Authorized Repair Limit (ARL) in motor insurance is an amount over and above the policy excess which the insured is allowed to expend on repairs of an insured vehicle following a loss or damage without necessarily requiring the insurer’s consent.
Generally speaking, it is a condition precedent to liability that the insurer must be adequately consulted before one can effect any repairs on an insured vehicle. This is very logical as you can not shave a man’s head in his absence. It therefore makes sense that since you the insured is still going to seek compensation from your insurer, it is only fair that you get their approval before incurring such expenses.
However, this might be difficult to apply in all circumstances hence the introduction of the “Authorized Repair Limits ” to take care of petty damages.
The implication is that once the amount expended is still within the stipulated limit, the insurer is duty bound to honour the claim but subject to the insured’s ability to substantiate same.
How is ARL determined?
It is generally not cast in stone. It’s usually a function of how much an amount the insurer considers to be immaterial. Another factor that is taken into consideration is the type of vehicle in question and its sum insured.
There are instances where the insured would request for an upward review of the ARL. This invariably increases the liability of the insurer in the event of a loss or damage. I have seen underwriters grant questionable ARLs which oftentimes results in a claim.
Where an insured requests a beyond normal ARL, it is expected of a prudent underwriter to qualify such conditions. One way is to subject it to the receipt of cost of repairs, and another is to make the ARL time-bound (like 48 hours after receipt of cost of repairs).
The consequences of spending beyond the ARL
Spending beyond the ARL is a violation of the insurance contract between the insurer and the insured.
From experience, I have found that oftentimes it is as a result of ignorance on the insured’s part and the anxiety to get their vehicles back on the road without any delay. So, they go ahead with effecting repairs (and sometimes even before notifying the insurer of the damage in the first place). But then, ignorance is not an excuse. There has however been times where it was a deliberate attempt by the insured to prevent insurers from investigating the claim and verifying the amount claimed.
Where the ARL has been violated, the insurer has the following options:
1. Limit their liability to the amount of the ARL
2. Totally reject liability (where the damage or loss is in doubt or the insured is unable to adequately substantiate the claim)
3. Reimburse the insured based on insurer’s self assessment of the degree of damage and market survey of the possible cost of repairs.
4. Penalize the insured for repairing without authorization by deducting some percentage from the amount claimed.
5. Sometimes a combination of the above.
As an insured, one way to make this pendulum swing in your favour is to request for an upward review of the ARL in your motor insurance policy. And if the underwriter wishes to make it time bound, you can decide the length of time usually within 24 hours to 72 hours. With this you are sure to get prompt response in the event of a loss or damage and where the time set expires, you wouldn’t have violated any condition should you choose to effect immediate repairs. Just ensure that you can adequately substantiate your claim.
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