I am looking for any advice on the following

A 2 vehicle accident, car A was stationary, car B runs into car A. Driver of Car B is Mr Honest and confirms to his insurers that he hit a stationary car so liability is not in dispute.

Whilst Car A is in for repairs owner of Car A hires a car. Hire car has a huge excess so owner of Car A opts for the Collision Damage Waiver.

When it comes to claiming back unisured losses the insurers of Car B refute the CDW and claim that owner of Car A had a duty to mitigate their losses and the CDW was not an essential item.

Owner of Car A was well aware of the duty to mitigate losses but they are a risk averter, their own policy does NOT have any excess, let alone an excess as large as that on the hire car. The owner of Car A would not consider driving a car that has an excess and therefore had two choices,-

1) Hire a car

2) Use public transport and taxis to carry on with running their own business whilst the car was in for repairs

The cheaper of the two options was to hire a car, but it is impossible to hire a car without a CDW.

I can understand that an insurer might refute the CDW if the driver of the car had an excess on their own policy (ie the car that was in for repairs), but surely given that owner of Car A only wanted to continue driving in the same manner that they did before the accident (ie NO Excess) I cannot see how they can refute this item.

At the time of hiring the car it was not known how long repairs would take, it was considered to do a temporary change of vehicle to cover the hire car on the policy of Car A but the admin charges would have ruled this out.

Anyone offer any advice

Mossycat

Hi Mossycat,

Your insurer's are correct, as CDW is not an essential cost, they don't have to, and therefore won't, reimburse that cost.

CDW is optional- usually there's an excess of approx £250/£300, OR CDW @ £2 per day (or there abouts).

Insurer's save money wherever possible, and had you been the owner of Car A, and paid CDW, Car B's insurer's would not reimburse you.

Hi

Thanks for your reply.

In this intance though surely the CDW was a necessity, the innocent party will not drive a vehicle that has an excess and by actions of another (ie the responsible party) they had to hire a car.

The innocent party has demonstrated by having a zero excess policy that they seek to avoid risk, whilst hiring a car they enjoyed no greater or better benefit than they would have done had the accident not occured.

Mossycat

One can buy many things to avoid risk - it does not make it necessary or reasonable. The cost of the CDW is not as a natural result of hiring the car, or indeed, of the accident. As such, it will not be covered.

Even going on the basis that CDW is mitigating - it is only potentially reducing the cost of something that may or may not happen in the future - it has not been purchased to reduce a known cost.

Thanks ab123uk and gyzmo, not what I wanted to hear but your replies were appreciated.

Mossycat

I'm going back a long way with my insurance experience here and I am prepared to be corrected if things have moved on in the 20 years I have not practiced but there used to be case law relating to CDW claims. It may well have been superceeded by now and I'm sure somebody will tell me if it has.

The case of Coughlan v Firmin Coates (? spelling) used to be quoted as the Judge in that case ruled that it was reasonable for the Claimant to protect himself from the excess on his hire car as it was significantly higher than his own policy excess. This ruling was upheld in the Court of Appeal (Marczyk v Davies - again ? spelling). CDW is therefore a legitimate expense that can be claimed from the TP insurer.

Like I said, I haven't practised in the business for a long time but when I was doing ULRs it was a well tested case.

I'm going back a long way with my insurance experience here and I am prepared to be corrected if things have moved on in the 20 years I have not practiced but there used to be case law relating to CDW claims. It may well have been superceeded by now and I'm sure somebody will tell me if it has.

 

The case of Coughlan v Firmin Coates (? spelling) used to be quoted as the Judge in that case ruled that it was reasonable for the Claimant to protect himself from the excess on his hire car as it was significantly higher than his own policy excess. This ruling was upheld in the Court of Appeal (Marczyk v Davies - again ? spelling). CDW is therefore a legitimate expense that can be claimed from the TP insurer.

 

Like I said, I haven't practised in the business for a long time but when I was doing ULRs it was a well tested case.

That is worth checking out

Many thanks for taking the time to respond

Mossycat

Good point. I couldn't find those cases so couldn't comment, but it certainly is worth bearing in mind. I personally cannot reconcile such a decision though. Maybe we're moving more towards the American system which has taken some decisions that wold be laughed out of court over here.

I'm having a bit of difficulty tracking them down, if anyone could point me in the right direction I would very much appreciate it

Mossycat

The cases? Can't find them either. will have a dig and see what comes up....

The cases? Can't find them either. will have a dig and see what comes up....

Much appreciated

I think it's a problem with my ageing memory and the spelling. Why can't these people have simple names?

I couldn't find them last night but I know they exist as CDW was a very live issue in the late 80's and I used them many a time to great effect. I'll keep looking and I'll dig out my CII folders later and see if there is any mention in there.

Hopefully we'll come up with a solution.

I think it's a problem with my ageing memory and the spelling. Why can't these people have simple names?

 

I couldn't find them last night but I know they exist as CDW was a very live issue in the late 80's and I used them many a time to great effect. I'll keep looking and I'll dig out my CII folders later and see if there is any mention in there.

 

Hopefully we'll come up with a solution.

OMG the phrase CII takes me back, bet you remember Donoghue V Stephenson or The Granary Wharf case then.

I remember dealing with CDW's as well, we used to pay them if the third party didn't have an excess on their own policy but that was back in the early 80's and I left the Insurance Industry mid 80's.

Maybe things have changed since our day but if you do find the cases I would really appreciate it.

