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Loss conditions

General conditions

Loss Conditions

1. Appraisal for Physical Damage Loss

If you and we disagree on the amount of "loss," either may demand an appraisal of the ""loss". In this event, each party will select a competent appraiser. The two appraisers will select a competent and impartial umpire.

The appraisers will state separately the actual cash value and amount of "loss". If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will be binding. Each party will:

a.     Pay its chosen appraiser; and

b.     Bear the other expenses of the appraisal and umpire equally.

If we submit to an appraisal, we will still retain our right to deny the claim.

2. Duties in the Event of Accident, Claim, Suit, or Loss

We have no duty to provide coverage under this policy unless there has been full compliance with the following duties:

a.     In the event of "accident," claim, "suit" or "loss," you must give us or our authorized representative prompt notice of the accident or "loss". Include:

(1)     How, when and where the "accident" or "loss" occurred;

(2)     The "insured's" name and address; and

(3)     To the extent possible, the names and addresses of any injured persons and witnesses.

b.     Additionally, you and any other involved "insured" must:

(1)     Assume no obligation, make no payment or incur no expense without our consent, except at the "insured's" own cost.

(2)     Immediately send us copies of any request, demand, order, notice, summons or legal paper received concerning the claim or "suit".

(3)     Cooperate with us in the investigation or settlement of the claim or defense against the "suit".

(4)     Authorize us to obtain medical records or other pertinent information.

(5)     Submit to examination at our expense, by physicians of our choice, as often as we reasonably require.

c.     If there is "loss" to a covered "auto" or its equipment you must also do the following:

(1)     Promptly notify the police if the covered "auto" or any of its equipment is stolen.

(2)     Take all reasonable steps to protect the covered "auto" from further damage. Also keep a record of your expenses for consideration in the settlement of the claim.

(3)     Permit us to inspect the covered "auto" and records proving the "loss" before its repair or disposition.

(4)     Agree to examinations under oath at our request and give us a signed statement of your answers.

Analysis

The appraisal clause sets out rules for both insured and insurance company when they are unable to agree on the amount of physical damage loss. Either party may demand an appraisal. Each party then hires an appraiser and the two appraisers select an umpire. In case the appraisers are unable to agree on figures for the actual cash value of the property and the amount of loss, the matter is thrown to the umpire, whose decision is binding.

The insured's duties include the obvious one of giving prompt notice to the insurance company or its agent of any accident, claim, suit, or loss. Even if an insured is confident that a claim will not be pressed or that the circumstances do not involve the garage liability coverage, the insurer must be put on notice even so. No matter how unexpected the claim, failing in the duty to report could leave the insured unprotected.

The obligation to make a prompt report is keyed to the promptness expected of an ordinary, reasonably prudent person. Anything less than an immediate notice of an accident involving serious bodily injury could hardly be prompt. But a Monday morning notification of a Saturday afternoon fender-bender with no injuries and minor damage constitutes prompt notice in that situation.

Insureds are required to cooperate with the insurance company in bringing about a settlement of any claim. Suit papers must be forwarded to the insurer immediately and insureds must refrain from inserting themselves into the settlement process except at the insured's own cost. Insureds must also submit to physical examination by physicians chosen by the insurer as often as is reasonably required by the insurer and make medical records available to the insurer.

If the loss is physical damage to a covered auto, the insured must protect the car from further loss and make sure a representative of the insurer gets an opportunity to see the damaged car along with any records that help to prove the loss before disposing of it. The police must be notified if the loss involves theft. The insured must also agree to examinations under oath, including a signed statement, if requested by the insurer.

3. Legal Action Against Us

No one may bring a legal action against us under this Coverage Form until:

a.     There has been full compliance with all the terms of this Coverage Form; and

b.     Under Liability Coverage, we agree in writing that the "insured" has an obligation to pay or until the amount of that obligation has finally been determined by judgment after trial. No one has the right under this policy to bring us into an action to determine the "insured's" liability.

4. Loss Payment — Physical Damage Coverages

At our option we may:

a.     Pay for, repair or replace damaged or stolen property;

b.     Return the stolen property, at our expense. We will pay for any damage that results to the "auto" from the theft; or

c.     Take all or any part of the damaged or stolen property at an agreed or appraised value.

If we pay for the "loss", our payment will include the applicable sales tax for the damaged or stolen property.

5. Transfer of Rights of Recovery Against Others to Us

If any person or organization to or for whom we make payment under this Coverage Form has rights to recover damages from another, those rights are transferred to us. That person or organization must do everything necessary to secure our rights and must do nothing after "accident" or "loss" to impair them.

Analysis

It is a condition of the contract that the insurance company cannot be sued until and unless all the terms of the policy have been met. This was once called the suit clause. If liability insurance is the issue, no third party may take the insurance company to court for purposes of determining the insured's liability and no one may sue for performance unless a judgment has been delivered or the insurance company has agreed in writing as to its insured's obligation.

If a covered auto is damaged by an insured peril, the insurer alone decides what form the loss payment will take. If the insurer decides to pay the actual cash value of the auto instead of paying to repair or replace it, the insurer has the right to take the damaged auto for salvage. If the auto has been stolen, the insurer agrees that the cost of its recovery is a legitimate part of the adjustment expense.

The garage policy's transfer of rights is from the recipient of policy benefit to insurer. The insurer's right of assumption does not extend to the detriment of a co-insured whose negligence injures another insured. Also, the courts are generally in agreement that the insurance company acquires no rights by its payment for loss or claim that the insured would not be able to exercise on his or her own behalf. If an insured has a contractual agreement–that was created before the loss–that would relieve the negligent party of responsibility for loss or damage, the insurance company is also unable to recover from that party. However, the insured must do nothing after the accident or loss to impair the insurer's right of recovery.