Claims for damages and ‘interesting’ practices in the insurance industry

The County Court decision in Kevin Fallows v Harkers Transport sheds interesting light on insurance industry practice.  In reality the case is between Royal Sun Alliance and Equity Red Star and concerned undisputed liability for damage to a parked car but, in the words of the judge:

“Behind this simple story lies a giant struggle which has been going on for many months between RSA on the one hand and a number of defendant insurers over a method of business which is seen on the part of RSA as perfectly legitimate and by a number of defendant insurers as involving methods of business which fall somewhere between very sharp practise and outright fraud. While the sums in each individual case are very modest it is clear that across the industry millions of pounds are at stake.”

The detailed issues concerned RSA’s practice of using its own car repair subsidiary to undertake repairs, which in turn used sub-contractors on whose charges a profit was taken.  The judgment makes it clear that the additional charges added to the sub-contractor’s bill are not recoverable, particularly in this case where there was no evidence to support them as additional costs of the repair.

Although only a County Court case, the judge, His Honour Judge Platt, is clearly very experienced with cases like this and he has made some plangent comments about insurance industry practice.

The judgment also offers a very helpful summary on the topic of damages.  This is clearly highly relevant to claims like this, but should also be of interest to other claimants for compensation – on compulsory purchase for example, where the same principles hold good for disturbance claims with regard to mitigation of a claimant’s loss.

The report is available from the BAILII website at: http://www.bailii.org/ew/cases/Misc/2011/16.html.  Fascinating reading for anybody who has ever dealt with a car insurance claim.