Tan Kin Lian's Blog: Insurance for taxis

Sunday, March 28, 2010

Insurance for taxis

Hi Mr Tan
What are your views about the taxi driver who discharge his insurance company from paying a third party claim for damage to their car? It is not fair to the third party who have to sue the taxi driver to recover the repair cost of $2,000. The offer of $300 by the taxi driver is ridiculously low.

REPLY
Currently, it is compulsory for a car owner to have insurance for third party injury, but not damage. In granting the licence to the taxi company, the Land Transport Authority should make it mandatory for the taxi to have insurance for third party damage as well.

The cost of insuring a car is about $1,000. The cost of insuring a taxi should be about $3,000 a year. This will add $10 a day to the cost of renting a taxi. I think that the taxi company should be required to buy the insurance and add this to the cost of the rental. The taxi should not be inadequately insured for property damage.

12 comments:

Anonymous said...: Gosh! I didnt know that damages to third party property is not covered!
This is revealing. I thought the LTA or the Taxi companies would do everything "properly".

It is reflective of what many other Statuary boards or Government bodies might be practicing too!

Not as first world as I was led to believe! quite the opposite!

All this talk about governance and such is a charade. Its no wonder the PRCs are daring enough to be " creative" in business here.
Looks like they know much more about our Gov's psyche then we ourselves!! we are blinded!!; March 28, 2010 4:09 PM
Anonymous said...: Dear Mr. Tan can you please explain in detail, what does 1st party, second party, third party and fourth party mean? In the motor insurance, please.
Thank You sir!; March 29, 2010 2:46 AM
Anonymous said...: Hi Mr Tan
Today is my first time to surf your blg though I knew about this long...could U enlighten me that if I am wrong throughout this insurance thing? I bought some Life n Anticipate Endowment about 10 years ago, my calculation was that I commit a 1,000,000 total of insurance which premium is about 40,000 but I am enjoying interest gain of 1mil n not 40K only thing the interest is not touchable until many year later, but I don't mind n I don't like stocks, but recent people say the yield is not high, only 2 - 4 %, but my thinking is I save only 40K n of course when more years pass the amount of 40K will multiply but at such bank interest rate of not even 1% I think is a good deal or am I wrong about the plan? Thank you n excuse me if this is the wrong area to post.
MK; March 29, 2010 3:23 AM
Anonymous said...: In NZ, it is not compulsory to have insurance for motor vehicles. What is expected is everyone to have their own personal insurance for injury.

Thus in case of an injury caused by an accident, one claims from one's own insurance. The insurance company can then sue the guilty party for compensation.

For damage to property, eg one's vehicle, one can sue the other party. It will be a civil suit. For loss to theft, one will have to bear one's own burden. But since cars are much cheaper there, it would not be that much of a problem.

Nevertheless, one is encouraged to insure one's car against theft or damage..........but as it is NOT compulsory, insurance companies do not have a stanglehold on car owners like they do here.; March 29, 2010 9:16 AM
Anonymous said...: Anon...March 29, 2010 3:23 AM,
you certainly need an honest and competent financial adviser to help you but please do not engage an insurance salesman who will burn a big hole for you.
With $40K premium in an endowment earning 2% interest rate you need 20 years to save $1000,000..Although you have $1000,0000 you are losing money in real value. Your $1000,000 is worth only $500,000 today if inflation is 3.5%; March 29, 2010 12:16 PM
Vincent Sear said...: To: 2:46AM

You're the first party, as in first person pronoun I, we or us.

Your insurance company is the second party, as in counterparty to a direct contract.

Whomsoever not directly insured, having nothing to do with your insurer except for the fact that you inflicted the injury, becomes eligible to claim for the injury as the third party.; March 29, 2010 8:36 PM
LWL said...: until the law is changed, where third party damages are mandatory, instead of only third party injuries, it is unfair for any party to be forced to take up insurance that exceeds what is legally required, by virtue of the fact that there is no other alternative.

So the "smart" person will make use of the limitation of the law to discharge its insurer as there is no legal requirement in law for him/her to maintain coverage for anything other than 3rd party injury.

should the law be changed? yes, maybe? But right now, i feel that the taxi driver has done the right thing by taking into consideration his personal interest only.

Is it the gentleman's way of doing thing? Maybe not? Is it his fault, no! Definitely not, he is working within the confines of the law that has been spelt out by the government of the day.

It is for the aggrieved party to utilise the available legal remedies to obtain an outcome that it feels is right. That has all along been the position of the government that we have today.

The government has taken a hands off approach to these issues by leaving it to the individuals to sort it out amongst themselves.

If one feels strongly against such an approach, then it is necessary to use the ballot box to enlighten the ruling party.; March 29, 2010 11:11 PM
Anonymous said...: Hi Mr Tan
Yes, but now am stuck since the premium is already paid over 10years, n committing the amount we are paying premium by installments...but how is the life plan after 30+ year if remembered increase yearly by so much of the cash value, like my kid 100K after 35years of premium total about 43K the cash value is 79K but after 40years total premium 49K the cash value is 113K?
Thank you for your king reply
MK; March 29, 2010 11:32 PM
Morgan Wu said...: i think it is appropriate to know what is the true extend of the damage. the taxi driver's story has to be heard.

if everything is simply left to the insurance companies who pays for everything and anything at whatever prices the workshop charge them, it would lead to a spiraling of costs.

the madam is also incorrect to move ahead with the repair without first seeking the taxi driver's opinion. he may know workshops who are willing to do it for a lower price.

really, does the damaged caused warrant the replacement of a bumper? this are facts that we should consider.; March 30, 2010 12:19 AM
symmetrix said...: Can some kind soul pls verify this?

I understand that by law 3rd party insurance is mandatory and a minimum for any car to be on the road. My understanding is that it covers not only human injury (including death to 3rd party) but also damage to public/private property (eg the other car, lamp post, tree, traffic light, bus stop etc). Is this understanding correct?

If 3rd party property is NOT covered, is the 1st party driver personally liable for such damages? What if the damage is extensive costing more than $100k? The 1st party driver may be sued to bankruptcy. This is scary !!!

The law should make the minimum 3rd party insurance cover ALL 3rd pary risks, including human injury and property damage.; March 30, 2010 9:57 AM
Anonymous said...: Actually if motor insurance not compulsory, then the premiums will not be so high because people can chose to self insure or get the insurer involve. Let's say if the premiums is $600/year but driver felt it is too expensive or unafforable to him, then he can self-insure himself.

The worst that can happen is people sue him, but he can bochup or think of a story to wriggle his way around. At the end of the day, most of the people will give up anyway, because it is hard to prove, time-consuming and incur costly legal fees.

So there are more advantages to not have compulsory motor insurance, especially when it comes to lowering of premiums. This is the same as not having compulsory life insurance, let the free market dictate the price.; March 30, 2010 11:04 AM
Unknown said...: This reminds me the accident my friend has before with a taxi too. The taxi hit the back of his car, left a dent, no other injury though. However, the lawyer suggested him to report neck injury, so that the taxi driver must report the case, because of injury.

I was quite surprised at first when I heard that 3 years ago, and felt it was a trick that the lawyer wanted to earn more. But after reading the story, I felt it's maybe another way to protect ourselves from those taxi drivers who's trying to use the loophole.

In the end, the taxi company paid about $4000 and my friend took around 1,800, the lawyer packed home the rest.; November 30, 2010 5:47 PM