The authorised dealer's quote is one figure, the insurer's calculation a much smaller one – and you are left standing between the two, asking who pays the difference. The loss adjuster talks about “Audatex values”, the “average hourly rate” and the “official importer's price”; the garage talks about genuine parts and its own hourly labour rate – and each of them is right within its own system. As a broker, I see that half of all calculation disputes grow out of a misunderstanding: the client believes the casco payment is compensation for damages that ought to cover the whole loss – whereas casco (comprehensive motor insurance) is a contractual benefit, and its extent is set out in the conditions, point by point. This article shows what the insurer's calculation consists of, what a Hungarian set of conditions says about hourly rates and parts, in which cases the difference stays with you, and how the dispute can be conducted item by item rather than on gut feeling.
- Casco is a contractual benefit, not compensation for damages: the amount paid is determined by the conditions – the Hungarian conditions reviewed reimburse the repair cost actually incurred, but at most at the price level generally accepted on average in Hungary, using the labour-time and parts-price values of the calculation software (Audatex), the recommended parts price of the official Hungarian importer, and caps on the paint index and on consumables.
- Whatever is above the cap under the conditions – an authorised dealer's higher hourly rate, a more expensive source of parts – is borne by you under the contract; at a garage contracted with the insurer there is typically no difference, with a garage of your own choice there may be one, and with a cash settlement (settlement by agreement, based on the insurer's calculation) you receive the net average cost, and the rest is your decision.
- It is worth conducting the dispute item by item, not on gut feeling: ask for the insurer's itemised calculation, set the garage's itemised counter-calculation beside it, and request a supplementary inspection for hidden damage; if you cannot reach agreement, the route is a complaint, then the Financial Arbitration Board (PBT) or the courts – the MNB (Hungary's central bank and financial supervisor) does not decide individual claim disputes.
What does the insurer's calculation consist of?
Hungarian casco insurers calculate repair costs using calculation software – Audatex, DAT or a similar system. These programs work with the standard times set by the manufacturer (how many labour hours it takes to replace a wing), and contain a database of parts prices. The conditions state which of these values the insurer accepts, and with what caps. Under the special casco conditions reviewed here as an example, the insurer reimburses the repair cost actually incurred, “but at most the cost corresponding to the price level of repair generally accepted on average in Hungary”; as regards the labour time chargeable for repair operations, at most the Audatex values current at the time of the loss may be taken into account; if the software's parts price is not the recommended price of the official Hungarian importer but is derived from a foreign price list, the basis of the benefit is the recommended price set by the official importer; the price of paint materials is reimbursed up to the paint-shop index cap set in the conditions, and the cost of consumables up to a maximum of 2 per cent of the price of the parts used. For a settlement based on a calculation without an invoice, the same conditions reimburse “the average net cost of repair in Hungary that can be determined at the time of the loss” – that is, without VAT. Other insurers' conditions use different words and different caps, so the first step, both when a claim arises and before taking out a policy, is to find the “repair cost” or “the insurer's benefit” clause in your own conditions. How the invoice-based route and the cash settlement route work is explained in detail in the article on the two claim settlement routes.
Genuine or aftermarket parts: what are you entitled to?
The second source of dispute is parts. The repair cost clause of the conditions reviewed does not calculate with aftermarket parts prices but with the recommended parts price of the calculation software – or, where they differ, that of the official Hungarian importer – which in practice is the Hungarian list price of the genuine part. There are, however, Hungarian conditions that calculate with the price of aftermarket parts “equivalent to genuine ones” above a certain vehicle age – or at the policyholder's choice, for a lower premium; this differs from insurer to insurer, and the conditions usually devote a separate sentence to it. If you ask the garage for genuine parts while the conditions calculate with aftermarket prices, the difference is yours to bear under the contract. If your car is under warranty, also check the manufacturer's warranty terms: what they say about where the repair is carried out and about parts – the insurer's calculation follows its own conditions regardless, and it is up to you to strike a balance between the two documents. Depreciation deducted from the value of parts is a separate issue: under the conditions reviewed, for a car less than six years old with average use, it may be applied only to specified items – tyres, battery, exhaust system, wear parts, suspension components, engine, gearbox, electro-acoustic equipment, alloy wheels and full repainting; the details are set out in the article on depreciation.
