QUESTION:
Our client's vehicle hit a third party (no dispute —it was our client at fault).
Our client's policy excluded U25's and an U25 was driving, so our client is liable for the third party damage.
PAV of the TP vehicle $29K, repair estimate $10K - for some reason (possibly because the TP didn't want an accident damaged vehicle back) the TP Insurers agreed to write it off and paid their insured the full $29K.
Vehicle salvage costs received by the TP Insurer $4K.
TP Insurer now holding our client liable for $25K ($29K less $4K salvage).
What is our client's actual liability? Is it the $25K being sought?
Should it be the $10K repair estimate as that was the actual damage they caused?
If it's the $10K where does the $4K salvage amount come into play (or doesn't it?)?
Surely the write off was a decision made (for whatever reason) by the TP Insurer and their actions shouldn't increase the amount our client is liable for, they are only liable for the value of the actual damage they caused?
CROSSLEY GATES ANSWERS
The amount the owner of the damaged TP vehicle can recover from your client in negligence is determined by the law of damages. One of the principles of that law is that a victim must mitigate his or her loss. A victim can't take advantage of the situation to recover more from the negligent party than his or her true loss.
As the vehicle was clearly more economic to repair, the victim can only recover the 10k in accordance with the obligation to mitigate. A subrogated insurer cannot be in any better position than its insured, so it can't recover more than the 10k either.
The TP's insurer's generosity doesn't change any of this.
