Insurance industry tactics of ‘deny, delay and dispute’ saw the Court of Appeal sharply criticise industry attempts to run out of town start-up operations by Right2Drive which provides temporary car rentals to ‘not-at-fault’ drivers waiting for insurers to repair damaged vehicles. Insurance companies were told to read the law and comply with the rules, rather than being obstructive.
Right2Drive took to the courts owed $4.9 million in claims denied by Vero, AMI Insurance and AA Insurance. Tower, YOUI and AIG had similarly refused to meet Right2Drive claims.
Using a business model available in Australia and the United Kingdom, Right2Drive specialises in hiring replacement cars to ‘not-at-fault’ drivers whilst their damaged vehicle is under repair. It started New Zealand operations in 2016. Car repairers typically refer car-less drivers to Right2Drive as it is more convenient than having the repairer provide a courtesy car as a temporary fix. The Court of Appeal was told Right2Drive has the driver sign a hire contract, but there is an understanding that it will waive recovery of any hire charges not recovered from insurers. Temporary hire of a replacement vehicle is a natural consequence of the ‘not-at-fault’ driver’s car being damaged by a negligent motorist. The negligent motorist’s insurer is in the gun for this cost; a third party claim in insurance jargon.
Vero argued the insurance industries side: the ‘not-at-fault’ driver had incurred no expense; the cost of Right2Drive hire was too expensive; no interest should be paid on late payment to Right2Drive. All these defences were rubbished by the Court of Appeal.
The ‘not-at-fault’ driver is contractually committed to paying Right2Drive hire charges (though in fact they are not going to be demanded); the daily hire rates together with delivery and pick-up charges were reasonable; interest on late payment was reasonable – insurers get a free ride otherwise by delaying payment.
Vero told the Court of Appeal drivers could first approach insurers to get use of a replacement vehicle. This is an option not advertised on insurance company websites and insurance companies do not make a habit of taking the initiative offering temporary replacements to not-at-fault drivers, the Court pointed out.
Operation of the business model used by Right2Drive had survived challenges in the courts of Australia and the United Kingdom, said the Court of Appeal. Instead of being seemingly intent on knocking Right2Drive out of business, it is to be hoped New Zealand’s motor vehicle insurers will now accept Right2Drive is providing a service that should be available to not-at-fault drivers, the Court of Appeal said.
Frucor Beverages Ltd v. Blumberg – Court of Appeal (11.11.19)
19.186