Can an insurance company require a vehicle to be repaired at an approved repairer? Yes, but only if the term is in the contract, and reasonable.
In a recent case of Crash Services Limited v AXA Insurance Ltd [2018] in Northern Ireland Crash Services argued that AXA’s standard consumer insurance policy terms requiring repairs to be undertaken by an approved repairer were unfair and too uncertain to be enforceable.
The facts of the case are that H took out a standard comprehensive car insurance policy with AXA. They had a minor accident and made a claim. When she requested that the repairs be undertaken by her local garage, AXA wrote to her to say it was not an approved garage and it would only pay what its engineers calculated was due for repair costs. As she didn’t agree, Crash Services was engaged by her garage to inspect her car and make the insurance claim.
Crash Services advanced two arguments against the contractual requirement of an approved repairer :-
- The term was not a ‘core term’ of the contract and so should be assessed for fairness under the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCR); and
- Was unenforceable as it was too uncertain.
After consideration, the Judge decided that the approved repairer clause was not a core term and so could be considered for fairness. However, after considering whether this disputed term was fair or not, the Judge ruled that that the ‘impugned term is not unfair since in my view it provides for a procedure that allows for the fulfilment of the obligation to cover the reasonable costs of repair’.
The Judge then went on to consider and dismiss the challenge to the approved repairer clause on the basis that it was void for uncertainty.
What does this tell us?
In some respects, the decision that this particular term was fair is not the point. By ruling that the term itself is capable of being considered under the UTCCR the court has opened the possibility that such clauses can be challenged where :-
- a term is so weighted in favour of the supplier as to tilt the parties’ rights and obligations under the contract significantly in his favour’[i];
- a term is not expressed fully, clearly and legibly, containing no concealed pitfalls or traps’[ii];
- the term appears on the list contained at schedule II of the Act presumed to be as unfair
The court will always have to consider the nature of the goods or services, all the circumstances attending the conclusion of the contract and all the other terms of the contract or of another contract on which it is dependent. In this case the fact that the insurer did not outright refuse the insured body shop but in the alternative agreed to assess the damage and contribute the costs payable to an approved repairer appears to have been key.
In conclusion
It should be noted that this case is not only a County Court Judgment and therefore not binding on any other court, but also that this case was heard in Northern Ireland and considered the UTCCR which has now been superseded by the Consumer Rights Act 2015 (CRA).
That said, this case is a useful example of the issues to be considered. Whilst the concept of an approved repairer itself is unlikely to be unfair, the wording of any clauses and the extent to which it is brought to the insured’s attention and applied will have to be. It remains to be seen how this concept develops.
Motor Industry Legal Services
Motor Industry Legal Services (MILS Solicitors) provides fully comprehensive legal advice and representation to UK motor retailers for one annual fee. It is the only law firm in the UK which specialises in motor law and motor trade law. MILS currently advises over 1,000 individual businesses within the sector as well as the Retail Motor Industry Federation (RMI) and its members.
[i] Director General of Fair Trading v First National Bank plc [2001] UKHL 52, [2002] 1 All ER 97
[ii] Director General of Fair Trading v First National Bank plc [2001] UKHL 52, [2002] 1 All ER 97
