Justin McLeod, an attorney at Chaplin & Gonet, has been following autonomous car developments for a couple of years now. His publications on the subject have appeared in Virginia Lawyer’s Magazine and the Subrogator Magazine. Now, he is dedicating an entire site to follow the continuous technological, regulatory and legal developments in the autonomous car industry. His blog will also explore how these developments impact the wider insurance industry, but subrogation in particular. You can find his blog at: www.autonomousvehiclelaw.com
There have been a lot of excited, ambitious and positive prognostications written over the last few years concerning the rapid advancement of autonomous vehicles. I have written about the huge impact they will have upon the judicial system writ large, but a recent article by Paul Carroll (you can read it here) explores the impact upon the automobile insurance industry. Specifically, that 1) the number of humans driving vehicles will plummet, along with the number of auto accidents and 2) the manufacturers of autonomous cars, like Google, Volvo and others, will start insuring their own cars and view it as a product liability claim.
The logic of Carroll’s article is sound, however, like others trying to predict the future, his guess that by 2025 or 2030 there will be no more auto insurance seems a bit aggressive. It seems more likely that over the the next two decades perhaps car ownership will decline due to the combined effects of more people moving to urban areas and the rise of autonomous fleet vehicles. Also, hopefully, number of traffic accidents will correspondingly decline, and over this period insurance companies will adapt their personnel levels accordingly. However, I think that to deny the automotive industry along with those who insure and service automobiles are in for major business disruptions over the coming years, is to deny reality.
Subrogation, in particular, is in an interesting predicament if manufacturers of vehicles start handling claims of injury and property damage. They would be cutting off subrogation rights since damages would be handled outside of the insurance arena. However, it seems likely that vehicles will still allow for human control in the future, even in the decades to come, and that has the potential for error and subrogation opportunities.
Too often in cases involving stolen property, subrogating carriers in North Carolina do not look any further than the actual thieves for potential subrogation targets. For a variety of reasons, even if they are identified and apprehended, the thieves may not be viable subrogation targets. However, where the sale of the stolen property can be traced, you may also have a claim against the entity that purchases that stolen property even if the purchase was in good faith. In many instances, the buyer of the stolen goods is a much more viable subrogation target than the thief who sells it to them.
North Carolina, like many other jurisdictions, still recognizes a cause of action for conversion by the rightful owner of stolen property against an entity that has in good faith purchased the stolen property from a third party that stole it. The North Carolina courts have held that a good faith purchaser of goods from a converter is also a converter and must answer in damages to the true owner because one who purchases goods from a thief does not acquire the right to those goods over the true owner.
For subrogation purposes, this theory may be particularly useful when dealing with the sale of stolen scrap metal to a scrap yard or recycling facility. This theory effectively makes the purchaser of stolen goods strictly liable to the rightful owner regardless of the reasonableness of their conduct in purchasing the stolen goods. For purposes of a conversion claim, the only thing that a plaintiff must prove to establish liability is that the plaintiff was the rightful owner of the stolen goods and that the defendant purchased those stolen goods.
In addition to providing an alternative potential theory against purchasers of stolen goods to a common law conversion claim, the record keeping requirements of the Act also make proving a conversion claim much easier. In most instances, the purchasers own records are sufficient to establish a prima facie case that a conversion has occurred.
Of course for a successful subrogation recovery, in addition to proving liability, it is important that the defendant have either assets or insurance coverage to recover from. Conversion is an intentional tort and good faith purchasers of stolen items may not have coverage for this under traditional liability insurance policies. However, many insurance carriers now offer specialty liability insurance coverage to recycling facilities and scrap metal processors which covers them against conversion claims. More sophisticated entities are likely to have this type of coverage in place.
If you find yourself with a case involving stolen scrap metal in a jurisdiction other than North Carolina, you should look to see if your jurisdiction recognizes a claim for conversion against good faith purchasers of stolen property and also whether it has a statute that governs the purchase of scrap metal as these may both provide viable avenues for subrogation.
Justin McLeod will appear in the upcoming Summer 2015 edition of Subrogator magazine. In the new format “Ask an Expert” Justin expounds upon how autonomous vehicles will potentially impact the automotive subrogation industry.
