Court Ruling will Impact Fleet Managers

A recent ruling by the Court of Appeal has given a stamp of approval to a practice that many have deemed morally dubious, giving the green light to Royal Sun Alliance Insurance (RSAI) and presenting fleet managers with a dilemma about what impact the ruling may have on their future actions.

The court ruled on whether it was legal for RSAI to inflate actual vehicle repair costs before sending bills to the insurers for at-fault drivers. RSAI was pursuing this course of action as a way for them to recover the costs of the repairs that they were paying. Though other insurers objected and brought suit against them, the court determined that it was a practice that was legitimate as long as the fees being passed on were reasonable.

As part of the explanation of the ruling, the Honorable Mr Justice Cooke stated that the damage that is being paid for takes place when the accident occurs rather then when the repair work is done, and that even if RSAI receives a discount on the repair work it is okay for them to charge full costs to the insurer of the at-fault driver.

The ruling has been determined to be applicable to others that pass on repair costs, including other insurance companies and the managers of fleets, making it possible for those that have negotiated repair discounts to upcharge for work that is done, as well as to charge administrative fees for facilitating those repairs. Though this presents a potential for adding to a fleet’s budget, it also carries the possibility that taking this type of action will eventually raise insurance rates.

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