A car crashed into my front garden, trashing my gateposts, gates and railings. My insurer, Axa, duly paid out. Two months later, I received a letter from a law firm to say it was acting for Axa to try to recoup the cost of my settlement from the driver’s insurance. It states that any court action would be brought in my name and it wants me to sign a declaration to give it the go-ahead.
The most worrying thing is that it says if Axa decides to settle for less than the full amount (the example is 60%) then my settlement would be adjusted downwards accordingly.
I don’t have savings and earn a fraction of the minimum wage, and only manage to pay bills because I get working tax credits. I contacted Axa but have not received a reply.
RB, Lincolnshire
At first sight it looks as though you are being left to do Axa’s dirty work and will take the hit if it fails.
In fact, you are being invited to add to Axa’s claim any uninsured losses of your own, such as the excess you had to pay on the claim, or distress and inconvenience suffered.
If a court awards Axa less than it paid out – say 60% of the sum – you will receive only 60% of your claim for uninsured losses. It does not mean you have to repay Axa the remaining 40%. Insurers can’t pursue the other party in their own name, as any losses caused by the latter’s negligence are deemed by law to be the policyholder’s. Instead, they have to recover their costs in the customer’s name.
Axa says: “Legal action does not affect the customer’s settlement. Our solicitors may ask whether our customer feels there are any additional uninsured costs. If so, we try and recoup these as part of our service as their insurer.”
According to Aoife Keane of legal firm Seddons, there should be no risk to you by lending your name. “It is not unusual for an insurance policy to expressly set out that, after payment of the loss, the insurer will be able to step into the shoes of the insured to pursue the third party that caused the loss,” she says. “The policyholder should not generally be put at a disadvantage by any subsequent proceedings and should ensure they will be indemnified fully in respect of any costs arising.”
If you need help email Anna Tims at your.problems@observer.co.uk or write to Your Problems, The Observer, Kings Place, 90 York Way, London N1 9GU. Include an address and phone number. Submission and publication are subject to our terms and conditions.
