2nd Source - C111 Chapter 4 Advanced Loss Adjusting

Chapter 4 – Automobile Injury Claims

Introduction

-        Auto policies provide coverage for both first party and third party (TP) injury claims

-        First party coverages are found under the Accident Benefits (AB) section

-        TP coverages are found under the Liability section

-        Auto policy wordings are mandated by provincial law

-        The auto policy wordings within each province are standard wordings for all who purchase auto insurance

Auto TP Bodily Injury (BI)

-        Coverage is provided for both property damage (PD) and BI to those persons who have suffered injuries or damages to their property as a result of the insured's negligence

-        In provinces where a no-fault AB apply, TP liability (TPL) will be applicable only under certain circumstances; the injury of the claimant will usually be set against a criteria before any coverage under this section can be applied

-        In provinces where TPL is government run, the policy will respond differently

-        In provinces where no-fault system doesn't apply, then ordinary rules of tort will apply

Accident Benefits (AB)

-        Provides coverages for:

·         Medical expenses

·         Wage loss

·         Rehabilitation

·         Death & funeral benefits

·         Other personal care expenses like caregiver, housekeeping, home maintenance

-        Level of benefits will vary from province to province

-        AB is mandatory in all provinces except Newfoundland and Labrador

-        AB is referred to as "no-fault" benefits because coverage will apply regardless of fault of the insured for the motor vehicle accident (MVA)

-        The purpose for "no-fault" benefits is to provide all insureds access to benefits with the purpose of rehabilitation for all claimants being the primary objective

-        In QC, there is no opportunity for claimants to sue negligent party for injuries sustained;  all claimants must go through SAAQ for their AB

-        In provinces allowing tort action and having AB "no-fault", any award for damages under TPL will be deducted for any benefits available under the AB section

-        AB is secondary to any benefits available to the claimants through their own employer insurance, government health plans, and long-term disability plans

-        The medical knowledge an adjuster must have in-order to assess auto injury claims are:

·         Medical terminology

·         Optimum course treatment

·         Limitations an injury is likely to impose

·         How long a person will be affected by the injury under the circumstances

Provincial Auto Injury Regimes

-        Refer to table for summary of all provinces & territories and their corresponding coverages

Ontario (Not in the Table)

-       The insurer has the benefit of closing the claim file, and the claimant has the benefit of receiving one lump sum instead of a series of payments over a long period of time

-       Commuted Value - amount that it would take today to pay off an accrued benefit that is due in the future
                            - interest rates are an essential component thus projections cannot be guaranteed

-       Even if the injured party was in the process of committing a crime, the insurer still has to pay statutory AB (Beattie v. National Frontier Insurance Company)

Out-of-Province Claims

-       Out-of-province accidents require the loss adjuster to investigate if the provinces have a reciprocal agreement to determine claims handling process

-       Example - ON and QC have an agreement between them to use IBC settlement charts to determine fault for MVAs;  QC residents involved in MVAs outside of QC are governed by the law of jurisdiction where the MVA occurred - i.e. if QC driver was negligent then they could be sued for any resulting BI or PD suffered by the innocent TP; QC residents are covered for their injuries due to MVAs anywhere in the world through SAAQ, regardless of fault

Injury Claim Process

-       Claims process does not have much variation for auto injury claims

-       It is important for the adjuster to meet with the injured party ASAP after the claim has been filed because:

·         Need to get the most accurate details of the accident

·         Need to get the most accurate details of the injury suffered by the claimants

·         Need to get the most accurate details of the claimant's activities

·         Need to get the most accurate details of the claimant's employment history

-        Once a claimant retains a lawyer it will be difficult to get any more information and the chance to reserve the file properly will be lost

-        A serious injury may take a lot of time to resolve; the settlement amount for an injury that will heal versus an injury that will cause a permanent handicap will be very different

-        The expenses that have to be reviewed by the adjuster for claims involving injury are:

·         Physiotherapy

·         Medical aids

·         Prosthetic devices

·         Prescription drugs

·         Chiropractic expenses

·         Dental treatments

-        These incurred expenses must be reasonable and necessary and related to the accident

