Determining liability when one driver’s mistake leads to damage across multiple vehicles

By Bernard AKYIN-ARKOH

Multiple vehicles accidents often lead to widespread concerns about how insurance companies will address claims, especially regarding coverage for vehicle damages and personal injuries / death. Many people find it unclear whether insurers will fully honor claims, leaving those involved uncertain about receiving fair compensation.

This article aims to shed light on how insurance companies and the legal system typically handle these complex incidents, providing insight into what drivers and injured parties can expect during the claims process after a major accident involving multiple vehicles.

What is motor insurance?

Motor insurance is an insurance policy that provides financial protection to vehicle owners,   against financial losses that may arise from accidents, theft, or other damages to the vehicle.

It typically covers various types of vehicles, including cars, motorcycles, trucks, and commercial vehicles, and can offer financial protection for the owner and third parties involved. The three types of motor insurance policy are third party, third party fire and theft and comprehensive policy.

• Third party policy: This policy provides cover for only third party liabilities (injury / death and damage to third party properties) in the event of an accident. It excludes any damage to the policyholder’s vehicle in the event of an accident. this is the most basic motor insurance required by law. In Ghana, the Motor Vehicle Third Party Insurance Act 1958 makes third party insurance policy compulsory for all vehicle owners. The policy offers coverage for damage to a third party’s property, with a standard limit of GH¢6,000.00.
• Third party fire and theft. This policy is an extension of the third party policy to cover damage to the policyholder’s vehicle caused by fire and when the vehicle is stolen. The policy excludes damage caused to the policyholder’s vehicle as a result of collision.
• Comprehensive policy: This is the most extensive form of motor insurance, covering third-party liabilities and damage to the policyholder’s vehicle, regardless of who is at fault. It may also cover additional risks like fire, theft, and natural disasters.

Determining fault in the event of an accident involving multiple vehicles

In multi-vehicle accidents, insurance companies follow structured protocols and apply specific principles to determine liability and decide on claim acceptance or denial. Establishing fault is crucial in these cases, as insurers rely heavily on policy terms, coverage limits and thorough investigations from both the policy and their internal claim’s department.

The first step involves examining police and accident reports, which provide essential details about how the accident unfolded. These reports help insurance companies pinpoint the individual or factors responsible for initiating the accident. This investigation is particularly important in complex incidents where one driver’s action such as sudden braking failure, reckless driving, or illegal maneuvers triggers a chain reaction.

For example, if a driver’s brake failure or reckless actions directly cause the accident, the insurer of the responsible party will generally bear the primary responsibility for the ensuing damages.

In some cases, other drivers may share part of the responsibility (contributory negligence). If, for instance, a vehicle was tailgating or not maintaining a safe distance, they might be partially liable. This is determined through evidence such as accident reports, witness statements, and expert analysis.

The third-party liability portion of the at-fault driver’s insurance policy is then activated. This component typically covers the financial burden of damages inflicted on other parties, including medical expenses (for bodily injuries) and vehicle repair or replacement costs. However, each policy has a specific payout limit, meaning that if the total damages exceed this cap, the at-fault driver may be personally liable for any additional costs not covered by their policy.

If liability remains disputed or if insurance limits are inadequate, affected parties might take legal action to resolve liability and pursue compensation. Multi-vehicle accidents sometimes lead to lengthy legal proceedings due to the complexity of establishing fault and managing claims for all parties involved. In some cases, insurers may opt for an out-of-court settlement, especially if liabilities are clearly defined, to expedite the claims process and minimize legal costs.

For those affected by the accident with comprehensive motor insurance, their policies can serve as a fallback. These policies may cover repairs or medical expenses for damages caused, even if the responsible party’s policy limit has been exhausted. A comprehensive insurance policy provides coverage for damages resulting from a wide range of risks, including accidents involving negligence.

When a driver is deemed at fault for an accident, comprehensive insurers covering the affected vehicles will compensate their policyholders for losses under the policy’s terms. After doing so, insurers may exercise a right of subrogation, a legal principle allowing them to seek recovery of paid amounts from the at-fault driver’s insurance company or directly from the driver if they are uninsured or found negligent

Situations involving unlicensed drivers or uninsured vehicles

Insurers may refuse to accept liability for claims from individuals involved in an accident if the drivers are unlicensed or the vehicles involved are uninsured. If the driver responsible for the accident is found to be unlicensed, their insurance company may not cover the costs related to property damage or injuries. Similarly, unlicensed drivers of other vehicles cannot make comprehensive or third-party claims against their insurers.

In such cases, the unlicensed driver becomes personally liable for the financial consequences of the accident and will be required to pay for the damages out of their own pocket. For many unlicensed or uninsured vehicles, fulfilling these financial responsibilities can be difficult.

This situation may make it challenging for the injured parties to receive compensation for their damages. The absence of insurance coverage for the unlicensed drivers can complicate the process of recovering losses. In Ghana, for instance, victims in such cases may turn to the Motor Compensation Fund (MCF) for potential compensation.

