What is the true legal relationship between a car owner, his insurer and the repairer of the car?


By timkelly@motorclaimguru.co.uk

The customer (the insured) has the contract with the insurer, and the insurer promises to indemnify the customer’s loss.

The insurer is acting as an agent on behalf of the customer. This cannot deny the customer the right to arrange their own repairs and cannot predjudice the customers rights under contract or tort law.

The insurer should technically never enter into a contract with a repairer. If the insurer negotiates in any way which is to the detriment of the customer it breaches ICOBS8.3,FCA regs .

The insurer’s contract is to re-imburse the consumers loss, and the bodyshop’s customer is the consumer, not the insurer. The insurer is  just picking up the tab.

So if you found out that your insurer has entered into an agreement or a contract where the repairer is working on average repair cost, for example £1,300 per job, and your car has a £3,000 repair, it may be they are not fully repairing your car correctly by using second-hand or none OE bits, and failing to indemnify you.

More at motorclaimguru.co.uk

Insurers are bullying repairers not to disclose the repair cost of vehicles, as they are working on average repair cost.

Insurer's are being complicit, or trying to illicit not only fraud, but also have repairers breach Consumer protection laws.

By Andrew Moody of Retail Motor Law.

On occasions Customers ask how much it will cost to repair the accident damage to their car, it’s a normal question that some interested customer want to know. As repairers, we have been told by an insurer that in no way should we discuss with vehicle owners the cost of repairing their vehicle. What should we say?

The saying ‘stuck between a rock and a hard place’ springs to mind.

It is normal for some of the more interested customers to want to know how much it will cost to repair their vehicle. Not every car owner will want to know but some will and to be denied this information by their insurer seems unfair.
The two questions we need to consider are;

  1. Whilst it may seem unfair is it? And
  2. What do you say if the question is asked?

Is it Unfair?

There are a number of laws that apply to consumers but a brief consideration of the Consumer Protection from Unfair Trading Regulations 2008, which came into force on 26 May 2008, may help to answer the initial question.

The Consumer Protection from Unfair Trading Regulations 2008, 'the Regulations’, apply to commercial practices before, during and after a contract is made, and contain a general prohibition of unfair commercial practices.

The Regulations apply to any act, omission and other conduct by businesses directly connected to the promotion, sale or supply of a product to or from consumers. Product refers to both goods and services, so the service of ‘repairing a vehicle' is likely to be included.

Is refusing to provide information unfair?
The Regulations stipulate that a commercial practice is unfair if:

  • it is not professionally diligent, and
  • it materially distorts, or is likely to materially distort, the economic behaviour of the average consumer.

Failing to provide material information which may change the customer’s decision as to whether to use your services is potentially unfair, and could be what the Regulations call, a 'Misleading Omission'.
Regulation 6 states
6.  (1)  A commercial practice is a misleading omission if, in its factual context, taking account of the matters in paragraph (2)—
(a)the commercial practice omits material information,
(b)the commercial practice hides material information,
(c)the commercial practice provides material information in a manner which is unclear, unintelligible, ambiguous or untimely, or
(d)the commercial practice fails to identify its commercial intent, unless this is already apparent from the context,

and as a result it causes or is likely to cause the average consumer to take a transactional decision he would not have taken otherwise.
Given the fact that the insurance company has instructed you not to disclose information to the vehicle owner, there is an implication that the insurance company is attempting to ‘hide material information’.  It is therefore likely that failing to provide information which is specifically requested would be a misleading omission.

Does this render your actions unfair?
Each situation would need to be assessed upon its own facts and it will depend upon whether the information is likely to affect the customer’s decision to use your services.

Would the information, if disclosed, have an impact upon the customer?
Yes it could. For example a customer may visit your premises in their new family car with a moderate front end impact and try to decide where to have the damage repaired by you. If you explained that the vehicle would be repaired for a fixed cost of £1100 including VAT when the customer knows that the replacement panels alone will cost several thousands they are likely to decide to use another repairer. 

Even though you assure the customer that the vehicle will be repaired correctly the amount received in payment is potentially a significant indication to the customer of the quality of the repair provided.

Failing to disclose the information may materially distort the economic behaviour of the consumer, and therefore is potentially unfair. Actively hiding the information suggests that insurers are failing to treat their policyholders fairly.

Some vehicle repairers may be thinking so what, why worry about the Regulations?
A professionally operated repairer will no doubt want to comply with legislation, however not every repairer will want to be made aware of legal aspects even though ignorance of the law is not a well considered defence.

Further the situation we have discussed is potentially a criminal offence for which you can be fined if the matter is heard in the magistrates court. If the crime were to be heard in the Crown Court then a prison sentence could be considered dependent upon the circumstances.

Who could be punished?
Well when a business commits an offence with the consent or connivance of an employee of that business, both the employee and the business can be prosecuted and punished.

In returning to the initial question ‘What do we say?’
You have to make that decision, because potentially it is you who will be prosecuted if you commit an offence.

Perhaps before you are asked the question again you should contact your ‘insurer partner’ via email and ask them to confirm that failing to supply the cost of repairing the vehicle to the policyholder is not a misleading omission and therefore not a criminal offence.

Refer them to this article on the www.retailmotorlaw.co.uk website and ask them to confirm that they are not instructing you to commit a criminal offence, and that you are treating their policyholder fairly.

If they confirm that it is ok not to disclose the information make sure you print a copy the email and keep a hard copy on file in case there is a criminal prosecution by an organisation such as Trading Standards.

If the insurer terminates your services because a ‘partner’ has dared to question their policy your next question may relate to the ‘legal protection for whistleblowers’?

For more information, email tracey@retailmotorlaw.co.uk



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