-        Rehabilitation (rehab) is a tool used to improve the odds that a claimant will return to work successfully in the shortest amount of time

-        Rehab process generally requires a plan of action that involves:

·         Assessments

·         Goal setting

·         Planning

·         Training

·         Placement

·         Follow - up

·         Address any factors that may inhibit or slow recovery

-        The expenses that have to be reviewed by the adjuster for claims involving rehabilitation are:

·         Treatment services such as guidance and counselling services

·         Training services

·         Special equipment needed by the claimant

-        Studies have shown that claimants that suffer from soft tissue injuries will likely recover more quickly when they follow a regime of exercise and activity

-        Information gathered by the adjuster about the claimant should include:

·         Physical characteristics

·         Party's age

·         Gender

·         Marital status

·         Number of dependents

·         Nature of employment

·         Details of their income or salary

·         Prior health issues

·         Regular physical activity prior to the loss

-        Medical information about the claimant's injury should include:

·         Effects of accident

·         Prior health issues

·         Probable duration of any inability to perform usual functions (documentation must be provided by family doctor to support any time off work)

·         Probability of permanent disability

-        The adjuster should also note if any out-of-pocket expenses were incurred by the claimant as a result of the accident like, medical expenses, transportation expenses, and home care expenses

-        For wage loss claims that are being presented for weekly income replacement, due to the claimant's inability to work, the adjuster must confirm that the claimant's employment falls within the definition of "employed" as stated in the policy

-        Permission from the claimant is required, and the adjuster usually gets an authorization form signed by the claimant prior to  investigating and confirming the details of the claimant's employment

-        The adjuster should also investigate if the claimant is entitled to receive any collateral benefits, as auto AB is secondary to any employer benefits;  also, if the AB can be reduced by any collateral benefits available to the insured

-        The criteria for collecting lost wages from AB coverage varies from province to province

-        Initially the test generally states that the insured must be unable to perform the duties usual to his/her occupation or employment

-        After a period of time the test changes to measure the ability to do any occupation or employment which the insured is reasonably suited for

-        If the claimant's disability period is longer than those of claimants who have experienced comparable injuries the insurer has the right to request an independent medical examination by a doctor of the insurer's choice

-        The adjuster may visit the injured party to assess their daily activity and the progress of their recovery

-        In extreme cases, a private investigator can be hired to do surveillance of the claimant to validate the disability or expose any fraudulent activity

-        The adjuster should obtain medical and employer authorization forms to the claimant who is injured as a result of the MVA and still living;  the adjuster will not be able to access the medical and employer information without a signed authorization form from the claimant

-        Understanding the medical issues will allow the adjuster to evaluate whether there is enough evidence in the file to make a decision on the claim;  the adjuster to should ask informed questions to assess if there is enough evidence, like:

·         How long after the accident did the symptoms appear for the claimant?

·         Did claimant have an existing medical condition?

·         If claimant had a pre-existing medical condition, was it made worse due to the accident?

·         Are there different types of disorders, and does a specific permutation apply to the claimant?

·         Is there objective findings to support the injury claimed?  If not, what are the subjective complaints of the claimant and are they consistent with the medical diagnosis?

·         If the claimant hasn't responded to traditional treatment, are aggressive, invasive methods of treatment needed, like surgery?

·         Is the medical professional diagnosing the claimant's injuries appropriately skilled to do so?

