Car Concerns Radio Show

Last Friday, June 5, 2009, I was a guest on Car Concerns radio show. Harry Douglas Is The Host Of The Fastest Growing Automotive Talk Show In Radio! The show and Harry can be heard live on the internet at http://www.carconcerns.com/ every Week-Day Morning 9:00 to 11:00 A.M. (EST) Now For Car Buyers Only: Car Concerns Extreme! Saturday 2:00 to 5:00 P.M. "When Your Money Is On The Line...Call The Line That Is On The Money!" Harry takes calls at USA TOLL-FREE: 1-877-958-5850

Last Friday’s show can be heard in its entirety at: http://recordings.talkshoe.com/rss48329.xml
"EPISODE537"

Thank you to all who listened in.

Crash Talk Radio

I will again be a guest on CrashTalk Radio, a show for consumers to learn about collision repair.

Saturday, May 23, 2009
11:00 AM – 12:00 Noon
http://www.am1090seattle.com/ “Listen Live” button top left
Phone in #: 1-877-753-1090
e-mail: crashtalkshow@gmail.com


Potential topics for discussion:

Diminished Value
Poor Quality Repairs
Insurance Steering/DRP
Appraisal Clause
Insurance Buy Backs
Rebuilt Titles
Certified Used Cars
National Motor Vehicle Title Information System
Total Loss Vehicles
Consumer Fraud – purchase of previous repair w/out disclosure

If you have questions about any of the above topics or a situation of interest to you email them anytime or call in.

Hope you will tune in and enjoy the show.

Ken


Kenneth J. Klein
Consumers’ Auto Detective
215 W. Chicago Street
Elgin, IL 60123
847-289-1392
www.consumersautodetective.com
http://autodetective.blogspot.com

Insurance Buy Backs

What is an insurance buy back? When a vehicle has been poorly repaired in the course of an insurance claim and where the cost to re-repair those deficiencies are not economically feasible, the insurance company will buy the vehicle (back) from the consumer.

This is not as rare a situation as you might think. As a matter of fact, Copart, a company that auctions insurance salvage actually lists “buy backs” as a category of salvage.

Problem? Problem 1, in as much as these deficiencies tend to be safety related in order to be so cost ineffective to total a vehicle. More disconcerting is the fact that these vehicles are normally, complete, running vehicles that most people would not be able to determine were unsafe.

Problem 2, because they are complete and running there is little if any chance that those inequities will be corrected before they are returned to the road.

Furthermore some insurance companies choose to buy these vehicles back below the total loss threshold and will offer them with clean titles. Even when auctioned with a Salvage Title, some will be moved from state to state to clean up that title.

Hopefully these vehicles will be captured in the National Motor Vehicle Title Information Service (NMVTIS) that has been the subject of a previous blog (November 20, 2008) and will be again in the near future.

So the problem is that once again we have consumers being subjected to the undisclosed purchase of previously damaged and possibly unsafe vehicles. Additionally, even if we aren’t the purchaser, these vehicles are on the road and possibly heading toward us.

Oh and by the way, have you heard that Copart is opening up those salvage auctions to the general public? That’s right, let people that do not understand what the issue might be will be allowed to bid on a vehicle that looks okay to an untrained eye. You don’t suppose that would drive the price of salvage up do you? "Enron ethics" hard at work once again.

The solution is that previously poorly repaired vehicles need to be removed from our roads if they cannot be re-repaired economically and are purchased by insurance companies.

"It's the Law"

Insurance companies try to chisel the amount they pay by many means. One involves claiming comparative liability/negligence for causing an accident. Consumers should be on guard against an unjustified use of this principle.

If you live in Illinois you have seen the commercials for liability insurance. “You can lose your privilege to drive.” Why? Because Illinois has a mandatory liability insurance regulation. As at least one insurance company puts it in its television commercial, “it’s the law.” This was meant to protect residents from being hurt by an uninsured motorist. This protection is, in my opinion, a myth.

If you are hit by another you will be dealing with the other driver's insurance and you have what is called a "third party claim." In theory that company will pay your claim 100%.

However, Illinois is also a comparable negligence state. What this means is it is also "the law" that when an accident occurs it is not necessarily one person’s fault. It could be that each person is equally at fault in which case each party would pay for its own damages. Or maybe one person is more at fault than the other driver, say 90% with the other person being 10% at fault. And in that event both parties are financially responsible in direct comparison to its percentage of fault. Each situation was meant to be analyzed separately.

Now the insurance company adjuster may declare, even without fact, that you were at fault for your accident in some percentage and use that percentage to reduce the amount it pays for your property damage, loss of use, lost wages and personal injuries. Usually the percentage claimed is not enough to warrant getting a lawyer but enough that you feel taken because you had to pay something significant out of your pocket. If the damage is $2,000.00 and the adjuster claims you were 30% at fault, you get paid $600.00 less than what it costs to fix your vehicle, and you have to pay this difference.

