I am writing this article from a hotel room in San Salvador, El Salvador. My wife, Krista Turko, and I love to travel and our wanderings often give me a glimpse into the legal realities in other parts of the world. Today, while returning from a visit to San Salvador Volcano, we saw the aftermath of a car accident in an intersection. Fortunately, no one was hurt, just a run of the mill fender-bender, but it raised the topic of insurance here in El Salvador. As our tour guide Roberto from Nahua Tours explained, there is no insurance here. The drivers will wait for the police to arrive, document the accident, and in most cases the at-fault driver simply pays for the repairs himself. This can be a tall order in a country that has a minimum wage of just over $1 per hour! When I asked what happens if someone gets hurt I was told that a court may force the at-fault driver to make payments to the injured driver for many years.
Why am I telling you this? Well, in part, because we often bemoan our insurance program here in a Canada…but it could be worse! That said, I have had a number of files of late that have illustrated the shortcomings of our own system and may contain some lessons for all us insurance-paying customers out there. A couple examples include:
Business Interruption – most business owners carry policies that protect them not only from third-party liability, but also against loss of business income in the case of an interruption to their operation. This sounds very good, but I have seen several occasions where business owners have had difficulty receiving coverage. For example, I recently acted for a business which suffered a loss in a flood. There was no doubt coverage would be extended, but coming to a total was less than simple. Unfortunately, the business owner struggled to outline his various losses and the insurer resisted a $40,000 offer, made by the business owner out of desperation and frustration. He ultimately brought the matter to me, and after several rounds of record gathering, and identifying all sources of loss, we settled at $110,000. Though he was very pleased with the final result, the business owner had been forced to seek outside financing, family loans, and whether severe cash flow pressure due to the extended time to receive payment. This could have been avoided, or at least minimized, had complete and organized records been at the ready supporting all equipment lost, sales and expense history (backing up his lost income) and the value of his leasehold improvements. Further, in reviewing the claim together, we were able to identify less obvious losses that were ultimately agreed to by the insurer.
Motor Vehicle Injuries – the sad fact is that every day people are injured in traffic accidents to varying degrees. The process of seeking recovery can be complex, long and very involved, depending on the nature of the injury. Again, my experience is that the insurer for an at-fault driver is in no hurry to pay more than they must, as illustrated by a recent example. My client was hit while riding her bike. Fortunately, she was not badly injured, but the consequence of the physical injury was more severe than she (and the insurer) might have thought. You see, she is a prospective Olympic athlete. Though her injuries were largely captured by the Alberta Minor Injuries Regulations (or “the cap” as it is sometimes called), the “minor” injury disrupted her training, in turn jeopardizing her amateur athlete funding, university scholarship, and shot at the next Olympic games. Although my unassuming client would have accepted any amount sufficient to cover a new bike (the first offer to her was not even enough to do that), after fully reviewing her situation we were able to identify all sources of loss and settled the matter at $52,500 (nearly 20x the first offer).
My intention isn’t to suggest I am able to work any special magic. That said, let’s face it, the insurer is in no hurry to pay, and certainly not interested in paying any more than it has to (a.k.a. that the claimant will accept). Your best response to this is proper preparation, documentation and complete consideration of your claims. Be it your business assets, revenue and expenses, nature of your injury, or what those injuries might have also contributed to in your life, a full and clear presentation of the relevant supporting information can avoid delays, reduced recovery, and hopefully litigation. This can be kept in mind not only when you need to make a claim, but in keeping such records organized in advance should that day come. But worst case, at least you won’t have to wait 20 years to get paid like that poor El Salvadorian driver.