When the responsible insurer delays inspecting the property and assessing the damage after the accident has been reported, the victim is left in a quandary - what to do: wait or act? According to Julius Sakalauskas, attorney at law and insurance law expert at AVOCAD, when the responsible insurer fails to make the necessary efforts to determine the consequences of the insured event and the amount of the insurance claim after the notification of the accident, and fails to inspect the damaged property within 3 working days of the notification of the injured party, and calculates the insurance claim at an unreasonable amount, the injured party has the right to turn to a property appraiser, and the insurer is obliged to compensate for the costs of the injured party.
The insurer delayed and underestimated the damage
The lawyer gives the example of a case in which it was established that the plaintiff's Volvo S60 had been hit by a BMW driven by a drunken driver in a yard. The accident was recorded by the police and the damage had to be compensated by the insurance company with which the perpetrator's civil liability was insured.
The claimant submitted the accident report and all documents in its possession, including photos of the damage to the car, via the insurer's self-service system. However, although the responsible insurer had doubts as to the extent of the damage to the applicant's car, it failed to inspect the damaged car within 3 working days of receiving the applicant's written notification of the accident and provided a damage estimate which did not reflect the applicant's actual loss at all.
Disagreeing with the insurer's calculation of the amount of damage, the claimant engaged an independent valuer of movable property, who found that the actual replacement value of the car was much higher. Although the insurer recalculated the damage and paid higher amounts after receiving the appraiser's estimates, the insurer still refused to reimburse the costs incurred by the claimant for the appraisal services.
The plaintiff therefore brought the matter before the court, and final court rulings established that the insurer had failed to fulfill its obligation to inspect the damaged property within three days, therefore, the plaintiff reasonably sought the services of an independent expert and was entitled to retain a representative—an attorney—and thus concluded that the costs of hiring the property appraiser and the attorney should be reimbursed.
The court's interpretation: the insurer must act quickly and in good faith. And how does this work in practice?
The Court stressed that according to the Law on Compulsory Motor Third Party Liability Insurance, if the authorised person of the liable insurer has not arrived within 3 working days from the date of receipt of the written notification of the accident by the injured third party and the inspection has not been carried out remotely, the injured third party has the right to obtain the valuation of the property in order to establish the amount of the damage caused to the property. In such a case, the responsible insurer must also reimburse the costs of the property valuation services incurred by the injured third party at market prices.
The right to inspect the damaged property remotely cannot be interpreted in isolation from the insurer's obligation to inspect the property within the time limit laid down in the Law, i.e. within 3 working days. Irrespective of the manner in which the insurer carries out the inspection of the damaged property, whether in person or remotely, it must be carried out within the time limit laid down in the Act, by means of a document of one kind or another (inspection report, technical inspection report, etc.).
In the case of compulsory insurance, insurers must calculate the necessary repair costs for the injured party’s damaged property based on average rates for labor and replacement parts and/or components that correspond to the current state of technology, in accordance with recommended time standards, rather than based on lower rates or discounts offered by the responsible insurers’ partners — car repair shops, which may not even have all the necessary equipment to perform repairs to the required standard, offer lower rates or discounts that they apply to insurers.
“This ruling once again draws a very clear line: insurers may not delay investigations into insured events, nor may they abuse their position by offering victims insurance payouts of a clearly unreasonable amount,” notes attorney Julius Sakalauskas.
“Accurate assessment of damages should not be a matter of negotiation, but a legal obligation. Insurance companies that disregard this obligation risk not only financial losses but also their reputation. If an insurer increases the payout several times only after claims are filed—that is a sign that the damage assessment was performed improperly,” the attorney states. According to him, this is an important restoration of legal balance between the businessperson—the professional insurer—and the injured party, who in many cases lacks the necessary knowledge and time to argue with the insurer over every nut and bolt in the repair estimate, and therefore ultimately gives up.
This precedent strengthens the position of victims in disputes with insurance companies, as the courts have emphasised not only the formal observance of the time limits for investigating insured events, but also the insurer's professional duty to act diligently, proactively and in good faith. Thus, according to AVOCAD's counsel, if the responsible insurer or its authorised person does not inspect the damaged property within 3 working days of the victim's notification of the accident, the victim has the right to obtain a valuation of the property in order to establish the amount of the damage caused to the property, and in such a case, the responsible insurer is obliged to compensate for the cost of the valuation of the property incurred by the injured third party, which is at the market price.