Fleet own-damage claim: late notice, pre-survey repairs and overloading
A fleet owner reports, on 14 March, an accident that occurred on 20 February. The insured's workshop had already replaced the cabin, front axle and two tyres for ₹6.42 lakh, and the truck had returned to service. No FIR was lodged; the insured says the third-party car involved settled privately. The driver's licence expired on 1 February and was renewed on 3 March. The goods carrier is permitted 7.5 tonnes; the weighbridge slip shows 9.1 tonnes. The policy requires immediate notice and allows the insurer to appoint a surveyor before repairs. The surveyor can now only inspect the replaced parts, which the workshop has discarded. The insured is a valued client with 42 vehicles and a clean claim history, and also wants the insurer to pursue subrogation against the car driver, whose registration number is noted.
1. Assess whether the insurer can repudiate the claim for breach of the notice and survey conditions, and describe a defensible decision.
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Repudiation is available but must be reasoned, not mechanical. The policy makes immediate notice and pre-repair survey conditions; the insured gave notice after 22 days and had the truck repaired, discarding the replaced parts. That is real prejudice: the insurer cannot verify cause, damage extent or whether the replaced parts were damaged. Overloading at 9.1 tonnes against 7.5 tonnes is a separate breach and a plausible contributory cause. The licence expired on 1 February and was renewed on 3 March, so there was no valid licence on 20 February, another breach. A defensible decision is to repudiate own-damage liability under the notice and survey and overloading conditions, citing the specific clauses and the prejudice, after giving the insured a chance to explain. I would not rely only on the licence, because a tribunal may take a lenient view of a short gap. Before finalising, obtain the workshop job card, photographs, weighbridge slip and driver statement. Offer no settlement without a full release, and keep the third-party position separate.
2. If commercial reasons favour an offer, how would you quantify it and what deductions would you apply?
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Quantify on the best available evidence, not the invoice. Ask the surveyor to assess visible damage from photographs, the job card and the replaced parts; obtain the workshop's purchase invoices for the cabin and axle to test the invoice. Apply policy depreciation, for example 50% on tyres and 20% on the cabin and axle if over one year old, deduct the policy excess (say ₹25,000) and any salvage value. The discarded parts mean salvage is likely nil, which is itself a problem. The overloading breach would justify a proportionate reduction or a without-prejudice settlement, but there is no contractual formula, so any reduction must be explained and documented. On a ₹6.42 lakh invoice the assessed loss might fall to ₹3.8-4.4 lakh before excess. An offer at that level must be labelled full and final and must not waive the insurer's recovery rights against the car driver. If the evidence cannot support even that, pay nothing and say why in writing.
3. What is the subrogation position given the insured's private settlement with the car driver?
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Subrogation arises only after payment and only to the extent of payment. The insured settled privately with the car driver, which may have released the third party and destroyed the insurer's recovery right. Ask for the settlement terms, any release, and the car's registration and insurer details. If the insured gave a release without the insurer's consent, the insurer may reduce the claim to the extent of the lost recovery. If payment is made, obtain a letter of subrogation and all documents, and do not let the insured sign away rights. The third-party claim is separate from own damage, and the insured's own handling of it is relevant to the own-damage assessment. This is an additional reason to document the file carefully before any offer.