However, if the other vehicles involved in the accident are comprehensively insured, their coverage may extend to damages to their own vehicles, even if the accident was caused by an unlicensed driver. In such instances, the insurance company of the injured party would compensate them for their losses and then seek reimbursement from the unlicensed driver.

Motor Compensation Fund (MCF)-Ghana

A Committee composed of representatives from the Commission and insurance companies responsible for underwriting motor insurance oversees the operations of the Motor Compensation Fund (MCF). The primary objective of this fund is to offer a measure of compensation to individuals or their family members who have suffered injuries or fatalities in motor accidents. Specifically, the fund covers cases involving Hit and Run incidents and accidents caused by Uninsured Vehicles.

Furthermore, the MCF plays a crucial role in extending compensation to the general public. This pertains to situations characterized by a Breach of Policy Conditions, encompassing circumstances like changes in vehicle ownership, the utilization of inappropriate driver’s licenses, and instances of driving without a license. Such policy breaches can lead to insurance claims being repudiated by insurers. In these cases, the MCF steps in to provide compensation to affected parties.

By offering financial relief in scenarios involving Hit and Run accidents, accidents with Uninsured Vehicles, and instances of policy condition breaches, the Motor Compensation Fund serves as a safety net for those impacted by these unfortunate events. The Fund’s oversight committee, comprised of Commission officials and insurance industry representatives, ensures that its operations are effectively managed and aligned with the fund’s objectives.

The table below shows the number of awards, total amount of claims paid and the average claim per award from the MCF from 2017 to 2021. For example, in 2020 the total amount of claims paid from the fund was GH¢2,400,000.00.

	2017	2018	2019	2020	2021
No. Of Awards	78	105	191	161	246
Total amount paid GH¢	1,300,000.00	1,200,000.00	2,600,000.00	2,400,000.00	1,500,000.00
Average claim per award GH¢	16,369.00	11,439.00	13,829.00	15,112.00	6,159.00

Source 2021 Annual report of the insurance industry of Ghana. Page 26 https://nicgh.org/wp-content/uploads/2023/06/2021-NIC-Annual-Report.pdf

What documents do I need to present to my insurance company when making an own damage claim?

1. Completed motor insurance claim form (date and circumstances surrounding the accident)
2. Estimate of repairs
3. Pictures of the damaged vehicle with vehicle number showing / making the vehicle available for inspection depending on the extent of the damage.
4. Copy of driver’s license (front and back)
5. Police report if a third party was involved in the accident
6. Fire service report if the cause of the damage is fire

What documents do I need to present to my insurance company when making a third party property claim?

1. Completed claims form by the insured
2. Letter of claim from the third party addressed to the insurance company
3. Police accident report
4. Copy of driver’s license (front and back)
5. Estimate of repairs of the third party property
6. Pictorial evidence of damage to the third party property

What documents do I need to present to my insurance company when making an injury claim?

1. Completed claim form by the insured
2. Police accident report
3. Medical report
4. Original receipts of medical bills and other expenses
5. Identity card of the victim
6. 2 passport pictures of the injured party endorsed by the medical doctor
7. Statutory declaration

What documents do I need to present to my insurance company when making a death claim?

1. Death certificate / burial permit / post mortem report
2. Letters of administration or proof of probate or registrar’s certificate
3. Two passport pictures of the administrators / beneficiaries
4. Identity card of the claimants and their relationship to the victim
5. For rural dwellers who cannot provide all these information, letter from their chief and statutory declaration can be provided

Conclusion

In such multi-vehicle accidents, timely claim filing, proper documentation and coordination between insurers and claimants are crucial for a fair settlement. When one driver’s fault causes damage to multiple vehicles, accountability typically falls on the driver whose actions triggered the accident.

However, the type of insurance coverage limits, contributory negligence as well as legal considerations can complicate the process. Understanding how insurance companies handle these situations is essential for both victims and the at-fault parties to ensure fair compensation and resolution.

>>>the writer is a Chartered Insurance Practitioner (ACII-UK), Chartered Property Casualty Underwriter (CPCU), and an Associate in Risk Management (ARM) from the Institutes, USA. He is an accomplished writer and author. He was recognized as the 2nd runner-up for the 2024 AIO-YIPs African Next Generation Award and won the Young Achiever Award at the 2024 Ghana Insurance Awards. He holds an Executive MBA in Finance from the University of Ghana, Legon and is currently a manager at Star Assurance Limited. He can be reached via 233249236939 and or [email protected]

References

• Akyin-Arkoh, B. (2024). Ghana’s Insurance Landscape: A Comprehensive Guide to General Insurance.
• Motor Vehicle Third Party Insurance Act 1958
• Insurance Act 2021(Act 1061)
• Road Traffic Act 2004 (Act 683)
• https://nicgh.org/wp-content/uploads/2023/06/2021-NIC-Annual-Report.pdf

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