-        In Ontario, the claimant has the right to see all medical information pertaining to him/her that has been collected in the claims file

-        Quebec study found that for whiplash and soft tissue injuries, the use of a cervical collar, traction and extended bed rest can actually delay recovery and contribute to the development of chronic pain

-        When the insured succumbs to their injuries as a result of a MVA, then death benefits are paid;  documentation that is required to pay a claim under death and funeral benefits are:

·         Death certificate

·         Medical report supporting the fact the insured succumb to his/her injuries as a result of the MVA

·         Marriage certificate

-        Information that should be collected and analysed for Fatalities involving MVAs are:

                      I.            Pre-existing conditions and expected life span of the deceased

·         The adjuster to should for any pre-existing health problems suffered by the deceased prior to the loss

·         The adjuster should consult the family doctor for pre-existing health issues

·         The adjuster should research how the pre-existing health issues might have affected the deceased's life span

                   II.            Complete work history of the deceased

·         When and where was the deceased employed

·         Total earning capacity

·         Occupation title/position

·         Absenteeism

·         Work performance reviews

                 III.            Family situation

·         Number of marriages

·         Current civil status

·         Number of dependants (e.g. children, ailing parents, etc.)

·         Loss of house-hold services due to the deceased's death; e.g. house-hold chores that the deceased regularly undertook

                 IV.            Income Tax Returns

·         Best to obtain the last 5 years of the deceased person's tax return

·         Determine the "after tax" income of the deceased

·         Deductions of up to 30% for the deceased's personal expenses

·         Take into consideration factors like the surviving spouse may remarry

·         Funeral costs are paid to the insured to the full limit of insurance

Damage Summary for a Tort Injury Claim

Out-of-pocket expenses

-        Examples are:

·         Ambulance

·         Prescription drugs

·         Home care

·         Transportation to physiotherapy

Income Replacement Benefits (IRB)

·         Weekly salary -> In Ontario, standard IRB is 70% of gross income or $400/wk, whichever is less, also there is a 7 day deductible

·         Modified salary replacement if the claimant returns to work on a part-time basis

Permanent Disability

·         Loss of competitive advantage

·         Claimant is on modified work duty and can no longer return to pre-accident work duties

·         Depending on the mobility of the claimant and future loss income this value should be researched using case law to support any settlement amount

Pain and Suffering

·           This figure is much more vague and open for interpretation

·           Best way to determine this amount is researching case law, taking into consideration age of claimant, type of accident, type of injury, and jurisdiction;  these factors can influence the settlement amount greatly

Protection Against Fraud

-        Insurance fraud is a serious criminal offense under Criminal Code of Canada and is punishable for up to 10 years in prison for those who are convicted

-        In Ontario, it is an offense to knowingly make a false/misleading statement or representation to an insurer in connection with a person's entitlement to a benefit under a contract of insurance

-        Also an offense is to willfully fail to inform the insurer of a material change in circumstances within 14 days

-        Another offense is to make or use a false document with the intent that it be acted upon as genuine;  if the insured submits docs for the support of a claim then the docs should be legitimate

-        Maximum fine, upon conviction are $100,000 for the first conviction and $200,000 for any subsequent conviction

Automobile Accident Subrogation

-        When subrogation is a possibility for a serious accident an outside expert is brought into evaluate, produce, and preserve evidence of cause and fault

-        Example - A chemist expert is used to evaluate the asphalt road.  The chemist shows the chemical composition of the roadway didn't meet standards which resulted in the road to more slick approaching a bend.  The chemist's findings help support the insurer who paid the claim to successfully subrogate a partial amount against the construction company who was awarded the contract to construct and pave the road

-        Other possible reasons the cause of the loss may include the following:

·         A stop sign was hidden by a tree branch

·         Inadequate road signs did not indicate that there was an upcoming bend in the road

·         The public roadway way was in a very poor physical condition with potholes and obstructions in the road

-        There is a possibility that a public entity or someone else could be responsible for the condition of the roadway and may bear some share of the liability;  municipalities, through the law, have shortened the time frame for a claimant to present a legal action against the city
Example - in most cases a TP has 2 years to present a legal action against a tortfeasor, however if a municipality is to share the blame then the limitation could be reduced to a matter of weeks

-        The right of a TP to claim for injuries over and above statutory AB may be limited or reduced by provincial legislation, as is the case in Ontario

Preliminary Report Information

-        Information that should be included in a loss report are:

·         Name & address of insured

·         Driver's license #

·         Vehicle details

·         Policy number

·         Date, time and location of accident

·         Police info, EMS info and if any parties were taken from the scene by ambulance (ground/air)

