Questions

We got a message a few days ago from a reader who was outraged by the behaviour of his employer. He said:

“I’ve been fully employed by this particular company since January this year. Last month on the 22nd I had an emergency (I had to go to school) so I served them a 24hr notice to inform them that I would leave on the 24th. So the thing now is they don’t want to give me the money I’ve worked for and want to deduct P1050 from my money. I should have been paid yesterday but they haven’t yet paid me! So I just want to know about notice. Am I not supposed to be paid because I’ve served a 24hr notice?"

The core part of this is simple. I suspect the reader is thinking about his notice pay. When you quit your job you only get paid for your notice period if you serve it. If you were expecting to paid a month’s notice then you have to work for that month. If you give them just a day’s notice then you only get paid for that day. On the other hand if they’re trying to deduct money from the period when he was working then he needs to call the Department of Labour immediately.

However the bigger question is this. How can going to school be an emergency?

It turns out that he’d applied for government sponsorship and when it was awarded on a Monday they insisted that he register with the college on Wednesday of the same week, forcing him to quit on the spot, leaving his employer in the lurch. However wouldn’t the decent thing have been to tell his employer that he was thinking of furthering his education? Wouldn’t that have been fair to them?

Another reader had a problem with insurance. She said:

“I have a house that cost P230,000 to build. I insured the house but this year the tenant accidentally hit the house with a vehicle. The quotation for repair (material and labour) was P24,831. I submitted everything to the broker.
They calculated the claim to be just P11,422. When I asked them the method of coming up with that amount the company that did the assessment told me that the house is under-insured hence they came up with that method they call average calculation.

My concern is that the amount to be is just too little even for the material that was quoted. Please help me with your usual investigations before I can sign the acceptance form for compensation.”

The problem is that very few people really understand insurance.

Insurance is about the transfer of risk. We pay our insurance companies to take our financial risk so we don’t have to. So long as we keep paying them the premiums they meet the costs of our misfortune. In effect you say to them “I’ll pay you a monthly premium and in return you pay to fix my car if it’s damaged or replace it if it’s destroyed or stolen”. You pay the premiums, they take the risk.

The question here is how much should the premiums be? Calculating insurance premiums is a complicated business but they’re based on the value of the insured item at the time it needs to be replaced, not the time it was constructed or purchased. If the insurance company was correct that the reader’s house is now worth considerably more than the cost it took to build (and we hope it is) then her premiums should have been much higher than she’d been paying.

Given that they’re offering to pay about half of the amount she claimed it sounds like her house is now worth half a million rather than a quarter. While that’s good news for her, it’s also bad news for her insurance policy. I suspect she should have been paying insurance premiums twice as high as she had been. The effect of only paying half is that she was only half-insured, hence the half payment.

The real fear is what would have happened if the house had been complete destroyed? All she would have got is the original construction costs from several years ago. That wouldn’t’ have covered the costs to rebuild the house. She would have been ruined. Maybe this small damage is a painful but useful lesson on how insurance works?

The lesson is that you must have adequate insurance based on the current value of the items covered. We all need to update our insurance policies every year as things either increase or decease in value. Remember that while having insurance might seem expensive, it’s a lot cheaper than not having it.

Another reader asked us for advice:

“We booked a new car at the end of May and we were expecting to receive the car in July. Now they are saying they are increasing the price from 1st August, and as the vehicle will be delivered in August I will be charged the increased price. They are increasing the price after the quote was finalised. Even the exchange rate was finalised and deposit paid. I find this very unfair.”

Surely this is very simple? The dealer went back on a deal. That’s not how business is done.

Our advice is to write the dealer a letter cancelling the deal completely and demanding a full refund. The reader had a contract with the dealer to buy the car at a price that was previously agreed and they had no right to change that contract without her consent. The simple truth is that any company that tries to do this can’t be trusted and we shouldn’t give them our business.

Keep the questions coming in to us, remember that help from Consumer Watchdog is one of the few things in life that is entirely free!