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Is It Okay for an Insurer to Combine Claims in Unrelated Vehicle Accidents?

A third-party claimant came to our non-DRP shop for repairs. Four days later, the at-fault party in his claim got into an unrelated accident, creating a second claim. Now, the insurer is deducting the first claim from the second, even though our customer had nothing to do with the second claim. Can the insurer do this?

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Writer E. L. Eversman is the General Counsel for Vehicle Information Services, Inc., award-winning author of the AutoMuse® blog and a frequent speaker and author on automotive consumer and legal issues.

Question answered by Erica Eversman, attorney and consumer advocate:

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Your question is somewhat confusing, but if I read it right, you had a customer/potential customer whose
vehicle was hit by someone else – thus making it the other driver’s insurance company/policy that’s likely to pay for his vehicle’s repairs. Your body shop is not a DRP for the at-fault driver’s insurer. We’ll call your customer Mr. Jones and the person who hit him Ms. Smith.  

Four days after the accident with Mr. Jones, Ms. Smith was involved in another accident (presumably with her same vehicle) of sufficient magnitude to warrant totaling her vehicle. Now, Ms. Smith’s insurance company appears to be saying two things to Mr. Jones: first, that Mr. Jones must agree on an amount for the repairs before he can have the body shop fix his vehicle (and you’re thinking that you should have a proper role in this discussion.) Second, that Mr. Jones’ recovery of damages must be deducted from the second claim/accident in which the vehicle was totaled.

The two questions I believe you’re asking are:

1) Is it proper for the at-fault driver’s (Ms. Smith’s) insurance company to insist that Mr. Jones ‘agree’ to an amount to repair his vehicle before Mr. Jones can schedule his vehicle for repairs?

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2) Is it proper for an insurance company to involve Mr. Jones’ claim against Ms. Smith with the second accident Ms. Smith had that resulted in her vehicle being totaled?

Assuming that the facts I outlined are correct and that I have properly framed the questions, let me answer the second question first. Mr. Jones’ claim against Ms. Smith has nothing to do with any second accident that occurred days later. They’re two separate occurrences and are wholly unrelated. If the insurer is somehow attempting to limit the coverage Mr. Jones may recover because of a second, unrelated accident, this is improper and Mr. Jones would be well-advised to file a complaint with his state department of insurance.

Answering the first question, if Mr. Jones is foolish enough to ‘agree’ to a repair price with the adjuster prior to taking his vehicle to the shop, he can do so if he wishes. However, it’s not advisable. Mr. Jones can settle his claim against Ms. Smith any time he wishes; however, until he knows the true nature and extent of the vehicle’s damage (and gets a realistic idea of what it will cost to fix the vehicle), he would be foolish to do so.

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The vehicle is Mr. Jones’. Ms. Smith’s insurer cannot prevent him from taking his vehicle to the shop, getting an estimate, having it repaired or anything else. Mr. Jones is entirely in control of his own vehicle and, as a third-party claimant, doesn’t even have to allow Ms. Smith’s insurer to see or appraise any damage prior to having it repaired. Most people, however, allow the at-fault driver’s insurer to inspect the damage/vehicle when the insurer has accepted liability for the negligence of its insured because this moves the matter along faster, allows them to have their vehicles repaired and paid by the at-fault driver’s insurer, and often allows them to avoid the annoyance and hassle of a lawsuit. Nonetheless, Ms. Smith’s insurer has no rights at all as it relates to Mr. Jones’ vehicle.

As to your intimation that you must be involved in the process of determining the costs for repair, this can be an issue of state law. In Connecticut, for example, the insurer must address the repair cost issues
with the shop, not the customer. This became an issue in that state that needed to be addressed when insurers began trying to have consumers (who were not knowledgeable about collision repairs) agree to repair costs that were insufficient to properly repair the vehicle. Unless this occurred in Connecticut or a state with a similar regulation, however, there is nothing that requires the at-fault driver’s insurer to deal with the shop for determining the necessary cost of repair.

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In most states, the repairer’s obligation is exclusively to the consumer – not to any insurer. It’s the customer’s obligation to pay the shop for the proper repairs. It’s the customer’s obligation to be reimbursed by the at-fault driver (whether that’s through her insurance company or individually) for the cost of those proper repairs. Any discussions the shop has with any insurer (whether for first- or third-party claimants) is entirely as a courtesy to the customer. There is no obligation on the part of the body shop to ‘agree’ with the insurer on the cost of repairs.

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