R&SA loses replacement car case appeal

Royal & Sun Alliance stands to pay substantial additional legal costs in a long-running dispute with DAS over a £610 replacement car hire claim.

DAS first won the case in the High Court in December 2006, with an order being given to pay the claim and full costs. Subsequently, three judges in the Court of Appeal unanimously rejected all R&SA arguments.

The judgment and appeal stem from a ULR claim handled by DAS on behalf of a policyholder whose stationary car was struck from behind in March 2004. Liability was not contested.

R&SA sought to challenge the DAS car hire supplier arrangement - DAS primarily uses Helphire for replacement vehicles - following the non-fault accident. DAS is unusual in the ULR market by providing replacement vehicles as an insured benefit, as well as on credit hire basis, according to different product offerings.

The hire rate agreed with Helphire of £29.07 per day was equivalent to the ABI General Terms of Agreement (GTA) rate, with an additional benefit for DAS policyholders of a nil excess on any collision damage to the hire vehicle.

"The appeal challenge in Bee v Jenson appeared to be on issues already decided in the Courts", says DAS head of legal services, Kathryn Mortimer. "Our ULR business model, not only for insured hire but also for credit hire, was shown to be both watertight and fair to defendant insurers.

"However, the appellants also sought details of our confidential commercial arrangements with replacement vehicle providers. The judges, both in the High Court and the Court of Appeal, did not see the relevance of this. They ruled against this using well-established case law. It was proven that alternative hire rates available to a typical motorist would have indeed been higher than those paid by DAS and subsequently recovered from the defendant.

The claimant would have also been without the benefit of a nil excess under the hire insurance policy, unless a collision damage waiver were purchased at an additional cost of around £10 per day".

Issues of subrogation and betterment (because of the nil excess) were also considered with the DAS position being upheld.

DAS estimates that the total costs liability in the case could be close to £1 million.

DAS UK sales manager, Lyndon Willshire, said:: "This case has, again, underlined the flexibility and advantages of the DAS ULR products and clearly demonstrated that we are committed to ensuring that policyholders receive appropriate assistance, even when we are faced with determined legal challenges.