Authorized Repair Limit (ARL) in motor insurance is an amount above the policy excess which a policy holder 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 could effect a repair on an insured vehicle provided there is an intention to file for a claim under the policy.
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, would seek compensation from your insurer, it is only fair that you got their approval before incurring such expenses.
However, applying this condition could be pretty difficult in every circumstances hence the introduction of the “Authorized Repair Limits ” to take care of petty damages.
The implication is that provided the amount expended is within the stipulated limit, the insurer is duty bound to honor 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 result 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 an estimate of repairs, and another is to make the ARL time-bound (like 48 hours after receipt of an estimate 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 was due to ignorance on the insured’s part, and the anxiousness to get the vehicle back on the road without delays. So, they would go-ahead with the repairs (and sometimes even before notifying the insurer of the damage in the first place). But then, ignorance is not an excuse.
There have 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 ARL. In other words, the amount of the ARL becomes what is paid to the insured.
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 favor is to request an upward review of the ARL in your motor insurance policy. And if the underwriter wishes to make it time bound, you could agree on 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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