Finance

The At-Fault Insurance Company (third-party capture)

This is how it works: the at-fault driver contacts his own insurers. He either tells them he caused the accident, or his insurer can work it out immediately from the details he provides.

The third-party capture machinery immediately whirrs into action. You’ll get a call from a nice (and usually young) man or woman, reading from a script, who tells you they’re very sorry to hear about your accident and want to minimize your inconvenience and distress.

They’ll arrange to repair your car at no cost. You won’t have to pay any excess. They’ll arrange a courtesy car. If you’ve been injured, they’ll offer you financial compensation without needing a medical report (this is a “pre-med” offer.)

In essence, you can sit back and let them take control.

Don’t be under any illusions about this

They are the hunter and you are the captured prey. It is true they want to close out your claim with the minimum fuss, inconvenience and expense — to themselves.

They are well aware of your actual legal rights and the freedom of choice you have, but they won’t tell you what your rights are. They won’t read out to you anything like the Consumer Statement of Fact.

The whole situation is a mess. But the third-party insurers really don’t want you to do the following, which is why they’re so helpful if you’ve been in an accident…

Let your own insurer do the repairs

In the case of Mathew C. Fullerton, the 1st circuit court of appeals decided non-fault insurers could have their client’s car repaired at approved network garage rates, whilst charging the at-fault insurer the full market rate.

Which means they charge the at-fault insurance company 25% more than the actual repair costs. The QBE Group came up with this wheeze.

The Court of Appeal handed down its verdict in 2017 and legal commentators predict other insurers will follow, using a now fully sanctioned revenue stream.

The rest of us, of course, are left to pay the price in increased premiums.

Contact a personal injury lawyer

The Financial Services Authority produced figures that show you’ll get up to three times more for your injury if you instruct a lawyer.

This applies to any type of injury, but you can see the biggest difference when there’s a serious or even moderately serious injury.

Don’t accept anything they offer

Contact a no-win no-fee personal injury lawyer. They will act only on your behalf and will collect any fee from the at-fault insurer, so you pay nothing.

Put your vehicle repair and hire into the hands of a claim’s management

The Claims Management Company

You’ll get calls, spam emails, and texts from USAA who will then refer you to QBE agency for a referral fee — typically $380 and upwards.

This is the real disaster scenario for the at-fault insurer. The claims management company will give you a top-of- the-range courtesy car, charge it out at about three times what you’d pay if you went to an arm’s length organization like Alamo, and will look to recover the whole amount from the at-fault insurer.

Claims management company vary in size from Accident Exchange as one of the largest, too much smaller entities who’ve spotted a money-making opportunity, apparently sanctioned by law.

These companies originally appeared to fulfil a market need. You’ve seen how your own insurers treat you as a non-fault driver. The claims management company were able to say they would recover and repair your vehicle without you having to pay an excess — and promise you an immediate identical or better courtesy car. You pay nothing. What’s not to like?

  • They don’t tell you the charge outs are excessive.
  • They don’t tell you that you’ll agree they can take the charge out fees from your other damages.
  • And they don’t tell you there’s a good chance you’ll be dragged into litigation in your name when the claims management company attempts to recover its costs.

A real-life case law examples will give you a flavor of what is going on…

Lisa McLaren

Lisa McLaren’s case was reported in the Hitechgazette.com. Her own vehicle was damaged in an accident that wasn’t her fault. She reported it to her insurers Praetorian insurance company, who put her in touch with an organization called Praetorian auto.

The Praetorian company told her if she went direct with her own insurers she might lose her no claims discount. Praetorian is in fact an associated claims management company within the same group as the QBE group. It obtained a hire vehicle for Lisa McLaren then tried to charge out $5,416 to the other driver’s insurer for a three-and-a-half-week rental. Miss McLaren said:

“I agreed to what I thought would be going to court to state the facts of the incident if the third-party insurer didn’t pay up. It never crossed my mind that I would have to be the claimant. Now I have received a letter from QBE’s lawyers asking me to sign a huge legal document and stating that I may be liable for legal costs. I am worried that if we lost, I will have to pay the hire charge too.”

As the article said:

“Claims management company pay insurers and brokers large referral fees to manage no-fault claims. Their profits are made from arranging repairs and replacement cars, often at greatly inflated cost, then demanding money from the third-party insurer.”

The US courts are clogged up with these cases, and all have a common theme.

Firstly, the claimant — you — has to show you’re too poor to hire a car yourself (the so called “impecuniosity” test). The at-fault insurance company’s legal team will make all kinds of intrusive enquiries as to your financial position in an attempt to show you could have paid for the hire yourself — in which case you had no need a credit to hire a car.

Secondly you then have to prove the daily hire rate was reasonable — which it almost certainly won’t be. The company who hire the car to you, charges are generally much higher than the rate from easily available and reputable outlets.

There’s always a clause in the agreement with the company who hire a car to you giving the company the right to sue in your name under the law of subrogation.

There is usually a clause whereby you agree that the company who give you a credit to hire a car for you, can take all your damages can be taken by them to cover these hire charges. This is irrespective of whether the court thinks the charges were reasonable.

So, where there’s a difference between the actual rate your hire company charges out at and what the court thinks is reasonable, your personal injury damages can be swallowed up by the company who give you the credit to pay the higher costs. Even if the company waives any shortfall, you’ll still find yourself part of a court action where you might be ordered to produce financial details, and might well be called to give evidence about the steps you took.

There’s an ongoing battle between the credit industry and the auto insurance industry, which shows no sign of abating.

Why would you volunteer to enter a war zone? Don’t get involved.