Who pays the difference? Three scenarios
- You have the car repaired at a garage contracted with the insurer: in this case there is typically no difference. The garage settles with the insurer at the agreed hourly rate and prices, and you pay the deductible and any depreciation. This is the route with the least friction; in return, you do not choose the garage.
- You have the car repaired at a garage of your choice, with an invoice: the insurer pays up to the cap set in the conditions – under the sample conditions, up to the generally accepted average price level, with Audatex standard times and the official importer's price. Whatever is above this – the authorised dealer's higher hourly labour rate, labour hours beyond the standard time, a more expensive source of supply – is borne by you under the contract. The exception is where the garage proves item by item that the calculated time or price is not enough for a professional repair: mandatory operations under the manufacturer's repair procedure, the calibration of a driver-assistance system, an omitted item. This can be disputed, and it is worth doing so – not the “unfairness” of the hourly rate, but the items.
- You choose a cash settlement based on the insurer's calculation: the insurer pays the net average repair cost, and you have the car repaired wherever and however you like. The difference is naturally yours, in both directions: if you have it repaired more cheaply, you keep the surplus; if it costs more, you make up the shortfall.
An important dividing line: all of this applies to your own casco. If the damage was caused by someone else and you claim compensation from the at-fault party's compulsory motor third-party liability (MTPL) insurer, the logic is different – there, the basis is not a contract but the damages rules of the Hungarian Civil Code (Ptk.) and the principle of full compensation (Section 6:522 of the Civil Code); the injured party may claim the justified cost of repair, and the calculation cap is not a contractual limit. A map of scenarios for choosing between the two routes is given in the article on how MTPL and casco work side by side.
How to dispute it sensibly
A calculation dispute is not about feelings but about items – and that is good news, because items can be compared. Ask in writing for the insurer's itemised calculation – the Audatex list shows, line by line, the labour operations, the standard times, the hourly rate applied and the parts prices. Ask the garage for a counter-calculation broken down in the same way, preferably in the same system: this shows exactly where the two differ – in the hourly rate, the standard time, the source of parts or an omitted item. For hidden damage that comes to light once the car has been dismantled, request a supplementary inspection before the garage goes any further. In your objection, refer to the clause of the conditions, not to the concept of compensation for damages: “the generally accepted average price level under the conditions” can be challenged if the insurer's hourly rate is below the actual level of the Hungarian market, but this requires data, such as quotes from several garages. If you cannot reach agreement with the loss adjuster, the next step is a written complaint to the insurer, which it must answer under the complaint-handling rules of the Insurance Act (Bit.); if the answer is not satisfactory, as a consumer you can turn to the Financial Arbitration Board (PBT), which operates alongside the Magyar Nemzeti Bank (MNB, Hungary's central bank and financial supervisor), or go to court – the MNB does not decide individual claim disputes.
As a broker, I am not your legal representative in the claim, and it is not me who negotiates with the insurer – but in a case that has got stuck or is disputed, I help where I can: in finding the relevant clause of the conditions, in comparing the two calculations and in drafting the objection, acting on your behalf. The orderly route is described in the article on disputed casco cases. The lesson applies to the time before you take out the policy: a good part of the difference between premiums lies in the calculation clause – what hourly rate, what parts prices and how much freedom to choose a garage the conditions work with. This is worth asking about while the answer is still a quote and not yet a calculation. The insurer pays only for what, and only as much as, is a benefit under your contract; a dispute over the difference will not catch you off guard if you know this clause in advance.
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Sources
- Special conditions for casco insurance of vehicles, JCKF29 (Hungarian insurer, example: II.2.4 repair cost, Audatex values, official importer's price, paint index, consumables, net cash settlement)
- Hungarian Civil Code (Ptk., Act V of 2013) Section 6:522 – the principle of full compensation (the basis of MTPL compensation)
- Insurance Act (Bit., Act LXXXVIII of 2014) – complaint handling at the insurer
- MNB – Financial Arbitration Board (PBT)
