Many readers will be aware of the recent dispute over allegedly inflated subrogated motor repair costs claimed by Royal Sun Alliance and other insurers in road traffic accident claims. For those of you not familiar with it, there are a number of claims going through the courts this year in which insurers have submitted Breakdown of Invoiced Costs (“BIC”) documents as evidence of the repair costs incurred. They have refused to disclose the garage repair invoices to support the sums claimed as these give different figures. The reason for the difference appears to be that the insurers are claiming their own administrative costs in sending the vehicles for repair, however they are unwilling, at present, to disclose these costs.
From my experience, and those of my colleagues, many judges appear to be familiar with the issue and the most frequent outcome appears to be either to dismiss the repair costs in full on the basis that the claimant has failed to prove its losses or to allow a small amount in recognition that some damage has occurred. In my view insurers’ administrative costs should be recoverable once they are disclosed if they have arisen as a result of organising the repair of the claimant’s vehicle and are not general business costs, and provided that they are reasonable in the amount.
It is understood that a test case is being heard in the High Court in October. It is to be hoped that this will resolve the issue – though a profitable source of work for defendant solicitors (who are frequently receiving unreasonable behaviour costs in the small claims track) and the junior common law bar, this litigation unnecessarily increases insurance premiums.