Facts are the key to the use of comparative negligence in your accident because each accident must be analyzed on the basis of its facts.

Ask the adjuster to explain the facts on which he or she based this percentage of you fault. Do your homework before the conversation. Analyze the police report, both the description and the diagram as well as the photographs. Did the other driver admit negligence to the police officer? or did witnesses describe the accident? Did the officer give the other driver a traffic ticket? Why should you be responsible if the other driver admitted fault, if the witnesses said you did nothing wrong or if the other driver was given tickets and you weren't?

The State of Illinois has guaranteed sales for insurance companies through mandatory liability insurance. At the same time, it has given insurers what some would say is a negotiating tool but what I would consider “a license to steal” through comparable liability/negligence. If they steal from you, the expense of an attorney cannot be recovered, only the dollars that were stolen. With no clear third party bad faith language in place to encourage insurers to play fairly or potentially pay the penalty, has the State failed to protect consumers?

You can file a complaint with the Illinois Division of Insurance if you feel you are not being treated fairly by an insurance company.

Another place to air your opinion is at Insurance Gripe.Com, not a government agency but a place where you can let others know how an insurance company dealt with you.

How Low Can An Insurance Company Go?

This past week an item showed up on the internet about an insurance company denying coverage on a non recovered stolen car because the vehicle's history included previously being a rental car.

According to the author, Sandra Lee of Evangelical Ministries, the policy has exclusion for theft coverage if “the ignition wire was not altered.” Although the vehicle had not been recovered to establish whether or not the wiring was compromised, the insurer denied coverage stating that as a rental car it would have “multiple drivers handling the keys.” Therefore someone "could" have pocketed a key and traced its wereab0uts? I don't know about you but it certainly looks like a big stretch to me.

As more than a curiosity I requested the name of the insurance company from the author. In so doing I stated that although I expected that the company would be a substandard, it would not greatly surprise me to find it a well known insurer either. The reply?

“The insurance company was United Equitable of Skokie, IL and the brokers who accept payment on their behalf is Great Northern Insurance of Chicago, others have contacted me about United Equitable saying they waited 90 days for claims to be settled, the claims manager made offers of 50% car value then tried to lower the price and hung the phone up on them. The story just goes on. They don't even respond to the Department of Insurance when a complaint is filed.”

This activity only scratches the surface of insurance company deceit. In the future other activities will be the subject of this blog.

This response also offers confirmation why a vehicle that was previously a rental unit is worth less money than one that never was a rental in the used car market.

Ms. Lee covers the entire story and the consequences to the vehicle owner quite nicely at:
Illinois Auto Insurance Company Leaves Minister With $20,000.00 Debt.

Air Bag Fraud Leads to $15 Million Verdict

A news item appeared this past week that demonstrates the importance of tracking and publicizing Salvaged and Rebuilt vehicles. I blogged on this subject on November 20, 2008 (National Motor Vehicle Title Information System as well as January 20, 2009 Used Cars – Salvaged and Rebuilt.

The CBS affiliate in San Diego, Channel 8 reported that a $15 million award was assessed against an auto body shop as a result of that shop rebuilding a salvaged pick up truck without replacing the air bags that deployed in the original accident that totaled the truck. As a result, an 18 year old man lost his life in a subsequent accident.

The article indicated that the air bags could have been replaced for as little as $2,000. But as I stated in the January 20th blog, in order to make a profit, corners must be cut and a $2,000 corner looks mighty appealing. Most consumers would not be aware of the bags missing nor should they be expected to.

The story first aired on January 22, 2009 and along with a very compelling video are available at:
Air Bag Fraud Leads To $15 Million Verdict


In another related story, a reader sent me a link to a Canadian National Television story on the accuracy of used car history reports with regard to damage history. This is very in depth nearly 18 minute story aired in Canada on January 19th and that can be seen at:
Canada's Investigative Consumer Show Market Place

Used Cars - Salvaged & Rebuilt

In Illinois we have four classifications of vehicle title. The first is unmarked or clean. After that a vehicle can be branded as Salvage, Rebuilt or Junk. Titles with Salvage or Junk branding cannot be plated and driven on the street. A Salvage vehicle can be repaired and upgraded to Rebuilt but a Junk Certificate cannot.

It is being reported by Carfax that in the United States, over five million (5,000,000) autos and trucks were written off by insurance companies as total loses in 2007. Further they are stating that over half of those vehicles are being rebuilt and returned to our highways. Think about that, over two and one-half million plus (2,500,000+) vehicles that an insurance company deemed total loses are being rebuilt.

