The information is presented using a fictional story for ease of recall and understanding.
Uncle Teo & Company (Uncle Teo) is a mom-and-pop motor workshop. Uncle Teo counts third-party insurance claims as one of the services he offers to his customers. Uncle Teo offers third-party claims as a service because he firmly believes that wrongdoers should pay for the damage rather than his innocent customers.
Headache 1: Inaccurate description of the accident by our driver
One day, Mr Liar got in an accident and came to Uncle Teo. Mr Liar was angry and agitated at how the Third Party had hit the rear of his prized car. UUncle Teo asked for the footage from the in-car camera, but was told that it was off during the accident. The camera footage would be useful evidence to prove Mr Liar was telling the truth. But always ready to believe his customers, Uncle Teo did not doubt what Mr Liar told him. The car was duly repaired and Mr Liar collected his car a happy man, without paying Uncle Teo anything upfront.
Weeks later, Uncle Teo applied for and received the Third Party’s Singapore Accident Statement. To his alarm, the Third Party wrote that the accident happened on a slope, and Mr Liar’s car had rolled backwards and hit the front of the Third Party’s vehicle.
As liability is now disputed by the Third Party, the chances of getting money from the claim are reduced. Uncle Teo’s calls to Mr Liar asking him to repay him for his cost of repairs went unanswered. I should not have believed that liar, Uncle Teo lamented.
Moral of the story
Don’t assume our driver’s account is accurate. Right at the start of the claim process, collate all objective evidence – video, photos or neutral witness – to corroborate our driver’s account. If Uncle Teo suspected that Mr Liar was not telling the truth, he should ask Mr Liar to sign a written agreement to state that if the claim fails, Mr Liar is liable to repay the workshop for the cost of repairs, and the cost of a rental vehicle (if any).
Don’t wait for weeks later to apply for the Third Party’s Singapore Accident Statement. Apply fast, so that you can know early – before Mr Liar drives away with his repaired car – whether the Third Party is disputing our driver’s account.
Headache 2: Repudiation by Third Party’s insurer
Uncle Teo however did not give up the claim. He has met his fair share of customers who gave inaccurate or biased accounts. Uncle Teo issued the letter of claim. He reasoned: since parties’ accounts are conflicting and neither party has objective evidence to prove his own account, I might get 50% of the claim amount.
Weeks after, the Third Parrty’s insurer dropped a bomb: they had repudiated insurance liability as the Third Party was drink-driving. Oh great, cursed Uncle Teo. Now the insurer won’t pay me anything.
Moral of the story
When repudiation happens, the claim will be paid by the Third Party directly, rather than his insurer. This is a headache because unlike insurers, the Third Party may not have money to pay for the cost of Uncle Teo’s repairs.
But all is not lost. If the Third Party driver can be identified and has the means to pay, a claim can still succeed. But do note that the claim may need to proceed to the enforcement stage in order to compel the Third Party to pay.
Headache 3: Dispute over settlement proceeds
Uncle Teo retained Reliable Law Firm to handle the above repudiated claim. At least I can get still something, Uncle Teo reasoned as Reliable had told him that the Third Party stays in a private property and is the owner of a few businesses.
Suddenly, a car drove in. The driver was a Mr Envy who just got into an accident the previous day. Uncle Teo learnt his lesson and grilled Mr Envy on how the accident happened. Satisfied that Mr Envy was truthful, Uncle Teo commenced repairs.
After repairing the car, Uncle Teo submitted the claim to the third-party insurer, Aunty Lucy Pte Ltd (Aunty Lucy).
Aunty Lucy issued a Discharge Voucher containing their offer. If Uncle Teo accepts the offer in the Discharge Voucher, Mr Envy has to sign on the document. Mr Envy saw the figure in the Discharge Voucher and became envious that Uncle Teo will receive this money. After all, Uncle Teo did not seem to have repaired his car that much to deserve the money…
Moral of the story:
At the start of the claim process, a written agreement should be signed by Uncle Teo and Mr Envy which spells out clearly the entitlement to the proceeds if the claim succeeds. If the claim fails, the agreement should also spell out the liability on the owner to repay the workshop for their services to repair the car, and the cost of a rental vehicle (if any). At the point of signing the written agreement, a lawyer should explain to the owner what the agreement means, so that the owner cannot claim he signed it under a unilateral mistake.
Subsequently, when Mr Envy is about to sign the Discharge Voucher, it will be helpful to give Mr Envy a breakdown of the figure (usually presented as a global figure) in the Discharge Voucher. Mr Envy will then appreciate that the figure may include expenses like survey report, the Third Party’s Singapore Accident Statement and search with the Land Transport Authority for the Third Party’s vehicle.
Headache 4: Settlement cheques are mailed to car owners
Thankfully, Mr Envy decided to sign the Discharge Voucher after all. Uncle Teo promptly returned it to Aunty Lucy, expecting the settlement cheque to arrive in about 2- 3 weeks’ time. Weeks passed. The cheque still has not arrived. This is his first time Uncle Teo was dealing with Aunty Lucy and he was worried whether the cheque may have gotten lost in the mail.
To his horror, Uncle Teo realised that Aunty Lucy had not mailed the cheque to him (as was the usual practice with other motor insurers), but had mailed the cheque directly to Mr Envy. With the cheque now in his trembling hands, Mr Envy was envious that Uncle Teo will receive so much money. Since the cheque was in his name and in his hands, should he just bank in the cheque and….
Moral of the story:
Examine the wording in the Discharge Voucher. The Discharge Voucher is tantamount to a settlement agreement1. If Uncle Teo wants to receive cheque (or to have the cheque in his name), this should have been included in the Discharge Voucher as a condition to settlement.
A lawyer could have helped Uncle Teo to negotiate the conditions of settlement and to include them in the Discharge Voucher, before it is presented to Mr Envy for signing.
Wong Chong Hui and another v Lim Siong Hoe Lawrence [2019] 4 SLR 989
Headache 5: Failing to reserve rights to personal injury
Mr Envy’s good sense prevailed. He banked the cheque and then transferred the money to Uncle Teo.
Several months later, Mr Envy started feeling pain in his neck. He suspected the pain was due to the car accident. He did not see a doctor shortly after the accident as he thought the discomfort (as felt then) would go away on its own. It did not, and the discomfort has now worsened into pain.
Mr Envy consulted a lawyer friend on whether he can make a claim for injury arising from the same accident. The lawyer told him he can’t, as the Discharge Voucher (that he had signed months back) stated that the sum offered would also cover injury claims that manifest in future.
On hearing this, Mr Envy felt incensed that his injury claim is barred. Why didn’t Uncle Teo explain to him the significance of signing the Discharge Voucher? Mr Envy is considering legal action against Uncle Teo…
Moral of the story:
In the Discharge Voucher, Uncle Teo (or a lawyer on Mr Envy’s behalf) should have reserved Mr Envy’s right to an injury claim. Alternatively, to negotiate the terms in the voucher such that the settlement covers only the property damage claim and not the injury claim.
The foregoing should be done even if Mr Envy did not see a doctor shortly after the accident. Uncle Teo wrongly assumed that since Mr Envy did not see a doctor, he was not injured. Uncle Teo should have realised that accident victims may refuse medical care at the time of accident (or shortly after), thinking they are fine. But latent injuries may arise much later, and once they do victims may then want to make an injury claim against the same Third Party.
