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The Rough Notes Company Inc.



May 27
12:08 2021

Show me the money

On May 7, 2015, a vehicle owned by Creative Electric LLC was damaged in a one-vehicle accident. The vehicle was covered under a commercial automobile policy issued by Sentinel Insurance Company, Ltd. Creative Electric assigned its rights to A & R Enterprises, LLC, an auto body shop, which repaired the vehicle for a total cost of $9,681.84.

Sentinel paid A & R $6,403.26 on the claim, leaving a balance of $3,278.58. A & R filed suit against Sentinel, alleging, among other things, that the insurer’s failure to pay the full cost of the repairs was an attempt to use financial pressure to “steer” Creative Electric to another body shop.

Under the policy section titled Business Auto Conditions, a “voluntary payment provision” stated that the insurer had no duty to provide coverage unless the insured had fully complied with certain duties, including that an insured “must … [a]ssume no obligation, make no payment or incur no expense without our consent, except at the insured’s own cost.”

After a one-day trial in March 2019 the court found in favor of Sentinel based on the provision cited above. A & R appealed.

On appeal, A & R first claimed that the trial court erred when it denied recovery of the full cost of repairs to the Creative Electric vehicle on the ground that Creative Electric failed to comply with the voluntary payment provision of the policy because (1) it did not consider whether the defendant was prejudiced by the insured’s noncompliance with that provision, (2) voluntary payment provisions are applicable only to expenses incurred prior to the insurer’s being notified of the claim of loss, (3) it failed to construe ambiguity in the voluntary payment provision in favor of the insured, and (4) compliance with that provision was not a condition precedent to recovery. Sentinel argued that A & R’s claims were not raised before the trial court and thus could not be considered by this court on appeal. The court agreed with Sentinel.

The court also rejected A & R’s argument that the voluntary payment provision of the policy was ambiguous. The court found that A & R did not explicitly allege any ambiguity in the language of the provision. Because A & R raised this distinct claim for the first time on appeal, the court said, it was not properly preserved for the court to consider, so the court declined to address this claim.

A & R also claimed that the trial court erred in concluding that Sentinel’s reliance on Creative Electric’s alleged noncompliance with the voluntary payment provision of the policy did not constitute an improper attempt to steer the insured to Sentinel’s preferred auto body repair shop in violation of a state statute. The court disagreed, stating that although Sentinel refused to pay the full cost of the repairs charged by A & R—the insured’s repair shop of choice—no evidence was presented at trial that Sentinel “required” the insured to “use a specific person” to repair the vehicle. In the absence of any such evidence, the court said, the trial court’s determination that A & R failed to prove a violation of the statute that prohibits “steering” was not clearly erroneous.

The judgment of the trial court was affirmed.

A & R Enterprises, LLC, v. Sentinel Insurance Company, Ltd.—Appellate Court of Connecticut—October 29, 2020—No. AC 42774.

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