Claiming for loss of use
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by Johnny Johnson
TO FORMULATE a claim for the loss of use of a vehicle while it is off the road following an accident is not easy.
A successful claim will invariably be the result of a reasonable attitude on the part of the insured and a measure of goodwill on the part of the insurer. The , result will inevitably be a compromise based on the demonstrable efforts of the policyholder to minimise the claim.
This attempt at mitigating the loss and the ability to show that such efforts have been made is critical to the success of the insured in obtaining recompense.
Circumstances alter with each incident and it is impossible to give rigid guidelines which will be acceptable in all cases. It is extremely difficult, and sometimes impossible, to arrive at an accurate assessment of the loss incurred which is acceptabel to both parties. It might be useful, therefore, to examine the problem in broad outline and try to determine which factors are likely to be accepted for inclusion in such a claim and which factors can be minimised or excluded altogether.
It is worth noting here that insurance companies are often happy to accept Commercial Motor Tables of Operating Costs as a basis for negotiation, especially when an operator is unable to produce precise figures on his own.
Using CM Tables and taking a 12-ton-gross boxvan as an example, the following weekly standing charges, based on a maximum annual use of 45 weeks, might be noted. Licences £4, wages £44.84, rent and rates £3.62, insurance £6.38 and interest on capital employed £12.64, A total of £71.48.
Of these, only rent and rates and interest on capital will continue to be met while the vehicle is out of traffic. These are, then, the only factors which are likely to be admissible for refund.
No claim for wages
The insurer will expect the operator •to seek a refund of the outstanding part of the road fund licence and will not admit to the claim for an amount for driver's wages.
On that subject, the insurance company is likely to take the view that the operator who continues to pay his driver his wages while the vehicle is out of traffic is not being called on to make any payment additional to that which he would have made if there had been no accident. It will undoubtedly be held that what is being claimed is loss of employee's services, which is not a factor maintainable in •a -claim for loss of vehicle use. It would be considered the claimant would have t in no worse position had driver been injured in the s dent and his wages had .1 Untied to be paid. This cat be reclaimed from a yen doer (the guilty party in accident, for instance).
Where an operator is abl use a spare vehicle from fleet or to rent a replacen the question of reling driver's wages does wise, ough, as has been 'stated, standing cost factors are tally those forming the ;. of a claim, because runoosts are not incurred s. the vehicle is laid up, it ki ;be borne in mind that Tables include depreciation running cost. This is be e it has been held that the age shown on the hodo ✓ affects the trade-in price le vehicle and the value is,' 31lore, decreased with the age run.
could be considered, how, that depreciation might My be included in -the ding cost, as the value eases with -the age of the die.
is well worth while maka reasonable assessment of depreciation which might nonsidered to have taken e while the vehicle was off road, and -including this in claim.
irges for renting ?here an operator has been to use a spare fleet unit claim should normally be xl on the standing costs of spare unit. If no such spare is available, however, and the alternative is to rent a replacement vehicle, an attempt must be made to obtain that vehicle on the best terms possible. For instance, the operator should try to find the cheapest rental terms and attempt to forecast the length of time that he will need the rented unit 60 (that the lowest possible terms are available. Taking the tariff of BRS Truck Rental, the newest of the truck rental companies as an example, and continuing the analogy of the 124ton grw boxvan with which the comparison began, to hire a vehicle of this type would cost £15 a day for a week's rental of one to six -days. However, If -the rental period is to be over two to three weeks (seven' to 21 days), The daily charge becomes £11.30 and for over four weeks' rental (28 days) it reduces to £10.67. All this, of course, is 'subject to an additional charge of 5p a mile.
Thus, predicting the length of rental could result in a lower rental Charge and ;this, less the running cost which could have been attributable to the disabled unit had it been in service, could be . accepted by 'theinsurance company as a basis of negotiation of the claim. Judicious rental will be taken as proof of the claim being minimised. However, 'because commercial vehicles are normally subject to very high weekly mileages, the question -of running costs will undoubtedly -include a request for the provision of proof. It might be expected that the operator will produce the -maintenance or log sheet • to substantiate the claim of weekly miles run.
Similarly, if the claim includes an amount to cover loss of revenue because a potential client has had to be turned away while the vehicle was disabled, the insurance company will expect to -be furnished with the details of that lost business including the name of the potential customer in order to check the Depending on the time of the year, 'to utilise part of -the period during which the vehicle is out of service for the regular driver's holidays— during 'which the vehicle would probably be idle anyway —and omitting that time from the Claim, will also demonstrate the reasonable nature of the claimant. Despite 'the absence of accurate supporting data, however, an operator should not be deterred from making a claim of this nature.
From time to time, the insurance companies deal with claims which 'simply state that during the 'period in which the vehicle was unusable, the profit of the company to which it belonged was reduced by a specific amount. These claims, say the insurance companies, are particularly difficult but .not impossible to negotiate.
It is not sufficient, however, simply to relate deprivation of the use of the vehicle to loss of profit. The 'onus of proof is on the claimant and though his relation of financial loss to the absence of the vehicle from traffic is not expected to be perfect, it is expected to be substantiated by supporting evidence.
Even a figure derived by deducting running costs from a difference In turnover for the period under consideration, when compared with similar previous periods, has formed a basis for discussion and a compromise settlement has resulted.
Thus, when lit 'is demonstrable that a loss has been incurred because the vehicle has been delayed in returning to traffic, even though the operator is unable to produce sufficient or precise detail to support the alleged amount, it should not prove impossible to arrive at a negotiated settlement.