INSURANCE is an intangible product which is based on a promise by one party to the other to compensate them in an event of an unfortunate event such a road traffic accident.
The litmus test of an insurer is when a more tangible service is required such as claims settlement.
That is why claims service is considered a shop window in insurance.
One form of compensation I will pick today is the repair of a motor vehicle following a partial loss.
Well first-things-first, the insured will be required to submit to the insurer the necessary documents which among others will be, repair quotations from authorised garages or repairers.
All insurers have authorised or listed garages they work with in many areas by way on entering into a contract usually on an annual basis.
Insurers will normally invite applications from repairers, rigorously evaluate and then rate them accordingly. These agreements are normally based on the understanding that the repairers will provide quotations to all their (insurer’s) clients upon request.
The repairer is also committing to offer repair services to the expected standards satisfactory to both the insured and the insurer.
Further the repairer is obliged to accept a repair order from the insurer and commence working on the damaged vehicle while payments are made later, as agreed by both parties and without inconveniencing the insured.
Excess which is the contribution of the insured is generally paid directly to the garage before the vehicle is released.
There is also a seemingly small yet very significant document called Satisfaction note or certificate.
This document is proof that the insured’s vehicle has been repaired to their satisfaction and contractually the garage may have no further liabilities unless proven otherwise.
For this reason it is vital for the client to ensure they take cautious measures of assessing the vehicle before signing this document.
Prior to authorising repairs the insurer normally assesses the damaged vehicle and scrutinizes the quotations issued by the repairer. After this process they will then agree costs or negotiate the pricing.
There are cases where the insurer opts to supply the quoted parts to the repairer who then only charges labour.
All these are background options which the insurer may consider without necessarily involving the client although an update to the client is inevitable.
Once the repair order is issued the insured has the duty of supervising the repairs at the garage.
If there are any delays the insured may engage the insurer who ultimately has a contractual obligation to carry out repairs to satisfactory standards.
In the process of repairing the vehicle further damages may be discovered which might have been omitted from the outset, in such cases the insurer needs to be informed and a further repair be issued after satisfying themselves of the further damages.
I must point out that if these further damages are not formally authorised by the insurer then the insurer can opt not to pay for them hence the need for the repairer to inform the insurer on time.
There are some garages which may not be on the authorised list of the insurer which the insured may feel they can use.
This may be based on say their previous dealings which were satisfactory or a regular garage which always attends to one’s car.
Insurers in such cases may deal with such a garage by issuing a repair order if acceptable to both parties and alternatively the insurer may pay cash in lieu of repairs to the insured.
Going by the latter option the cash will be paid on the agreed or negotiated subtotal that is before Value Added Tax (VAT).
There is a simple accounting rule that VAT must be borne by the final consumer.
From our discussion it is evident that the repairer plays a vital role in fulfilling the obligations of the insurer in the compensation process. Both parties need each other.
On a concluding note some garages when issuing quotations usually ask the customer whether insurance is involved and if so the quotation is very high as compared to an individual paying.
Unreasonably inflating pricing on this basis is unethical and retrogressive.
Repairers must not abuse the insurance funds on this basis considering their mutual relationship which is a win-win and long term one.
Those who practice such activities do it at their peril as they risk sanctions from insurers such as removing them from the authorised list.
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