Insurance: What rights have you given to your insurer?

By John Grant Every insurance policy that we've seen covering general property has a clause where you as the insured give over authority to your insurance company to take whatever action is reasonable to recover their losses, and to do it in your name. Here is a sample: [caption id="" align="aligncenter" width="490" caption="Extract from AMI Motor Policy"][/caption] In the section headed "3. Our rights - iv" the policy that is signed by you gives authority to the insurer allowing them to take legal action in your name against anyone else for everything covered by the policy. This does make some sense; no one wants to be involved in recovery action, and why shouldn't an insurance company to do this on behalf of the insured? However it does have a number of potential complications;

1. If the insurer commences legal action in your name then you should be involved and have an opportunity to have input into the process. Documents will need signing by you, and you are under an obligation to comply with reasonable requests to assist. It can be particularly time consuming if this action involves a Disputes Tribunal action where lawyers are not able to be present. The onus then falls on you to be present personally in front of the Tribunal and put the case for damages to be awarded.
2. Sometimes subrogation can come with complications. For example, consider a case of a family who had agreed to billet a family friend. The billet causes damage to the family's car or house or contents. If the family claims under its insurance policy, the billet is likely to receive a letter from the insurance company seeking repayment in full of losses incurred. You have no say in this as it is the insurer's sole decision. Your only option is not to claim.

An example of how complicated subrogation becomes is seen by the recent claims against councils for leaky buildings. Clearly the insurance company who insures the council is pulling the strings, and when they do the council has no option but to do whatever the insurer requires. This problem is also often seen in complicated professional indemnity cases where both the party being sued and and the party who is insured must follow the directions provided by their respective insurers. If you do not follow your insurer's directions in these matters you could well jeopardise your cover and 'protection' and that therefore leaves you with little option but to comply. What can you do about it? Not a lot. But you can make your insurer aware of any factors that may complicate their planned recovery actions. They should also keep you informed of any and every action being taken in your name and you should be given the right to have input into the discussions and decisions. And as if this is not enough, remember you have also signed over the authority to your insurer for them to complete all documents and deal with all authorities in your name.