The impacts of recession are on the way, making it a good time to review claim strategies, particularly in light of the predicted increase in motor vehicle thefts. At LKA Group Loss Adjusting, we have seen these claims suffer some of the most comprehensive effects of pandemic restrictions, including increased theft, increased repair durations and corresponding hire costs, and increased pressure from repairers and vehicle owners alike.
Case Study
Shortly after pandemic restrictions commenced, LKA was appointed to assess a liability claim for a vehicle stolen from a workshop’s carpark, in broad daylight and in plain view of the mechanics. The police and vehicle owner were notified, and the owner continued possession of the mechanic’s complimentary customer vehicle while the claim was processed.
The replacement value of the vehicle was quickly and easily assessed at around $12,500. The claim was all but finalised when police recovered the vehicle. The owner was thrilled, and being understandably attached to their vehicle they preferred repairs to which the insurer agreed.
Unfortunately, due to the pandemic restrictions LKA could no longer inspect the vehicle in person, so we viewed the damage via video link with the insured. We developed an agreed repair quote of around $9,000, plus an additional $1,000 to replace keys, test electronics and replace stolen contents which were not recovered with the vehicle.
Repairs commenced on schedule and the customer retained the insured’s complimentary vehicle when another problem arose: parts required from interstate and overseas were significantly delayed by pandemic restrictions. This added unavoidable time to the repair period, and the insured needed their customer vehicle back, so it was agreed the claimant would hire a vehicle. Total cost of hire = $2,000.
Adding up the repair cost, hire cost, claim assessment fees, and time spent by all parties, there is a strong case for having settled the claim for the value of the vehicle in the initial stages. Unfortunately the timing of events and the owner’s emotional attachment to the car made it impossible to resolve this claim in any other way; nobody can predict the future. But we can learn from our experiences, and here’s what we learned about motor vehicle theft claims in pandemic conditions:
- Remember that the impact of the pandemic can heighten the emotional stakes of a claim. This meant that the vehicle owner was more attached to their car and more concerned with accessing a hire vehicle than in normal conditions; without his car he felt trapped and hopeless. While a claimant’s mental health cannot always be front and centre of a claim, it can often be an important consideration and should never be disregarded.
- Focus on practicality. Do you have access to the parts, materials and labour to resolve this claim effectively? Restrictions change quickly, and while the downturn in business meant the mechanic had more time to prioritise the repairs, there was nothing they could do to speed up shipments. We anticipate that as restrictions lift, competition for these resources will be intense, meaning that the practical effects and delays caused by the restrictions could last much longer than expected.
- Stay flexible. In some circumstances, we do need to look forward, consider the commercial benefits of early settlement, and communicate well so each party can make an informed decision about what they want. While this claimant wanted his own vehicle back no matter the time the repairs would take, many claimants would prefer to finalise the claim months earlier.
- Take preventative measures. With a more secure carpark, this claim could have been prevented. Liability insurers of repairers, trade vehicles and public carparks should all be alert to the risks facing these service providers, particularly with some businesses unoccupied while trading is interrupted. We can all help insureds to prevent losses through regular inspections, good security and awareness, but they may need support and direction to understand and respond to these risks.
LKA Loss Adjusting is always available to discuss your claim assessment needs; contact us on (03) 9340 3250 for more information.
