This article is a companion piece to this video

In this episode of On Subrogation: Phantom Vehicle, RG attorney Jason Sullivan discusses what to do when your targeted tortfeasor claims there is another party responsible for the incident, but they are nowhere to be found. Are they telling the truth or passing the blame? Jason unpacks how to settle an auto subrogation claim where the phantom vehicle defense is asserted.

Ghost Adventures in Subrogation: The Phantom Vehicle Defense

As far as affirmative defenses go, the phantom vehicle defense, also known as the mystery car defense, is one of the most tenuous. And, in fact, it is not an official affirmative defense at all. Still, it arises often in auto insurance claims, and that means that once a phantom vehicle case lands on a subrogation lawyer’s desk, they, too, are dealing with a mystery ghost car. Let’s explain:

Say someone rear ends your insured. You receive a claim from your insured and pay out that claim. When you submit the subrogation claim to the other driver’s carrier, they refuse to pay it. They say that, according to their insured, there was a third car involved that rear ended them, causing them to rear end your insured. They do not think they should have to reimburse you, because the accident supposedly wasn’t their insured’s responsibility, but that of the missing 3rd driver.

A mysterious third vehicle that gets the alleged tortfeasor off the hook and is also nowhere to be found? How convenient. This is the phantom vehicle defense.

Investigating the Validity of a Phantom Vehicle Claim

When completing the investigation phase of a subrogation claim, a general rule of thumb is to never take someone’s word for it, especially when it comes to things that cannot be proven in court – like ghost cars. There are several ways a subrogation team can approach determining whether or not that phantom vehicle was real, and they should all be exhausted before deciding how to proceed with your claim.

First, talk to your insured:

  • Where there any other vehicles at the scene?
  • Did anyone else stop?
  • Did they see another vehicle?
  • Did they hear/feel more than one impact?

Then, view the police report:

  • Look for any references to other vehicles at the scene. This information may come from your insured, the other driver, witnesses, or even law enforcement.
  • What type of damage happened to the cars? If the alleged tortfeasor is telling the truth, there should be damage on both the front and back end of the car.
  • Did the other driver make reference to another vehicle or being pushed into the insured? – Statements taken at the time of the incident are more likely to be true. You want to ensure that phantom vehicle was a presence in the initial retelling of the incident and not a convenient excuse made up later.

Finally, ask the other carrier:

  • Do they have any proof of the phantom vehicle? If they adjusted their own collision claim, they’ll have photos and records of the damage to their insured’s car.
  • Could the additional damage have been pre-existing? The issue here is that other carrier may just be doing liability. In that case, they would not have documented the collision damage on the car.

Additional Options to Make the Other Side Give Up the Ghost

If there is truly no way to tell if the mystery car ever existed, proceeding to litigation is a smart option. Subrogation lawsuits are heard in civil court, where the burden of proof is preponderance of evidence; you only have to convince the court your argument is 51%+ true to receive an affirmative judgment. 

In court, your burden as the subrogating party is to prove by a preponderance of evidence that the incident was the other driver’s fault. On their end, the adverse carrier has the burden of convincing a judge/jury by preponderance of evidence that it was not their fault. If they want to raise the phantom vehicle defense, they have to find a way to prove a 3rd car (1) was there and (2) was at fault in order to prove that the accident wasn’t their fault.

The other option, should the liability carrier for the other driver be a part of Arbitration Forums, is to pursue the subrogation claim via intercompany arbitration. AF rules state that all parties in an insurance dispute have to be members to use it, but because you are only interacting with the other driver’s carrier, since the third one may or may not exist and you are not asserting a claim against them, arbitration is allowed.

Curious to learn more about this and other important subrogation subjects? You can find more free educational resources on the subrogation process and how to navigate insurance disputes on Rathbone Group’s blog, YouTube channel and podcast library. Have a topic we haven’t yet covered? Reach out to us at [email protected] or [email protected] to see your topic covered on a future episode of our On Subrogation series.