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Case Study
Student Transportation Provider
Going the Extra Mile for Loss of Use (LOU)
A school bus fleet relied on Cadex Insurance Recovery Group after their third-party administrator failed to recover full loss of use and auto physical damage compensation.
Commercial fleet accidents occur at a rate of 20% annually, with an average of 4.5 accidents per driver. While many large fleets focus primarily on recovering auto physical damage (APD), they often overlook Loss of Use (LOU) claims, which in the school bus industry can equal one to two times the APD recovered. Without pursuing LOU for downtime when buses are out of service, companies miss significant compensation.
One fleet administrator had consistently recovered APD but had never pursued LOU, unknowingly leaving tens of millions of dollars unclaimed. After partnering with Cadex Insurance Recovery, they successfully recovered substantial LOU funds within the first year—unlocking a powerful new revenue stream through strategic recovery.
Loss of Use Recovery Offsets Growing Fleet Costs
ABOUT THIS CLIENT
A leading school bus provider ensures safe, reliable transportation for 5.5 million students daily, offering full-service management, special-needs transport, fleet electrification, route optimization, and charter services.
ENGAGEMENT SUMMARY
Contract Start Date: 2021
Industry: Student Transportation Provider
Delivery Location(s): USA
Languages: English
SERVICES APPLIED
- Insurance Subrogation
- Auto Physical Damage
- Loss of Use
The Challenges
Subrogation was an afterthought, and the client’s third-party administrator was leaving substantial funds untapped.
Companies with large fleets often outsource the insurance subrogation process to a third-party administrator (TPA). While TPAs provide comprehensive claims management, subrogation efforts typically focus on "low-hanging fruit" auto physical damage (APD) claims, leaving loss of use (LOU) damages under-recovered, if recovered at all.
Despite a positive relationship with their TPA, the client suspected that more money could be recovered from LOU claims, which require time, persistence, and extensive knowledge of state-by-state insurance law. Facing rising fleet costs from bus driver shortages and increasing parts expenses, the client was open to exploring how Cadex Insurance Recovery Group could help maximize subrogation recoveries. They were interested in conducting an audit but lacked the internal team and resources to handle additional work.
Cadex made it easy to get started, managing the end-to-end process and offering a no-cost audit of previously closed accident files within the statute of limitations.
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The Solution
Capitalizing on LOU has significantly reduced the client’s out-of-pocket expenses and preserved capital.
To demonstrate the value of Cadex Insurance Recovery’s expertise in insurance subrogation and highlight the benefits of specialized LOU claims management, we proposed a tailored solution to support the client’s VP of Risk Management with the following services:
No-cost audit and pilot
Cadex Insurance Recovery audited the TPA’s past settlements to assess the magnitude of unclaimed LOU damages. The audit uncovered not only unclaimed and undervalued LOU amounts but also uncollected auto physical property damages. Our subrogation specialists identified that previous LOU claims were based on estimated calculations and lacked state-specific methodologies for determining full reimbursement potential. Leveraging its expertise, resources, and processes, Cadex Insurance Recovery reported its findings and executed a pilot with 20 accounts. The pilot generated immediate LOU returns, reinforcing the need for a specialized partner to manage LOU responsibilities long-term.
Overflow and escalation partner for APD and LOU claims
As Cadex Insurance Recovery consistently delivered strong recoveries, the client’s growing subsidiaries introduced increasingly complex claims challenges, prompting the need for a new approach to their claims structure. Over several months, the client terminated its contract with the original TPA, brought APD claims in-house, and continued to rely on Cadex Insurance Recovery for LOU claims. During this transition, the client recognized the need for an overflow and escalation partner. Cadex Insurance Recovery stepped in to meet this need and now manages LOU claims, escalation cases, and APD collections for its subsidiary brands.
Ongoing LOU collections.
Cadex Insurance Recovery provided the specialists, systems, and processes to handle eligible LOU claims. Upon reviewing thousands of processed accounts, Cadex meticulously re-evaluated all necessary accident documentation. In many cases, the TPA had collected APD without submitting a LOU request. In others, the TPA submitted LOU requests but failed to collect. Some cases were disregarded or deemed ineligible due to signed releases that limited further action. Over 11% of the “closed” cases required additional LOU collection efforts. At Cadex Insurance Recovery’s recommendation, the client instructed the original TPA to stop submitting combined APD and LOU demands, as these often undervalued the LOU claims, limiting the proper pursuit of full reimbursement.
The Results
Cadex Insurance Recovery found the silver (dollar) lining in adverse circumstances.
Managing accident-related insurance claims for a large fleet is both complex and time-consuming. Outsourcing subrogation to specialists like Cadex Insurance Recovery enables organizations to prioritize their core focus—people and assets—while ensuring claims are managed efficiently. Unlike many TPAs, Cadex Insurance Recovery tenaciously pursues at-fault insurers, leveraging deep expertise in LOU and legal nuances. This approach not only improves recoveries but also delivered this client a 20% reduction in fees and commissions over time, significantly enhancing their bottom line.
in Year 1
Inception
Inception
LOU and PD Since 2022
