PETER CITUKWU’S MOTOR INSURANCE CLAIM Mr. Peter Chukwu owns a Peugeot 406 saloon car which he insured for a value of #2,000,000.00 with Integrity Insurance Plc on comprehensive basis. He uses this vehicle for social, domestic, pleasure purposes and in connection with his business but not for hire and reward. One day, as he was going to the beach with his two children, Emeka and Pauline, he got involved in an accident with another car, a Honda Accord belonging to Mr. Bayo Samuel. Mr. Bayo Samuel was descending a hill at a high speed and consequently hit the back side of Mr. Peter Chukwu’s cat damaging the rear bumper, two rear lights and the booth. An argument ensued between Mr. Peter Chukwu and Mr. Bayo Samuel as to how to settle the issue. It was however discovered that Mr. Bayo Samuel had a third party motor insurance cover with Adequate Insurance Company Limited. The accident was reported to Integrity Insurance Plc by Mr. Peter Chukwu who subsequently submitted estimate of repairs, in the sum of two hundred and fifth thousand naira (N250,000.00). The insurer of Mr. Peter Chukwu admitted liability and paid the sum of one hundred and eighty thousand naira (#180,000.00) after adjustment and wrote to Adequate Insurance Company Limited for recovery of its outlay. Mr. Peter Chukwu took delivery of the damaged bumper and rear lights from his mechanic after fixing his car and took them home with the intention of repairing them for sale.
Required:
(a) Identify the principle involved in the case and why?
(b) Explain the principle identified.
(c) Who should take the delivery of the damaged parts of the Peugeot 406 car?
(d) Explain two covers available under the insurance policy held by Mr. Peter Chukwu
Explanation
(a) The principles involved in the case are:
(i) Indemnity:- Because the sum to be claimed by Mr. Peter Chukwu cannot exceed the sum insured which is the insurer's limit of liability. Subrogation:- Because the insurer of Mr. Peter Chukwu which is Integrity Insurance Plc will have to indemnify him and seek recovery, from the insurer of Mr. Bayo Samuel which is Adequate Insurance Company Limited as Mr. Bayo Samuel was at fault.
(b)(i) Indemnity:- There is the payment of exact financial compensation sufficient to place the insured in the financial position he enjoyed before the loss.
(ii) Subrogation:- This is the legal right of one person (insurer) having indemnified another person (insured) to stand in place of that other person and receive back all his entitlements due from any other source.
(c) Integrity Insurance Plc should take delivery of the replaced damaged parts of the peugeot 406 saloon car as salvage having settled the insured.
(d) The insurance policy held by Mr. Peter Chukwu is comprehensive private motor policy. The two covers under this policy are: Own Damage Cover: Loss of or damage to the insured vehicle (Peugeot 406 Saloon Car) arising from accident, fire and theft of the vehicle or its accessories while fixed on the vehicle.
(ii) Third Party Cover: Third Party legal liability to third parties arising from the use of the vehicle on public road leading to bodily injury to or loss of or damage to third party properties during the period of insurance.