Early Reporting Initiative - The good, the bad and the ugly
Common claim - Into rear of third-party (IRT)
SCENARIO 1: THE GOOD
Insured drove into rear of third party vehicle. The driver completed a Scene of Accident Information Form, submitted a claim on The Specialist Risk Group Claims App and provided these to third party who signs for receipt, providing information on mitigation of loss and the offer of a free replacement vehicle if the Insurer agrees the third party is innocent and a replacement car is necessary. Incident reported within 24 hours. Third Party Pro Activity initiated immediately. Contact made with innocent party who accepts Insurer’s offer to manage the vehicle repair and provide replacement vehicle.
Representation
Third party had no need for representation as they were contacted quickly by Insurer before seeking representation.
Credit Hire / Repair
Both avoided. Early Third Party Pro Activity has allowed Insurer absolute control of the repair cost, duration of repair and alternative vehicle provision whether by providing courtesy car (preferred) or equivalent vehicle for duration.
Personal Injury
Whilst the Third Party indicated a small niggle from being hit in rear medical attention not sought and has decided not to seek advice in view of the early contact by insurer and provision of vehicle repairs and replacement vehicle.
Costs involved and our comments:
- Cost minimised
- Repairs: £2850 + VAT
- Duration: 10 working days
- Replacement vehicle: No direct cost as courtesy car accepted
- Personal Injury: No claim as third party satisfied with fast and efficient service
- Cost of representation: Avoided
- Total: £2,850 + VAT = best fit
SCENARIO 2: THE NOT SO GOOD
Same incident BUT incident not reported to Insurer for 15 days. However, Scene of Accident Information Form was completed by driver and provided to third party who signs for receipt.
Representation
Too late for Insurer to act proactively. Third party obtains representation through broker with Credit Hire Organisation (CHO). CHO acts quickly and provides 1st advice of claim to Insurer on day 2.
Credit Hire / Repair
Claims presented for credit hire and credit repair. As third party proved their innocence the credit repair and credit hire processes start immediately. Period of hire, cost of hire and cost of repair considered excessive. However: Opportunity to resist credit hire as Scene of Accident Information Form exchanged.
Personal Injury
Broker also recommends a solicitor to pursue a Personal Injury (PI) claim even though third party unsure about claiming. Solicitor then quick to act. Solicitor maximises the claim potential and instructs regularly used orthopaedic surgeon.
Costs involved and our comments:
- Cost considerably higher BUT some success on cost reduction
- Repairs: £3,250 + VAT
- Duration: 18 working days. Allegation by CHO of delay in provision of replacement parts. (Common occurrence!)
- Replacement Vehicle: CHO submits claim for 23 days at £232 per day + VAT for BMW. Total £5,336 + VAT BUT in view of the precedent of TNT – v – Steadman we successfully reject the credit hire claim. Cost: NIL
- Personal Injury: £2850. Claim for whiplash (18 month recovery)
- Cost of representation: £2250 + VAT Solicitors costs
- Total: £8,350 + VAT = a reluctant 2nd best
- Almost a 300% increase on Scenario 1 above for same incident!
SCENARIO 3: THE BAD
Same incident BUT incident not reported to Insurer for 15 days and Scene of Accident Information Form NOT completed by driver and provided to third party. Therefore third party not provided with ANY advice on mitigation of loss or direction on alternative vehicle hire (no answer on liability).
Representation
Too late for Insurer to act proactively. Third party obtains representation through broker with Credit Hire Organisation (CHO). CHO acts quickly and provides 1st advice of claim to Insurer on day 2.
Credit Hire / Repair
Claims presented for credit hire and credit repair. As third party proved their innocence the credit repair and credit hire processes start immediately. Period of hire, cost of hire and cost of repair considered excessive. No opportunity to resist credit hires or credit repair as Scene of Accident Information Form NOT exchanged at scene of accident.
Personal Injury
Broker also recommends a solicitor to pursue a Personal Injury (PI) claim even though third party unsure about claiming. Solicitor is quick to act. Solicitor maximises the claim potential and instructs regularly used orthopaedic surgeon.
Costs involved and our comments:
- Cost much higher and NO success on TP claims cost reduction
- Repairs: £3,250 + VAT
- Duration: 18 working days. Allegation by CHO of delay in provision of replacement parts (a common occurrence!)
- Replacement Vehicle: CHO submits claim for 23 days at £232 per day + VAT for BMW
- Total £5,336 + VAT and NO opportunity to resist credit hire as presented in accordance with GTA rules and NO opportunity to make reference to the precedent of TNT – v – Steadman
- Cannot successfully reject the credit hire claim. Cost : £5336 + VAT
- Personal Injury: £2850. Claim for whiplash (18 month recovery)
- Cost of representation: £2250 + VAT Solicitors costs
- Total: £13,686 + VAT = A poor 3rd
- A 480% increase on Scenario 1 above for same incident!
SCENARIO 4: THE UGLY
Same incident BUT incident not reported to Insurer for 25 days and Scene of Accident Information Form NOT completed by driver and provided to third party. In addition, insured driver attempts to deny blame in the full knowledge that they are to blame which comes out in the investigation and evidence compiling process.
Therefore third party not provided with ANY advice on mitigation of loss or any direction on alternative vehicle hire. In addition, it takes 3 months to fully investigate and determine liability, meanwhile the credit hire clock is ticking and the third party is under no pressure to return the vehicle as there is no cost implication.
Representation
Too late for Insurer to act proactively. Third party obtains representation through broker and Credit Hire Organisation (CHO) acts quickly and provides 1st advice of claim on day 2.
Credit Hire / Repair
Claims presented for credit hire and credit repair. As third party proved innocence the repair and hire processes start immediately. Period of hire, cost of hire and cost of repair considered excessive. NO opportunity to resist credit hire as Scene of Accident Information Form NOT exchanged AND period of hire extensive due to liability investigations.
Personal Injury
Broker also recommends a solicitor to pursue a PI claim even though third party is unsure about claiming. Solicitor is quick to act. Solicitor maximises the claim potential and instructs regularly used orthopaedic surgeon.
Costs involved and our comments:
- Cost far higher, NO success on third party claims cost reduction AND period of hire out of all proportion
- Repairs: £3,250 + VAT
- Duration: 90 working days in view of policyholder’s liability dispute which turned out to be unfounded but took 3 months to investigate to establish the evidence
- Replacement Vehicle: CHO submits claim for 90 days at £232.00 per day + VAT for BMW as liability investigations necessary. NO opportunity to resist extreme credit hire as presented in accordance with GTA rules and NO opportunity to make reference to the precedent of TNT – v – Steadman and cannot reject the credit hire claim. Cost: £20,880 + VAT
- Personal Injury: £2850 claim for whiplash (18 month recovery)
- Cost of representation: £2250 + VAT Solicitors costs
- Total: £29,230 + VAT = An awful result!
- A 1,025 % increase on Scenario 1 above for incident!
We are here to help
As you can see from the above scenarios, early reporting is a must and it will allow your insurance broker to help you. After any incident, policyholders and drivers must respond quickly to requests for information. Having the right reporting processes in place to provide your insurance broker with meaningful information in a timely manner is vital as this will allow them to ensure liability is quickly established.
Our multi-award winning, in-house claims team combine over 100 years of experience and are committed to providing the highest level of claims management service to our clients. By working with our experts to implement claims reporting processes, you can help minimise claims costs. Click here to find out more about how you could benefit from our claims management service. Alternatively, get in touch to speak to a member of the team.
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Belfield Group