November 2015 E-Bulletin
This month's E-Bulletin topics include:
- Thank you Members!
- Policy Limits and Pro Rata Share Acceptance
- Damages: What Proof Is Required?
- Training Opportunities
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Thank you Members!
At this time and throughout the year, we are thankful for you and your continued support. As a membership-driven organization, your feedback allows us to improve our processes and services to ensure they are effective and efficient.
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Policy Limits and Pro Rata Share Acceptance
While most cases flow easily through the arbitration process, claims involving multiple parties and policy limits offer unique challenges of which our members need to be aware. In a typical two-party scenario, the Applicant indicates it will accept the Respondent's policy limits as final settlement of the claim. In response, the Respondent properly asserts and supports the affirmative defense of policy limits. In these cases, the arbitrator will award damages up to the policy limit, based on the percentage of liability proven. By agreeing to accept the policy limits and keeping the dispute within arbitration's jurisdiction, the Applicant waives its right to pursue the balance of its claim afterwards (Article Second (d) of the Agreement). Simple!
Complications arise, however, when the Respondent also argues that another party(ies) (i.e., Applicant's insured or another involved party) is also claiming damages against the policy limits. Due to the existence of the other claims, the arbitrator cannot award the policy limits, even if the Applicant indicates it would accept it.
Arbitration can still be helpful in resolving these matters. Here's how.
If the Applicant's insured is the only other party with a claim against the Respondent, the Applicant can indicate in the Affirmative Pleading Description field that it will accept the policy limits and reimburse its insured's out-of-pocket expenses from the award proceeds. By protecting the Respondent against the insured's claim, arbitration is allowed to retain jurisdiction over the dispute for quick resolution.
If there are multiple parties seeking recovery from the Respondent with policy limits (i.e., a multiple vehicle accident), arbitration will only retain jurisdiction if all parties are signatory and each filing company specifically asserts the affirmative pleading of "Pro-rata Share Acceptance." Simply agreeing to accept policy limits is not sufficient. Unless all parties have agreed, an arbitrator cannot enter a pro rata award, since it may adversely impact the Respondent's handling of all the claims.
For example, suppose there is a $10,000 PD policy limit with two parties with claims against it. If the parties assert the affirmative pleading that they will accept policy limits, each would expect an award, based on liability proven, of up to $10,000. However, if they have similar company claim amounts and liability is proven 100% on the part of the Respondent holding the $10,000 policy, each would actually only have access to up to $5,000, not the full limit. This is not what they indicated they would accept when they entered the "Policy Limit Acceptance" affirmative pleading. Therefore, the "Pro-rata Share Acceptance" affirmative pleading is necessary.
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Damages: What Proof Is Required?
In arbitration, there are no default judgments. If the Respondent fails to answer an arbitration filing, the Applicant does not automatically win. This is because the Applicant has the burden of presenting a prima facie case, proving both liability and damages, notwithstanding any rebuttal by the Respondent.
What constitutes the requirement that the Applicant prove damages? Depending on which damages we're referring to, the answer changes. For rental, it would be the rental bill, showing the number of days and the daily rate. Towing is the same, a towing bill, showing mileage and the date of tow. Storage follows suit, requiring a bill from the storage facility with a daily rate and the number of days of storage. Vehicular damage doesn't typically result in a final bill; the estimate plus any supplements is considered proof of the damages. Some members consider proof of payment as a requirement as well as photos. Remember, many of our members are self-insured and would not cut a check for the repair of one of their vehicles as they make the repairs themselves. Photos of the damage are customary and common; however, photos by themselves do not prove damages, as there is no breakdown of parts, labor hours, and final cost that the estimate contains.
There are instances wherein damage photos and proof of payment are important pieces of evidence though. In cases where the damages are being disputed, the Applicant may turn to photos or proof of payment to rebut the Respondent's allegations and offer proof of the validity of its damages. In the absence of a damage dispute, proof of payment and damage photos are not required evidence items to prove damages. As the Guide for Arbitrators states on Page 24, "An arbitrator may not rule against the Filer on the issue of damage solely because no proof of payment has been included; it is only necessary to show proof of damages (e.g., estimate, repair bill, medical bill)." This also holds true for damage photos.
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Whether you are filing for the first time or want a refresher course, these interactive, instructor-led Webinars offer valuable information on filing and responding to claims. Sign up today on the AF Web site!
Key Arbitration Rules and Terms
Dec. 2, 2 PM EST
Upon completion of this Webinar, learners will be able to better explain and apply the key rules and terms of AF's intercompany arbitration programs.
Writing Effective Contentions (Filing Company)
Dec. 2, 11 AM EST
Develop the skills you need to prepare an effective case by learning how to write an introductory statement, body, and closing statement, and discover how to use the "linking" technique to support each allegation with specific evidence. An activity is included to provide learners with the opportunity to apply the content discussed.
Writing Effective Contentions (Responder Company)
Dec. 9, 11 AM EST
Develop the skills you need to effectively respond to a filing by learning how to write an introductory statement, body, and closing statement, and discover how to use the "linking" technique to support each allegation made with specific evidence. This Webinar also includes discussion on affirmative defenses and disputing damages.