What happens when a vehicle is being transported from one place to another and arrives at its destination damaged? Who is liable? Can you subrogate automotive claims such as these? Subrogation lawyer and Rathbone Group partner Jason Sullivan explains the complex nature of vehicle transportation claims and best practices for successfully subrogating these cases.
Jason breaks his discussion down into 5 important factors any subrogation lawyer or claims adjuster must address to maximize their ability to recover from vehicle transportation losses:
1. What parties might be liable for the damage?
The liable parties could include the brokerage coordinating the transport, and/or one or more transportation companies that completed the shipping process. If you consider someone moving from NYC to Hawaii, there will likely be more than one ground shipping company, plus the maritime company that transports it across water.
In fact, as a subrogation lawyer licensed in Hawaii, these claims where the insured moved to or from HI are the most common types of subrogation cases Jason deals with in the course of vehicle transportation. An attorney facing this type of insurance dispute should make sure to ask their insured about every party that was part of the process of having their vehicle shipped.
Learn more about Maritime & Admiralty subrogation claims.
2. What cause(s) of action exist for subrogating the damage?
Causes of action in these cases may include contract terms (known as the bill of lading), negligence, or bailment:
- Contract terms: The bill of lading sets the terms of shipping and liability. Your insured should know and understand the details of what the coordinating and shipping companies are and are not liable for before they sign anything.
- Negligence: This applies to any standard sort of negligence you’d see in tort subrogation, such as a worker leaving the windows open on cars on a barge when there was clearly a storm coming, resulting in interior water damage.
- Bailment: This refers to a legal-social contract – when you hand over possession of your property for transportation, the party(ies) you give possession to have an obligation to return it in the same condition it was given to them.
For more on bailment, view our On Subrogation episode covering the subject.
3. There are often damages obstacles that limit liability.
As with many contracts, there is often language in the bill of lading that limits liability for the companies involved in shipping the vehicle. The Federal Carrier of Goods by Sea Act may also apply, which also provides protection from liability in maritime and admiralty subrogation. If you find there is language that is unfavorable to your automotive claim, try to find an argument by looking at:
- Were the terms of the contract unfair?
- Did your insured actually ever see the bill of lading?
4. Proving damages can be problematic.
The most common issue a carrier encounters when making a subrogation demand for damage during vehicle transportation is proving the extent of the damage. While some types of damage, like interior water damage, are a little more obvious, minor exterior damage is not. Because there are usually no “before” pictures of the automotive, it can be difficult to prove when the vehicle is delivered that this scratch or that dent is new.
The bill of lading and associated paperwork will often have a general illustration of a vehicle where one can mark all existing damage at the time they take possession of the vehicle, but that is also problematic. These are not detailed and are susceptible to misinterpretation, smudging, etc. Carriers should encourage their insureds to create photographic records of vehicle condition at the time it is transferred from the owner to the coordinator/transporter.
5. If a subrogation lawsuit is needed, where do you file it?
Vehicle transportation will almost always involve more than one state jurisdiction and even include maritime law. According to the Restatement of Conflict of Laws, the rule is usually to file a subrogation lawsuit either (1) where the contract was signed or (2) where the majority of the contract took place.
The issue with vehicle transportation claims is that you rarely know exactly where the damage occurred, whether dealing with accidents or negligence. Jason advises that the best solution is often to file a subrogation claim in the state where the vehicle was delivered, as this is most convenient because your insured is likely at that location.
Determine the appropriate location to file your claim as soon as possible, though – you do not want to wait too close to the statute of limitations only to find out you filed the lawsuit in the wrong state or that there is some defense that can be brought because of where you chose to initiate a subrogation lawsuit.
Experienced Subrogation Counsel is Key in Vehicle Transportation Claims
Not only is shipping subrogation tricky in a procedural sense, but in a jurisdictional sense, a liability sense, and an evidentiary sense as well. Insurers should partner with a subrogation law firm that combines nationwide coverage with jurisdiction-specific experience necessary to navigate complex subrogation claims across state lines or deep waters.
For more free educational material on pertinent subrogation topics, strategy, and process, check out Rathbone Group’s blog, YT channel, and podcast library:
Have a question or suggestion about a topic we haven’t yet covered? Email us at video@rathbonegroup.com or podcast@rathbonegroup.com to see it featured in a future episode of On Subrogation!