Where the claim is admissible the next steps to be taken depend
on the nature and the extent of the damage.
Own Damage Repairs
If present, a clause in section 1 of a comprehensive motor
policy grants the policyholder the right to instruct repairers
to proceed with the repairs, subject to immediate notification
being sent to insurers with a detailed estimate. This clause
is modified or qualified by some insurers who restrict the
policyholder’s authority to a fixed amount. The tendency
is for these monetary limits to be increased gradually in
line with inflation. The fixed amount may well buy very little
in the way of car repairs these days and some insurers are
prepared to allow insureds to instruct repairers if the estimated
cost of repairs is below a fixed low amount.
It should be
emphasised that where the insured is permitted to authorise
repairs, with or without monetary limit as discussed above,
the insurers are not necessarily promising to pay the whole
amount of the repair bill. There may, for example, be a contribution
for betterment to be collected from the insured or it may
transpire that the insurers are not liable at all for the
damage in the terms of the policy. In other words, permission
to authorise repairs is always given without prejudice to
the insurer’s position and should always be treated
as no more than a convenience where the need for an inspection
is unlikely and where it is important to minimise delay. In
many cases the problem is largely academic because the repairers
may not be prepared to accept instructions from the insured,
who would be liable for payment and might not have the financial
resources.
Approved Repairers
In other cases the ‘permission to authorise repairs’
clause often provides the insurers with an answer if the insured
complains that the repairs have been delayed: in such cases
the insurers can point to the fact that the insured could
have authorised repairs straight away had he so wished. Nearly
every car insurance company now has a network of nationwide
approved
Where the damage is serious the company will instruct its
own engineer, or an independent assessor, to inspect the damage
and report. In suitable cases the engineer will agree with
the repairers the extent and the cost of the work to be done
without formal authority. Otherwise, the insurers will authorise
repairs, with or without qualification, after studying the
engineer’s report.
Excess Deductable
Whenever there is an accidental damage excess the amount
of the excess must be deducted before the account for repairs
is settled. The excess is usually collected by the repairer
before the vehicle is released to the policyholder. When he
pays the amount of the excess the insured will receive a receipted
account from the repairer, and if a claim for uninsured losses
is to be pursued against a third party, this account will
serve as the basis of the claim.
A further point to note here is that if the repair estimate
is in excess of the amount up to which the insured is permitted
to give immediate instructions to the repairers, and there
is likely to be some inconvenient delay in the inspection
of the damage by the insurer’s engineer/assessor, the
insurers will occasionally authorise the immediate commencement
of the repairs, subject to any damaged and replaced parts
being retained by the repairers for subsequent inspection.
An arrangement such as this might be made if the insured cannot
afford to be without his car for more than a couple of days
and it is impossible for an insurance inspection to take place
in less than, say, four or five days as is often the case.
Value added tax – motor
repairs authorised by insurers
In general terms the introduction of VAT (currently 17.5%)
has increased the cost of accidental damage claims to insurers
– simply because VAT is added to accounts for most forms
of vehicle repair, whether the account be paid by the owner
of the vehicle himself or by his insurers Insureds who are
‘registered taxable persons’ for VAT purposes
(i.e. in a business or profession which has to charge VAT
on goods or services supplied) have to be handled in a different
manner from persons who are not registered (i.e. in simple
terms, the general public who merely pay VAT on goods and
services supplied to them).
Motor accident report forms contain a question asking the
policyholder whether he is registered for VAT purposes. The
answer given will be of importance to insurers for with the
introduction of VAT the agreement of H.M. Customs & Excise
was obtained to a change in insurer’s existing procedures
for authorising motor repairs so as to enable the VAT on a
motor repair bill to be charged to the policyholder where
the latter is a registered taxable person who is able to set-off
the VAT against his own liability for VAT. I practise, this
means that if the policyholder has stated on his accident
report form that he is registered for VAT purposes, the insurers
should ensure that any VAT amount is deducted from the account
which they settle with the repairers; the VAT element should
be settled by the registered policyholder who, in turn, should
then declare the amount involved to the authorities as a set-off
against his own VAT liability.
For policyholders who are not registered taxable persons the
existing procedures for authorising repairs continue unchanged,
i.e. in general terms the amount of the VAT on the repairs
will be borne by the insurers. The insurer’s letter
of authorisation to the garage must make it clear that the
insurer is giving instructions and making payment as agent
of, and on behalf of, the policyholder. The Motor Agent’s
Association recommended to its members that they should operate
a special invoice scheme for motor repairs authorised by insurers.
Although this invoice is not used by all garages it is standard
practise for garages to deduct from the total repair cost
any excess or contribution to be payable by the policyholder
and to add VAT to the result to arrive at the amount recoverable
from the insurer. The policyholder is then invoiced for the
amount of the excess and any contribution plus VAT on the
contribution. An excess is not subject to VAT. The full amount
of the repair is subject to VAT and the excess is then deducted
from the total repair invoice.
See also:
Towing
Charges
Choice of Repairers
Car Insurance Claims Frequently
asked questions
What
should I do if I have an accident
Where
can I find an Accident Claims Solicitor
What is the role of the
Motor Insurers Bureau
What are Car Insurance Claims?
How is the
Claim Process controlled?
Fire
Theft & Acident claims explained
What is on a
Claim Form?
How do I know
I'm if I'm covered
Why
would a car insurance company deny liability?
What
is an Insurable Interest
How
do I go about getting the damage repaired?
What are approved
repairers?
Who pays
for towing charges?
What happens
if my car is a write off?
Who decides
my cars market value?
What was
the World's worst car insurance claim?
|
|
UK
Car Insurance Online
