"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.

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

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.

Crashtalk Radio

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

Saturday, December 13, 2008
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
Insurance Buy Backs
Rebuilt Titles
Certified Cars
National Motor Vehicle Title Information System
Total Loss Vehicles
Appraisal Clause
Consumer Fraud – purchase of previous repair w/out disclosure


If you have questions about any of the above topics, or anything else collision oriented that may be on your mind, email them anytime or call in.

Hope you will tune in and enjoy the show.

National Motor Vehicle Title Information System (NMVTIS)

In 1992 Congress passed legislation for a comprehensive database of used vehicles that were stolen or so badly damaged that they were declared total losses. The Department of Justice (DOJ) has, by court order as a result of being sued by a consumer group, until March 31, 2009 to implement this long overdue system. The DOJ is currently taking comments regarding the implementation of that system with the current cutoff of midnight, Friday November 21, 2008. The following comments were filed by me on behalf of consumers benefit.

As one who inspects collision damaged vehicles for consumers before purchase, after purchase and after collision repairs, I can attest to the importance of thorough title information to the public being monumental in terms of the public’s safety and financial loss.

When a vehicle is declared a total loss by an insurance company, it means that a business decision has been made. Although a total loss does not necessarily equate with damage exceeding the value, it might as well. Most insurance carriers will “total” a vehicle at eighty percent (80%) of its retail value and send it to the auction. If 80% or better of the value is damage, how can a vehicle properly be repaired profitably? And that is a key for a consumer’s safety.

It was recently reported by Channel 10 News in San Diego, California, that 2.5 million cars are totaled by insurance companies every year and more than half are returned to the streets. Over 1.25 million totaled cars returned to the street, that fact is staggering.

Potentially, salvage value to an insurance company drops when a salvage vehicle exists, as it does to the salvage yard and potential salvage buyer/rebuilder. Kelly Blue Book estimates that a “Rebuilt” title alone makes a car lose thirty-three percent (33%) to fifty percent (50%) of its retail value. Quite obviously a vehicle with 80% damage cannot be properly repaired if its retail value will only be 75% in a best case scenario. This alone should indicate that corners will be cut in the repair of the salvage. Unfortunately these cuts are usually in areas that cannot be seen such as improper frame repairs rather than in cosmetic areas as that would be a give away as to the history of the vehicle.

That loss in value is circumvented when a totaled vehicle retains a clean title. What can occur, in some cases, is some insurance companies have sold vehicles with clean rather than salvage titles. This certainly helps the bottom line for those companies that do this. And I must stress that not all insurance companies are guilty of this, but cases of this have surfaced.

Another scenario has the salvage buyer take the car to a state where it can receive a clean title.

In some cases, even when a car has a branded rebuilt title when it is imported into a state, it is given a clean title. Part of that problem might be that even when the vehicle receives a rebuilt title it isn’t that clear on the title itself. When one is looking at a title a branding does not stand out that well on most states’ titles and it has to be looked at very carefully.

Consumers need a place to go where they can get accurate title information by Vehicle Identification Numbers (VIN) to protect their investments and safety.

To read the regulation or to post a comment:
http://www.regulations.gov/search/search_results.jsp?css=0&&Ntk=All&Ntx=mode+matchall&Ne=2+8+11+8053+8054+8098+8074+8066+8084+8055&N=0&Ntt=nmvtis&sid=11DBA3145300


To review the Channel 10 News video:
http://www.10news.com/news/1796008/detail.html#-

Ethics

The 1963 Consent Decree is the product of the U.S. Attorney General's Office under the leadership of Robert F. Kennedy and is still in Full Force and Effect today. The 1963 Consent Decree can be read in its entirety at: http://www.ican2000.com/documents/1963/

My understanding of the 1963 Consent Decree is that nearly every known insurance company operating at the time (see note at end) which combined to account for “ Total direct premiums earned in the United States by all insurance companies in 1960 for automobile property insurance amounted to approximately $3,327,815,566” signed the decree.

Among other things, the insurers are accused of having formed an association in early 1940, the purpose of which was ultimately “intended to depress and control automobile material damage repair cost.”

While all of the intentions and means of the 1963 Consent Decree have interest and merit one sentence from one paragraph has captured my attention. Paragraph 16: “On March 12, 1942 the CCC passed a resolution which provided for the organization of Casualty Insurance Claim Managers’ Councils (hereinafter referred to as “Councils”) in various areas of the United States to act as sub-committees of and under the direction and control of the CCC, then known as the Joint Claims Committee."

Of concern to me is primarily the date of March 12, 1942 barely three months after the bombing of Pearl Harbor on December 7, 1941. How could an American Industry, as suggested by the list of companies that signed the Decree, be concerned with claims administration at our Country’s darkest moment? This was an industry that was concerned with personal profit in a time of crisis. Has anything changed?

The ethics established in the early 1940’s should be a caution to us all in how they deal with us in the contracts we have with them.

To see the list of companies that signed the 1963 Consent Decree go to the following linked page and go to the bottom of the page to acquire a Word or Text document. http://www.consentdecree.com/documents/documents.htm