for - practically acceptable is the current market price at which the vehicle is bought.
Therefore, any damages will be either repaired or complete replacement (in the case of complete write-off situations) will be made up to the value of the Claims sustained and not exceeding the sum insured.
b. Standard third party cover
This, on the other hand, covers the Insured for third party claims only. In the event of an unfortunate accident, any third party claim is entertained depending on the nature of the claims up to $50,000.00 per any one incident.
Basically, this indemnifies the Insured for losses/damages that may be claimed against him/her in the event of the accident involving the insured’s insured vehicle.
It is also important to note that this cover is compulsory and must be part of the material damage cover.
2. Motor Cycle Comprehensive Cover
Like motor vehicle above, all that falls applicable to the Motor Vehicle is thus applicable to motor cycle in particular including its third party obligations.
3. Third Party only covers.
Unlike the cover for (1) and (2) above, this is specifically designed for damages/losses sustained by third parties of the Insured.
The insured will legally be liable to pay to any third party sustaining loss/damage in terms of:
a. Damage to property excluding property of the Insured or held in trust by the Insured
b. Death or bodily injury to any person (third party)
4. General Applicable Principles:
a. Classification of Motor Policies
The treatment to premiums based on the risk exposure is further classified under the following classes
i. Private rating – this offers cheaper rates with basic understanding that the risk the insured is exposed to is rather limited compared to those involved in business operations. Under this rating, it is thus obvious that the risk is restricted only to personal use of the vehicle and also limited to certain authorized drivers, particularly only members of the family.
ii. Commercial Use – this rating is more expensive compared to private use generally because of the use in the sense itself. It would understandably be used on a daily basis in the operations of the intended purpose. Drivers will vary from different employment schedules depending on the need of the Operation.
i. Normal Excess;
1. Practically, every insured under this policy is expected to meet an excess, a first payment, to every claim entertained. The Corporation meets the rest of the amount on the claim.
2. The normal excess payments falling can be viewed
ii. Voluntary Excess:
1. This is a situation whereby the Insured voluntarily increases Excess payments instead of applying the normal Excess.
2. In this case, the Insured weighs his/her chances or probability of meeting any claims to be less.
3. If this be the case, the Excess is thus increased and this effect, the annual premium charged will thus decrease..
c. General Exclusions
i. These will be more specific under the KIC Motor Vehicle Policy Conditions.
d. Limitations to Liability
i. Depending on the need of the Insured there would be agreed limitations to the policy’s liability and this is also defined under the Terms and Conditions.
ii. However, generally practiced now is the uniformed limitation imposed by the Corporation under standard third party compensation only. This could be increased according to the Insured’s preference with corresponding premium increase to reflect the change in preference.
i. These more or less reflect changes which have been endorsed to be included to form part of the formal cover. These changes have been effected to suit the changes in time reflecting the trend in which this particular policy claims has encountered over the years of operation:
1. Driving clause – to avoid complications of claims considerations to this effect, the Corporation has effect a loading of premium charge of $100.00 to allow Insured continue with the respective operations without worrying of complying to this certain condition. The charge is imposed to waive this particular driving clause. It has assisted greatly to most private business owners in this field.
2. Other Changes – in the span of the insurance period, there may be changes needed to be made to the original state of the Policy from inception. These should be made in writing to the General Manager, a proper endorsement to the Policy is thus effected to note the changes made at a later date.
f. Cover Expanded
This is intended to inclusions of certain risks to the standard policy made based on the preference of the Insured:
i. Passenger’s Risk – this covers passengers of the vehicle. It is important to note that this not automatically
ii. Third Party – As detailed in (3) above, this could be increased to the insured’s preference at a loaded premium charged.
g. Special Offers
i. Fleet Discount
A 20% discount is offered to an Insured on motor policy consisting of more than one vehicle. The effect of this is a further discounted premium to normally charged premium annual per any one vehicle alone.
ii. No Claim Bonus
This is also a discount offered to the Insured based on the following:
- 1st year of insurance with no claims reported and entertained by KIC – no effect to annual premium
- 2nd year of insurance with no claims – a 20% discount is offered to annual premium
- 3rd year of insurance with no claims – a further 40% discount is offered. This is the maximum bonus discount offered.
iii. Declaration on Insured’s NCB history
An insured with a letter of confirmation from previous Insurer declaring his/her claims history to be clean for than 2 years is automatically given a maximum discount of 40%. Likewise, an insured wishing to move to another Insurer could also request a declaration from KIC informing of past record of holding a Motor Policy so as to be offered the same benefit previously mentioned.
Further information could be obtained from the Corporation.