"Bob” was pretty excited about showing his car at a concours. His 1967 Alfa Duetto Spider Veloce was in exceptional condition. Never wrecked, it still sported the shiny, original red lacquer paint with no significant flaws from the car’s 120,000-mile life. It was highly original — all the way down to the hose clamps and the Dunlop disc brakes. Bob staged the Alfa on the field the night before. Concours organizers told him they would have security overnight and that he need not worry about the car. He parked it in the designated, roped-off area, and went home for a nice dinner before the big event the next day. Upon arrival in the morning, Bob was horrified to see a nasty scrape and dent on the nose of the Duetto. He immediately contacted the event organizers, who apologized profusely and volunteered that their insurance carrier would take care of everything. Bob was very pleased that the organizers were taking responsibility and they had a cordial conversation about what might possibly have happened. The area had been roped off all night, there were no other show cars nearby, and the damage didn’t really look like it had been caused by another car. The conclusion was that one of the event workers must have run into the Duetto with a golf cart.

Claim maladjustment

Bob submitted his claim to the event’s insurance carrier, a commercial-lines insurance company Bob had never heard of. The adjuster seemed pleasant enough — and promised to get back to Bob soon. Bob’s comfort turned to distress when he received a letter denying the claim because the event’s policy excluded coverage for “competition vehicles.” Bob’s explanation that his cream-puff Duetto was as far from a competition vehicle as possible fell on deaf ears. The concours organizer was equally incredulous, contacted the insurance adjuster and demanded they fix the car. The adjuster begrudgingly agreed to repair the car and offered a modest settlement for the repair and repaint of the nose of the car. Bob pointed out that the proposed repair wouldn’t work very well. The car’s original lacquer paint was not going to match up with a two-stage paint repair on the nose. The entire car needed to be repainted to match, and doing that was going to be highly problematic since it was illegal in California for paint shops to shoot lacquer paint. The adjuster wouldn’t buy that — and insisted that the quickie repair was all that was needed. At this point Bob started feeling like a Legal File, and he contacted our office for representation. With Bob’s permission, I am able to share the story.

A simple fix

After hearing the story, there were two simple questions for Bob: First, “Who is your insurance company?” When Bob responded that it was Chubb, the quick second question was, “So why are you screwing around with this? Why don’t you turn it over to Chubb and let them take care of it? It will get handled lickety-split.”

How insurance works

Bob is a lot like many of us. We pay our insurance premiums regularly, and we keep our noses pretty clean, but we have this lingering, irrational fear that our insurance company is going to dump us at the first sign of trouble. So when something bad happens, we try to negotiate whose insurance company is going to pay for the claim. “It’s your fault, so your insurance is going to pay for it!” From a lawyer’s perspective, it’s kind of funny that clients think they can do that. No insured person has the right to commit his insurance company to pay a claim. There are rules that control the claims process, and insureds can’t change them. The general rule in the United States is that the insurance follows the car. That is, the carrier that insures the car takes primary responsibility for the claim, no matter who was driving the car. In simple terms, if you let me drive your car and I wreck it, your insurance company — not mine — is going to pay for the repair. Technically, the policy covers the car and anyone who is driving the car permissively. So if I drive your car, run a red light, and crash into three other cars, seriously injuring three people, that’s all on your insurance policy — not mine. And if your carrier gets angry enough about it, it’s your insurance that gets canceled. Similarly, if you run a red light and run into me, my insurance company will pay for the repairs to my car. But that isn’t the end of it. My insurance carrier then makes a claim against your insurance carrier to recover its losses — in a process called subrogation. Whether my carrier gets reimbursed in whole, just partly, or not at all is between the two insurance companies. Either way, the crash was not my fault, and my insurance company doesn’t penalize me.

A happy ending

Bob submitted his claim to Chubb and immediately received confirmation that everything was going to work just as described. Chubb would pay the claim and get its money back from the event’s insurance carrier. Chubb understood that the entire car needed to be repainted to match. They said they are used to this, as collector cars need a complete repaint for even small damage about 85% of the time. Bob was able to find a fully capable body shop to paint the car at an estimated cost of $17,500. Chubb paid the claim without question, and Bob should have his Duetto back by the time you read this.

Deal with the right people

As “Legal Files” has written many times, it pays to use a collector car specialty insurance company instead of garden-variety consumer insurance carriers. The specialty carriers know car collectors and our cars, they’ve been around this block many times, and they generally don’t nickel-and-dime us when we submit a claim. Paul Morrissette, president of Chubb Insurance Solutions Agency, offered some useful advice: “The collector did the right thing by taking your advice and involving Chubb rather than dealing with the event’s insurer. Even if the event insurer had agreed to cover the loss, chances are very good that the settlement would not have reflected the high labor and material cost associated with a proper paint job for a #1 condition Alfa Duetto. Chubb’s claim adjusters understand that you can’t always obtain a perfect match by doing just a portion of the car, and that original paint is more expensive to replace. “This situation serves as a great example of the importance of having superior collector car insurance and the benefits of using your coverage when an incident occurs, even if the damage was another party’s fault. Insurers have more resources at their disposal than an individual consumer when there is a need to recover damages through subrogation.”

Who ultimately pays?

Morrissette declined to speculate on whether the event is liable, stating that Chubb’s procedure is to refer the matter to their subrogation department once the claim has been paid. So what will happen when the subrogation department gets involved? “Legal Files” recently dealt with this issue in the story about the Porsche Panamera stolen from a hotel parking lot (January 2017, p. 50). In that Legal File, the issue was whether a bailment had occurred. The parking lot operator insisted it was not a bailment, which would have made it liable, but the mere rental of a parking space, which would have avoided liability. That distinction may apply in the case of the damaged Duetto — did this rise to the level of a bailment? The Duetto was unquestionably parked on the event’s field at the invitation of the event. However, the car was locked and Bob kept the key. It may well be that the Alfa was never actually entrusted to the event. Without being under the event’s control, it may not have been a bailment. However, the apparent consensus was that an event worker driving a golf cart damaged the Duetto. This would make the event liable for the negligence of its staff. The event manager did accept responsibility. All of that suggests that the event’s insurance carrier will reimburse Chubb.


“Legal Files” can’t resist one last quote from Morrissette: “Thanks for your efforts. You’re performing a great service by educating collectors on a situation that will likely repeat itself across the country as car show season hits full swing. It seems like every year we hear about an incident occurring at one of the major concours events, and I can’t imagine how often this must happen at less-organized shows.” ♦ JOHN DRANEAS is an attorney in Oregon. His comments are general in nature and are not intended to substitute for consultation with an attorney. He can be reached through www.draneaslaw.com.

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