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COLES V. HETHERTON FACTS Cases arising out of a minor road traffic accident in which the vehicle of a person insured by Royal & Sun Alliance Insurance Plc (RSAI) was damaged by the admitted negligence of a driver insured by either Provident Insurance Plc (Provident) or Allianz Insurance Plc (Allianz). In each case RSAI indemnified its policy holder by having the vehicle repaired. The claims are therefore subrogated claims brought in the name of the policyholders. The claimants are insured by RSAI under a va riety of policies. However the wording of the policies, although not identical, shares a common feature---an option for reinstatement. Each policy contained the option, where the car was repairable for less than its market value, whereby the policyholder could choose a repairer or elect to use RSAI's system for repairing cars. In each of the managed cases the option exercised was for utilisation of the RSAI system which also entitled the policyholder to the use of a courtesy car, if the policyholder so desired. The RSAI system is the subject of challenge by Provident and Allianz (supported from the sidelines by other insurers) essentially because, it is said, the system has the effect of inflating claims for repairs which fall to be paid by the insurer of the tortfeasor. Amount claimed was more than what the insurance company (in light of its bargaining power) would have been required to pay: This set out the figures payable by RSAI to MRNM which, in most cases, exceeded the sums paid by MRNM to a subcontractor, as the rates agreed with PRN repairers were, on RSAI's evidence, lower than those which could have been obtained by any individual obtaining repairs from the same garage because of the discount which MRNM could obtain from the garage by reason of its bargaining power and the bulk volume of work produced to the garage by it. The argument of the defendants is that the insurance companies, could have used their bargaining power to obtain much cheaper prices than what the figured here indicate. According to them, since the payment was made in this case by the insurance companies and not by the victims personally, the prices which the insurance companies could have obtained must be taken into account - failure to do that according to the defendants excuses their failure to mitigate loss. HOLDING Difference between assessment of direct loss and consequential loss
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