In a move to expedite the payment of uninsured and underinsured motorist claims, the Virginia House and Senate passed VA House Bill 1819, which has been sent to the Governor for executive approval. Section 38.2-2206 of the Code of Virginia is amended to 8.01-66.1:1 by the Bill and the relevant text that does away with underinsured subrogation claims states in part:
“Any insurer paying underinsured motorist benefits to an insured, by way of settlement or payment pursuant to a judgment, shall have no right of subrogation against any individual or entity who settled with the underinsured motorist benefits insurer’s insured pursuant to subsection K of section 38.2-2206 unless the underinsured motorist failed to reasonably cooperate in the defense of any lawsuit brought against him. An underinsured motorist shall be presumed to have failed to reasonably cooperate if he fails or refuses…”
This new language added to the Virginia Code now prohibits the subrogation rights of insurers against those drivers who cause damages above and beyond their personal policy limits. Breaking with centuries long tradition in Virginia, this alters subrogation’s favored status promulgated in the Virginia Code.
The Motor Vehicle Collision Recovery Act of 2015, introduced by Councilmember Mary Cheh (Ward 3), seeks to modify the common law principle of contributory negligence. Contributory negligence is a common law principle, only followed in the states of: Virginia, Maryland, the District of Columbia, North Carolina and Alabama, which awards damages only if a plaintiff is completely free from negligence. Many view this principle as needlessly draconian and inequitable, as a plaintiff could be deemed 1% at fault and the defendant 99% at fault by a jury, but the plaintiff would be awarded no damages.
The Bill introduced by Mary Cheh does not seek to repeal contributory negligence in the District completely, but rather focuses on cases involving cyclists and pedestrians. If passed, the Bill would allow cyclists and pedestrians to recover damages in a court of law from a negligent driver as long as they were less than 50% negligent. This could be the beginning of a larger movement to chip away at the principle of contributory negligence that persists in the Mid-Atlantic states. The subrogation and personal injury industries would certainly welcome such a sea change.
A recent article published in the Fall 2014 Subrogator magazine penned by Glenna Roberts of Roberts, Matejcyk & Ita, demonstrates that no one in the subrogation industry really knows what changes will be wrought on the subrogation industry by autonomous vehicles. Titled “Advanced Technology Equals Advanced Subrogation?”, Ms. Roberts’ article discusses the development of autonomous vehicles in a more cursory fashion than my own article but attempts to assure readers that basic investigation principles will remain constant into the near future.
While the conclusion that sound investigation techniques including: gathering evidence, enlisting the help of experts and interviewing witnesses will undoubtedly continue into the future is sound, this is hardy reassuring. What about the very nature of automotive subrogation claims? Will tort claims even exist, or will car crashes be relegated to breach of warranty claims between the car manufacturer and the driver who must arbitrate any disagreements? Not to mention the economic threat that large fleets of autonomous cars pose for the insurance agencies themselves. If the risk of accidents drop precipitously, then so do rates and premiums.
Another facet overlooked by the article is the likelihood that autonomous vehicles employ multitudinous sensors. These would likely record the movement of the vehicle and many other variables, thus rendering much of the investigation done today, namely witness interviews, largely moot. And while critical thinking and careful investigation are timeless aspirational qualities, where uncertainty is eliminated by technology there will be a reduced need for those people investigating these types of claims.
Chaplin & Gonet is proud to announce the publication of an article by attorney Justin McLeod entitled “Autonomous Vehicles: Peeking Into Pandora’s Box” appearing in the February 2014 issue of Virginia Lawyer Magazine. The article explores the impact that autonomous vehicles will have upon the legal community.
Currently, under Virginia law the surviving spouse can collect both from the insurance company for the life insurance proceeds and from the tortfeasor. This can be remedied by allowing subrogation of life insurance claims where negligence occurred causing the death of the insured. Furthermore, insurers could begin placing a subrogation clause in the life insurance contracts of the insured to lay the foundation for future subrogation claims.
Virginia common law prohibits another person bringing a wrongful death claim on behalf of another. This arises from the principle that personal legal actions die with the individual from whom they arise. However, if one examines the Virginia Workers’ Compensation statutes it is clearly stated that the insurers and the Attorney General, in some circumstances, may be subrogated to the wrongful death rights of their insured. Therefore, if the Virginia Assembly were to pass a similar statutory provision regarding life insurers it would not be a groundbreaking proposal. In fact, the logic would be exactly the same as that employed when carving out a statutory exception for the Workers’ Compensation insurers.
Insurance companies could begin lobbying Virginia lawmakers on this point and potentially see real movement on the issue.