Fairness of rules for loss of use in motor claims

QUESTION:  I am a taxi operator. The vehicle I drive is registered in my wife's name. On May 17, this year, another vehicle came over on my side of the road and severely damaged the taxi. The driver admitted that he was at fault. The assessment was done and all the relevant documents submitted to my wife's insurer within a few days. We have a third-party policy. My wife was called by her insurer on November 11 to sign a document. It was headed Release and Discharge. She was offered a sum of money that represents 14 days' loss of use. We were told that 30 days is the maximum that would be paid for loss of use. We asked for 30 days but this amount was rejected. The taxi was my only means of livelihood. I have not earned a cent since the accident. I received injuries and do not want my wife to sign because I believe that it will endanger my claim. Can the third party's insurer be sued for my loss of earnings in relation to those injuries?

HELPLINE:

I apologise for the delay in replying to your email. Since you are a very smart guy, I am quite sure that you and your wife have done nothing to endanger your claims against the third party and/or his insurers. You and your wife can be one or two separate parties in law. In the case of the taxi, she is one party that is distinct from you. The car is registered in her name. I would expect the claim that was made against the third party for fixing the taxi and loss of use expenses would be in her name, not yours. You can check this by examining the Form of Release and Discharge. See if your name is stated. If it is not, then your wife can sign it, assuming that you are both OK with the settlement offer.

Your claim for compensation for personal injury and loss of income should be treated as separate from your wife's claim for damage to her car and loss of use.

"Loss of use," according to USlegal.com (http://definitions.uslegal.com/l/loss-of-use/) "refers to an element of compensation demanded by a claimant as part of their damages ... (it) refers to the inability to use an automobile, living quarters, business facility or equipment due to damage caused by the negligence or other wrongdoing of another. In the case of a vehicle which is damaged in a collision, loss of use would be the amount claimed for the rental value of another automobile. The period of loss must be 'reasonable,' meaning the damages will be limited to a period in which a person would normally and promptly proceed to have the vehicle repaired.

Recovery for loss of use

"When actual financial loss in procuring a substitute isn't present, the issue of recovery for loss of use is decided on a case-by-case basis. In some (US) courts, where a vehicle or other personal property has been used in business, loss of use damages has been allowed without a showing that a substitute has been rented. Such cases have found that while pecuniary loss in the form of rental payments for a substitute item is not incurred, the plaintiff may suffer substantial personal inconvenience due to the lack of the item.

"Damages for loss of use of a rental vehicle shall be calculated based on a good faith estimate of the number of hours of labour needed to repair or replace the parts of the vehicle that are damaged, limited to a maximum of 30 days, calculated under the following schedule, utilising the daily rental rate on the rental agreement, not including any additional charges: (a) one day loss of use will be calculated for every four hours of labour time from the repair estimate; (b) two days for weekends shall be added for every five repair days; (c) three days for administration shall be added to account for time needed to: (i) obtain an estimate, and (ii) transport the vehicle to and from the repair facility. (d) In the event of a total loss of the vehicle, damages for loss of use may not exceed 30 days."

These appear to be the rules - excluding items (a), (b) and (c) of the preceding paragraph - that guide how local insurers calculate loss of use claims in conjunction with advice given by loss adjusters. Are they reasonable and fair given our local situation?

Calculating lost income can be very tricky, especially for a self-employed person like you. Can you provide evidence of your earnings to the insurers? Would that evidence be consistent with any medical report that you have? These are two of the main hurdles that you are likely to face. It would be wise to seek the advice of a lawyer or a claims professional.

Cedric E. Stephens provides independent information and advice about the management of risks and insurance. aegisja@gmail.com SMS/text message to 812-7233.