‘Half Knowledge is as good as no knowledge at all’ – Author

The rains and effects

The rains have set in as expected with some devastating effects on lives, property and business operations. Regardless of whatever preventive measures that might be put in place, some individuals and businesses may still suffer a setback as their operations come to a halt albeit temporarily due to flooding or fire affecting their business premises.

Why Vehicles under repairs are not covered under motor insurance?

Readers would recall the displeasure that followed the aftermath of the June 3 disaster when some motor insurance clients had their motor insurance claims repudiated. Some automobile garage owners in the capital were also reported to have allegedly told their clients, whose vehicles were lost to the floods, to consider them as total loss (i.e., without compensation from the garage), describing the cause of the loss as a natural disaster and / or an act of God! Some victims who resorted to some of their insurers had the shocks of their lives when their insurers showed them ‘the rule book’.

Instinctively, I felt very sad for those clients as the brand of vehicles involved were mostly the luxury pretty expensive ones, thus, letting go could actually cripple some individuals and in some cases corporate clients. Imagine a comprehensively insured Landcruiser V8 valued at US$90,000 submerged in floods and no compensation!

Consumers have an equal responsibility to always take self precaution (e.g., insurance), as this will not only provide them protection or security against unexpected losses, but also the peace of mind to focus on other aspects of life.

What the insured need to know or ought to know

It is important to note that with motor insurance, anytime one checks in his / her vehicle for servicing or repairs with a garage, (which could take some days, weeks, months) the insurance cover on the vehicle AUTOMATICALLY CEASES! In this regard, it is the responsibility of the vehicle owner (i.e. the insured) to officially notify his / her insurers to either suspend cover on the vehicle and return premium or extend the expiry date of the cover by the number days the vehicle remains at the garage, since the insurer may not be obliged to pay claims that may arise whilst the vehicle is at the garage, in the custody of the service provider.

What Should Garage Owners Insure?

It is obvious that the insurers of the garages would not pay third party claims in the aforementioned situation, as the likely policy in place at the time of the disaster could be a standard fire policy with extension to cover flood and other allied perils. The insurers would not in this circumstance assume a risk which is not catered for. It is therefore the duty of every garage owner to obtain a blanket public liability policy to typically cover the following:

  • Professional Indemnity Coverit is expected that these garages and service centers obtain a Professional Indemnity (PI) cover for all their professionals to protect them against any liability at law in the discharge of their duties.
  • Public Liability Covergarages or service centres of automobile companies owe motor vehicle owners a duty of care once the vehicle enters their premises and in their custody hence, the expectation that they would have this cover to compensate any vehicle owner on account of damage to their vehicle. (This may apply to the June 3rd as well as the recent floods).

Do the Garages / Service Centres Know This?

Even though this information is made known to the well organised automobile companies, some of them still go to the extent of issuing disclaimers as force majeure to the effect that they would not be held liable in the event of any direct or indirect damage done the vehicle and this includes while the vehicle is being road-tested. While the primary focus of the disclaimer is against valuables kept in the vehicle at the time of the loss, nonetheless, most of the well established auto firms take responsibility for accidental damage on customers’ vehicles during road-tests or any other damage during repair works. Since most often the disclaimers are more against loss of articles or items left in the vehicles, customers must ensure that all valuables are taken out of vehicles before visiting the garage.

It became clear after my interaction with some garage owners that it’s not always the case that they do not want insurance protection for their premises but NOT many insurers are willing to provide cover for their garages due to the high risks associated with working in a garage especially those in flood prone areas.

Words of advice to members of the motor insuring public

Generally, motor accidents may be caused by the owner/user or someone else. At the garage, however, your motor vehicle could get burnt, damaged or carried away by flood waters. In any event, once the loss occurred whiles the vehicle is at the garage, one will only get compensated if the garage has an appropriate insurance, as discussed above.

The Way Forward

Many vehicle owners have had to suffer this fate in years gone by and many continue to suffer similar fate and the floods in Accra last week may not tell a different story as regards how vehicles in garages at the time of floods would be dealt. Insurance stakeholders, particularly, the National Insurance Commission (NIC) and the Ghana Insurers Association (GIA), should continue to engage with garage owners and provide them adequate education on this all important issue, which could significantly transform their operations, whiles expanding the insurance reach in Ghana.

Similarly, it is imperative for garage owners to transfer the risks associated with their services to insurers, as their clients who may suffer losses on account of their vehicles while they remain in their garages. That notwithstanding, garage owners must also take seriously the safety requirements / precautions within their premises and comply with ‘insurance warranties’ as this would make it easier for insurers to accept such risks.

The insuring public must always ensure they notify their insurers anytime they are going for repairs / servicing. This should be done between the day of handing over the vehicle to the service centre and the day it would be ready for delivery. Besides, it is always important to have ask questions and not assume the fact that once a vehicle is comprehensively insured, there are no accompanying conditions! Try as much as possible not to be like that Uncle of mine who went to buy a motor cycle and was taught how to start it but, out of excitement, he never bothered to find out how to stop it and the reality dawned on him when he reached home!


Until next week, this is ‘Insurance from the eyes of my mind’