Damage Disputes from Both Perspectives

We recently offered a webinar covering damage disputes from both the Applicant and Respondent perspectives. Interest was high, and it was our pleasure to accommodate the demand with additional sessions! Attendees spanned those who work on the Applicant side, the Respondent side, and some who work on both sides. While the webinar was primarily designed for filers and responders, we were pleased to see some member arbitrators in attendance too!

We want to share a few key takeaways for those who could not attend. First, there is a difference between the obligation that a first-party carrier has to its policyholder and that of a liability carrier to a claimant. First-party coverage is a contractual relationship generally designed to indemnify, or to return the insured to pre-accident state, unless special coverage is purchased that provides for betterment, such as New Car Replacement Coverage. The obligation of a liability carrier to a claimant is also based on indemnification, but differs in that it is based on its insured's legal liability for damages. An awareness of this difference is critical to both the Applicant and Respondent when arguing damages.

Image of a man inspecting damage to a car and completing a report

Next, it is important to remember that in arbitration, proven damages are not at issue unless disputed by the Respondent. Rule 2-5 specifies how Respondents must present a damages dispute: "If a responding company disputes damages, it must present all damages arguments and disputed dollar amounts, if known, in the Dispute Damages section." It is important to remember the arbitrator is not allowed to investigate or to introduce arguments; the arbitrator must objectively evaluate the arguments and evidence presented to decide the dispute.

The best chance of proving your case is including specific arguments and linking them to submitted evidence. For example, if arguing the Applicant's duration of rental storage was too lengthy, do you have evidence such as an estimate or rental bill that would support a shorter duration? If arguing the Applicant's chosen repair parts constituted betterment due to the age of the vehicle, what evidence do you have to support this theory?

Finally, if an Applicant anticipates a damage dispute, it can argue its rationale for the damages paid in the contentions. If arguing the circumstances of a claim support the payment, explain why and link the arguments to submitted evidence. For example, if arguing a reasonable parts search was conducted and LKQ parts were not readily available, include proof to document the search. If arguing a 30-day rental on a total loss is owed by the Respondent, explain and support the extenuating circumstances of the claim, such as serious injury to the owner, vehicle under police hold, or the accident occurred before a lengthy holiday weekend. While companies understandably have handling guidelines, there is no industry standard to pay a particular amount for a feature on claim. Each claim must be handled based on its own unique merits.

Article published in: February 2017 E-Bulletin