In the case of a traffic accident, the insured must inform the insurance company as soon as possible and in any case by not later than two weeks by notice in writing of the occurrence of the event together with such particulars of the event of which he/she may be aware.
Where the insurer has reasonable grounds to believe that an event has occurred in relation to motor vehicle as a consequence of which the insurer may have to pay a claim to an injured party but the insured fails or delays to lodge a claim, the insurer is bound by law to treat that event as if a claim had been made.
In the event that a third party fails to inform his insurer of the event which may result in a claim, there is a process which needs to be followed. This process is described below:
a) eTARS Reports (i.e. the wardens’ report) are normally sent to insurance companies after 3 or 4 working days from the day of the accident.
b) The insurer of the party who is likely to be at fault will treat any notification received as a claim. The insurer would not normally accept liability before it can discuss the circumstances of the accident with its insured. That is the reason why the insurer would send a surveyor to inspect the victim’s vehicle on a “without prejudice basis”. The insurer would also normally discuss the case with the innocent party. One has to appreciate that it is a basic principle of natural justice that both sides should, at least, be given an opportunity to be heard within a reasonable time.
c) There are instances where the party who allegedly is at fault queries the accuracy of the eTARS Report and refuses to accept liability. At that point, his/her insurer can do either of two things (i) if fault is not totally clear, propose to his policyholder the option of going to voluntary arbitration so that an independent arbiter can determine fault, or (ii) if the insurer is convinced that fault lays with his policyholder, formally inform him/her that he/she should accept liability or else be prepared to bear the cost of any legal action taken against him/her.
d) Whichever way the recommendation is given, the third party cannot refuse to lodge a claim. If the errant third party refuses to take the insurer’s suggestion to accept liability, there is yet another process to go through. This requires the insurer to write formally to the policyholder informing him/her of the intention to pay compensation to the third party unless the policyholder, in writing, gives specific instructions to the insurer not to proceed with payment. Presumed innocent third parties may complain about this fact - however, whilst every insured is bound to lodge a claim, they have a legal right not to accept liability. An insurer cannot legally accept liability against the policyholder’s express wish.
e) Some insurers recommend to the presumed innocent party to send a legal letter so that there would be a formal claim registered against their policyholder. Although there is nothing which should preclude the third party from doing so (especially if he wants to expedite matters), this may be an additional (and in some cases unrecoverable) expense. A legal letter may not be required if the insurer intends to process the claim. It is only necessary if the policyholder has disagreed (in writing) with his insurer’s opinion that he is to blame. If the third party wants to start legal proceedings he has a choice as to whether to proceed directly against the insurer or the responsible party.
f) A legal letter or some similar form of written communication is the minimum necessary to prove to the third party’s insurer that there is a claim by the third party.
g) The law is quite clear on this aspect. Article 15 of Chapter 104 of the Laws of Malta provides that a registered or judicial letter be sent by the third party insurer to their client granting him notice of the claim and the intention to accept liability. Only after the requisite 10-day period has lapsed can the insurer proceed to pay the innocent third party. It is to be noted that the law (and the handbook of Best Practice for Third Party Motor Liability Claims issues by the Malta Insurance Association)requires that the insured be given an indication of the amount to be paid - which would, strictly speaking require the third party to submit bills regarding repairs or an approximate indication of the total amount due as resulting from the survey report.
h) As soon as the insured is notified with the insurer’s registered or judicial letter sent in terms of law, the 10 days required according to law would start running, and should the insured fail to lodge an objection within that time-frame, the insurer shall be entitled, according to law, to pay the innocent third party.
i) If a vehicle has been declared beyond economic repair, this means that it is not financially feasible for the insurer to repair it as in doing so might very well exceed the vehicle’s market value.
The process mentioned above can take from a few days to several weeks, depending on the circumstances of the case.
Whilst one naturally sympathises with third parties who are involved in accidents and suffer unnecessarily, one must also appreciate that the law must be respected.
Finally, there is also another important aspect which should be borne in mind. The innocent third party might argue that his vehicle is not in a good state to be road worthy as a result of the accident (until it is repaired). Thus he/she is deprived from its use during the time until a decision is taken by the insurer to accept liability and authorise repairs. One must remember that it may be possible for temporary repairs to be undertaken so that the vehicle may be driven without the risk of contravening any traffic regulations. Such situations may however complicate themselves if the financial outlay for repair works is high. This too might appear as an additional financial burden for the innocent third party, but repair works would nevertheless have to be carried out sometime or other, whether reimbursable or not (especially if the case is referred to arbitration and the presumption of innocence is not upheld).