Let’s look at the facts; first, what makes a vehicle a total loss? It is by insurance company standards. Rule of thumb is that if the damage (cost of repair) is equal to or greater than eighty percent (80%) of a vehicle’s retail value it is not repaired but sent to a junkyard. That may vary legally from State to State with at least one state that requires a repaired vehicle where repairs exceed eighty percent (80%) would receive a branded title even if it stays with the current owner.

Well, what is the price of salvage? Generally speaking, an insurance company believes it will be able to recover twenty percent (20%) in the salvage sale. Shrewd, why pay more than 80% in repairs when the company knows it can get 20%? And that makes perfectly good sense. Today, insurers are using salvage companies, such as Copart, that hold large scale auctions that they hope will increase the return on salvage units.

How does one make money by buying something for 20% of its value that will require 80% of its value to bring to pre-loss condition? Not to mention that in its repaired state it will not be worth its original value. The rebuilders have to do it by cutting corners. Since insurance companies are very cost conscience and consider every possible cost cutting procedure they can in order keep costs down, it is very difficult to find corners to cut. At least to cut them without reducing the value of the repaired car even more.

What I have seen happen is that the rebuilder straightens parts that should have been replaced, often times critical structural components that effect the crash worthiness of the vehicle. These “modifications” can effect the critical deployment of the airbags. That is if they have actually replaced the airbags and not just replaced cosmetic covers and removed lights.

Are these repairs so bad that the average person can readily see the problems? Not so much. I like to refer to these repairs as “beauty is skin deep, ugly goes all the way to the bone.” The paint shines and while there are usually many cosmetic problems a majority of consumers would never notice. Body lines aren’t good and it may not even go down the road straight. But unfortunately, the average person will not see the problems.

Additionally in Illinois a fleet operator, a company that operates over five (5) vehicles, such as a Rental Car Company, must apply for a salvage vehicle and go through the steps of bringing that vehicle to a Rebuilt classification if damage exceeds thirty-three percent (33 %) of its retail value.

Copart, the previously mentioned salvage auction company, has stated that over six hundred thousand (600,000) totaled vehicles have been retained by their original owners bypassing the Salvage/Rebuilt system. It is unclear whether this number was included in the Carfax numbers or not.

Finally, I have inspected too many vehicles that consumer’s brought to me with a Rebuilt Title that were not repaired safely.

So what can you do to protect yourself if you are buying a used car? In addition to Carfax, Autocheck also offers vehicle history reports online for a fee. If your car was previously registered in Illinois, the Secretary of State offers a free service to check the current branding of a Vehicle Identification Number (VIN). Go to http://www.ilsos.gov/regstatus/ and fill out the form. These services will only report known history and as the old saying goes, “garbage in, garbage out.” So after the known history is determined to be clean, get the potential purchase inspected.

What If You Aren't Happy With Your Insurance Company's Offer?

You do have options when your company appears to be offering you less than what you think is fair in the settlement of your claim. Within your policy of insurance is a paragraph headlined as “Appraisal.” Commonly referred to as the “Appraisal Clause,” it is written into the contract to offer an insured, or the insurance company, the opportunity to settle disputes.

Although the actual verbiage will vary by insurance company contract, the Appraisal Clause generally follows this form:

If you and we fail to agree on the amount of loss, either may demand an appraisal of the loss. Each party will choose a competent appraiser. The two appraisers will choose an umpire. The appraisers will separately appraise the property and set the amount of the loss. If they cannot agree they will submit their differences to an umpire. An agreement by any two will set the amount of the loss. Each party will be responsible to pay for its own appraiser and will equally share the cost of the umpire should one be required.

It matters not whether “the amount of loss” refers to the cost to repair the property or the value of the property in the case of a total loss. By design it is intended to be a quick, cost efficient solution to disagreements between the two parties. And most of the time it does work just that way. However, some insurers may use it as a roadblock to delay settlement. In those unusual situations there is additional legal leverage that might come into play.

Steering Part II

There are numerous ways that insurance companies steer customers. What is common to all situations is that the personnel that you are dealing with are trained while you are inexperienced and expect them to help and take care of you.

One method is to tell the consumer that they have to go to a shop in its network or:

They will not get their vehicle repaired promptly.
Their repairs will not be warrantied.
They may be required to pay additional costs

Another method is by telling a consumer that “you can take your car anywhere you want for repairs, but you must take it to XYZ Autobody for an estimate.”

After the consumer gets an estimate from XYZ, the insurance company states they will pay no more since XYZ is “capable” of repairing the vehicle for its estimate.

Whatever the ruse the end result is the same; The consumer is pressured to go to a repair shop that offers the insurance company concessions or possibly made to pay out of pocket for quality repairs. Neither of which should be allowed and both of which are borderline illegal at best.

Bottom line: The insurance company is responsible for the proper and complete repair to the vehicle and the vehicle owner is entitled to go to the repair shop of their choice.

Good sources for additional information are available at:

www.yourvehicleyourchoice.com
as well as

www.stopsteering.com.