Claims conditions: When you have an accident or exchange details you must not admit liability even if the accident was your fault. You will find an express condition prohibiting admission of liability in all car insurance policies, for example:-
No admission offer promise payment or indemnity shall be made or given by or on behalf of the insured without the written consent of the Company which shall be entitled if it so desires to take over and conduct in the name of the insured the defense or settlement of any claim or to prosecute in the name of the insured for its own benefit any claim for indemnity or damages or otherwise and shall have full discretion in the conduct of any proceedings or in the settlement of any claim and the insured shall give all such information and assistance as the Company may require.
This condition gives the insurers the right to handle the claim in order that it may be dealt with to the best advantage.
The validity of action by the insurers has been challenged from time to time in the courts, but has remained unshaken.
This condition modifies the common law rule as to subrogation.
It gives the Car Insurers the right to prosecute in the name of the insured for their own benefit, even before payment, ‘any claim for indemnity or damages or otherwise’.
Two further points arise from this condition with regard to motor insurers’ practice.
First, besides drawing the attention of the insured to the condition itself the Car Insurers will normally ask the insured to ensure that any communications – whether oral or written – received from a third party or his insurers or anybody acting on behalf of either of them, are passed on, unacknowledged, to the insurers who are dealing with the claim.
The emphasis is placed on the word ‘unacknowledged’ because an insured could quite easily and unintentionally reply to a third party with words to the effect that ‘my insurers are dealing with the claim’ which may imply that the insurers will actually be meeting the claim; here again, the insurers position could so easily be jeopardised.
Secondly, the modified form of subrogation referred to above is often applied by insurers on the basis that ‘attack is the best means of defence’! It has often been possible for an insurer to defeat a third party claim by lodging a counter-claim in the name of the insured alleging some act of negligence on the part of the third party.
If the issue has not finally been resolved in the courts, many third parties have recognized the strength of the counter-claim by the insurers and have decided to withdraw their own claim as a result.