·         Description of loss details of the accident

·         Damages sustained by the insured (BI and PD)

·         Identification of TPs and passengers in all vehicles involved in the loss

·         Insurers and policy #s for all persons suffering BI or PD due to the loss

·         Name and contact info of witnesses

·         Name and contact info of all parties who sustained injuries due to the loss

·         Location of property after it was moved from the scene

·         Possibility of subrogation against other tortfeasors

·         Contact info and name of experts and their findings

Collateral Benefits

-        The type of benefits which can be deducted from an automobile settlement are collateral benefits received from other sources, like employer benefits, workman's compensation, short term disability, etc.

-        Some policies have a clause that mandates a claimant must repay any duplicate payment
Example - Hugo was involved in a MVA where TP was unidentified.  Hugo had his own auto policy and disability insurance through his employer.  Hugo made a claim under both policies.  The auto policy is secondary to any employer benefits and deducted any duplicate entitlements that Hugo had access to through his employer's policy;  Hugo is to receive indemnity for his loss and profit from it

-        There are certain provinces that have legislation in place allowing certain benefits to be received from multiple policies without deductions
Example - Lisa is hurt in a MVA.  Lisa's benefits under the policy were NOT deducted for her entitlements for her welfare payments and unemployment insurance

Releases for Injury Claims

-        Signing a settlement release has the effect of the claimant giving up his/her rights to present a legal action today and in the future for BI and PD

-        Even if the claimant signs a final release, his/her entitlement under AB is NOT affected

-        In Ontario the loss adjuster should be prepared to warn a claimant to consider seeking legal, financial, and medical advice before signing a release; the claimant has a two (2) day cooling off period after a settlement release has been signed and the claimant must be aware of his/her rights to dispute the settlement

-        If the claimant has been informed of his/her rights and signs the release the insurer is NOT required to provide a commuted value calculation to determine what the value is now of what would have been the future benefits

Uninsured Motorist (UIM) Claims

-        From time to time there are motorists who operate vehicles and cause accidents when they don't have auto insurance

-        UIM is coverage which allows the insured (policy holder) to present a claim for BI and PD (depending on the jurisdiction where the accident occurred) under their own policy when an uninsured motorist is responsible for a MVA

-        Only in the case of BI an insured can present a claim under UIM coverage for an unidentified motorist who is liable for the MVA;  liability is difficult to assess because the other party is not available to verify or refute the loss details presented by the insured

-        If the uninsured motorist is known, the adjuster must verify that insurance did NOT exist on the vehicle involved in the loss;  this is usually done by receiving a report (in ON it is called the Autoplus)

-        If the other party is identified and confirmed uninsured then the coverage is limited to the minimum TPL policy requirements in the jurisdiction where the MVA took place

Non-Owned Auto Policy

-        This is an endorsement available for purchase with the standard CGL policy

-        This endorsement covers the liability imposed by law upon the insured arising from the use/operation of any automobile that is not owned or licensed to the insured, in the course of the insured's business; includes vicarious liability through the negligent act of an employee

-        This endorsement will cover the insured when an at-fault vehicle is uninsured or when an at-fault vehicle is insured and the owner's policy has its limits exhausted due to the BI and PD claim presented by the victim, as a result of the insured's and/or his employee's negligence causing the MVA
Example - Insured owns Boss Repair shop in Toronto.  After servicing one its client's vehicles an employee takes the vehicle for a test drive.  While driving the client's vehicle the employee doesn't yield at a stop sign and collides with Anne who was on her way home.  Anne suffers injuries and damage to her vehicle.  Anne's vehicle is covered under her own policy, but her injuries are permanent and serious.  She sues the owner of the vehicle for her BI.  The owner's policy only has $200k TPL limits and Anne's BI claim is valued at $350k.  Boss Repair shop has a CGL policy with a Non-Owned Auto rider which has TPL limits of $500k.  Any balance that is not covered under the client's TPL limits auto policy will be paid by the TPL coverage under Boss Repair shop's CGL, Non-owned Auto endorsement coverage