Mossycat

My CII folders are well out of date, in fact I don't even know why I've still got them - I got my ACII in 1987:o I've been married twice and moved house 7 times since then but they always seem to come with me.

I do remember that the presiding judge in the appeal court case was Justice Llewellyn and I think it was 1984.

I can recall the details but I can't find the cases. I hope I'm not just having a really wierd dream!

Gone all spozzy eyed now and still can't find them. There must be someone out there who can tell me I'm right but until then, it's time for Torchwood!

Gone through my CII files (circa early 2000's) and haven't found anything on the matter. Have done searches on the legal databases I have access to (6 of them) and still cant see anything.

Methinks revolting peasant had a bad dream!

Gone through my CII files (circa early 2000's) and haven't found anything on the matter. Have done searches on the legal databases I have access to (6 of them) and still cant see anything.

 

Methinks revolting peasant had a bad dream!

Gyzmo I really appreciate you looking. When I was a claims handler (1980's) we would pay out for CDW's provided the claimant didn't have an excess on their own policy or if it was significantly lower than that which the CDW was averting.

To my mind it is a reasonable item of claim because the risk averter doesn't want to be responsible for a big excess on a vehicle that is temporarily in their charge.

Seems I may have to issue proceedings to recover it and argue my case in court.

Thanks again

Mossycat

Hmmm - it is my opinion I am giving here, but I still find it difficult to reconcile. Just as a PS - revolting peasant deserves a thank you also!

Just as a PS - revolting peasant deserves a thank you also!

Revolting Peasant is seriously starting to worry about his mental health:)

I know these cases exist but theres only so long I can spend trying to prove it. I suspect that something has happened and they are no longer current case law.

This is a tough one.

Usually I'd say that CDW wouldn't be recoverable because weather or not the claimant was in a hire vehicle or there own on the balance of probabilities they would still have been involved in any subsequent accident.

However the basis of indemnity is that the claimant be return to apporximately the same financial position they were in before the accident. This would seem to indicate that in a case such as the one mentioned where either the claimant had no excess or had an excess that was considerably less then that they would be subject to in the hire vehicle that this would mean that if they had an subsequent accident in the hire vehicle they'd being paying more then they would had the original accident not happened.

Now that's just how one could agrue it and I'm not saying that what I've said above is definitely correct but it's definitely one way of looking at it.

That was in essence that argument put forward in the cases I can't find. It is reasonable for the individual to protect themselves from the risk of further loss greater than would have been incurred under their own policy.

This is a tough one.

 

Usually I'd say that CDW wouldn't be recoverable because weather or not the claimant was in a hire vehicle or there own on the balance of probabilities they would still have been involved in any subsequent accident.

 

However the basis of indemnity is that the claimant be return to apporximately the same financial position they were in before the accident. This would seem to indicate that in a case such as the one mentioned where either the claimant had no excess or had an excess that was considerably less then that they would be subject to in the hire vehicle that this would mean that if they had an subsequent accident in the hire vehicle they'd being paying more then they would had the original accident not happened.

 

Now that's just how one could agrue it and I'm not saying that what I've said above is definitely correct but it's definitely one way of looking at it.

Ah but the it's not just the risk of an accident is it.

Hire cars are an all section excess NOT just accidental damage, the hirer of the car does not feel comfortable knowing that there is a car on his drive that has a huge excess that he has to pay if it gets vandalised or otherwise damaged. If that was his own car (the car he has been deprived the use of through no fault of his own) there would be no excess and he would not have any worries.

I can understand an insurer turning down a CDW if the claimaints own vehicle had an excess but I cannot see why they do not pay to put the claimant in exactly the same position they were in whilst they are having to hire a car.

I accept the claimant has a duty to mitigate their losses, but the claimant is self employed and needs the car to carry on with their business in order to mitigate losses (not working or using taxis would not be mitigating, yet they are the only alternatives that do not have an excess attached to them).

Whilst I am typing can I just say a VERY BIG THANKYOU to anyone who has contributed in anyway (specially revolting peasant for all the time you have spent looking up cases for me)

Mossycat

OK looks like this is going to proceed to Court.

My argument is that IF there had been an excess on the car in the first place I would be claiming that excess back from the responsible party as an unisured loss. Since there was no excess it demonstrates that I am a risk averter and will not be responsible for a car that has an excess attached to it. Therefore it was reasonable when hiring a car to take the CDW and claim that back as an unisured loss. Effectively I was in no better position when hiring the car as I was when I was driving my own.

The insurance company cannot have it both ways and argue that a CDW is not essential when dealing with a 'no excess' third party, because had there been an excess they would have paid in no argument, conversely had there been an excess then I wouldn't be entitled to claim for the CDW as this would have put me in a better position whilst hiring the car because it did not have the risk of an excess attached to it.

Before I issue proceedings has anyone got anything to add that I might have missed or not thought about?

Thanks

Mossycat

I think you have the nail on the head there MC.

You were driving a hire car as the result of an accident that was not your fault and it is reasonable to protect yourself from the consequences. If you were to have an "at fault" accident in the hire car you would be liable for a substantial excess that would not have applied to your own insurance. Were it not for the negligence of the TP in the original accident you would not have been driving the hire car in the first place. It's about cause and effect. By paying the CDW you have reinstated your position prior to the original accident and in spite of being unable to find the original case law I still believe you have a very strong case.

Keep us posted;)

All i can say then in this case is why cannot someone, involved in an accident, claim back anything above RTA only (third party - told you it was a while!) insurance premiums? the principle (and indeed the situation) seems be the same.