Posts
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
Showing posts with label auto accidents. Show all posts
Showing posts with label auto accidents. Show all posts
Tuesday, January 27, 2009
Monday, January 12, 2009
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.
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.
Tuesday, January 6, 2009
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.
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.
Friday, December 19, 2008
Collision Damage Steering
Steering is the directing of damaged vehicles to specific body shops for repair by an insurance company.
Before discussing the "hows" of steering it is necessary to review why steering exists.
MONEY!
Insurance companies choose to direct consumers in an effort to save money.
Body shops enter into a contract with insurance companies to receive additional work and therefore make money.
This arrangement is commonly referred to as a Direct Repair Program (DRP), although each insurance company has its own personal name for them. By design, poor quality repairs are not a desired result of what insurers are looking to receive? No, but they have no profit in receiving quality repairs either.
It is often argued that discounts are not a component of the DRP model. However, parts discounts, use of imitation parts and used parts are normally a part of the contract. With very finite targets of usage defined, monitored and scored. Future participation for a repair shop may hinge on maintaining desired imitation and used parts usage percentages.
Labor rates can be discounted by $2, $4 an hour or more with some companies receiving a discount of $28 or more. Yes in an industry that by and large has not yet cracked the $50 per hour mark for body and refinish labor rates, some shops may still be accepting work for less than $20 an hour for some companies. One major insurance company actually has a clause in its agreement/contract that the shop will repair vehicles for them at the lowest rate that they charge to any insurance company, fleet account or individual.
Paint and material caps can also be included in the contract between insurer and shop. What this means is that the normal method of charging for material is overridden at a set amount. When this cap is met, the shop is then expected to absorb the additional cost of materials in the repair.
Other considerations shops may provide for an insurance company include, but are not limited to, free evaluations and free storage for total loss vehicles. It is often agreed that the insurers’ repairs are given preferential treatment. This last clause has led to insurers holding shops responsible for delivery times. If the repair takes longer than the mandatory time the repair shop would then be liable for the cost of the rental car.
The consumer is told that the insurer “warranties” the repairs. However, closer inspection of both the insurance/body shop contract and the customer warranty finds that the warranty will be the shop’s responsibility.
Consumers need to question how they will benefit from the relationship of the insurance company and body shop. How will substandard parts, discounted labor, paint & material caps and time repair guarantees produce high quality repairs to their vehicles?
Before discussing the "hows" of steering it is necessary to review why steering exists.
MONEY!
Insurance companies choose to direct consumers in an effort to save money.
Body shops enter into a contract with insurance companies to receive additional work and therefore make money.
This arrangement is commonly referred to as a Direct Repair Program (DRP), although each insurance company has its own personal name for them. By design, poor quality repairs are not a desired result of what insurers are looking to receive? No, but they have no profit in receiving quality repairs either.
It is often argued that discounts are not a component of the DRP model. However, parts discounts, use of imitation parts and used parts are normally a part of the contract. With very finite targets of usage defined, monitored and scored. Future participation for a repair shop may hinge on maintaining desired imitation and used parts usage percentages.
Labor rates can be discounted by $2, $4 an hour or more with some companies receiving a discount of $28 or more. Yes in an industry that by and large has not yet cracked the $50 per hour mark for body and refinish labor rates, some shops may still be accepting work for less than $20 an hour for some companies. One major insurance company actually has a clause in its agreement/contract that the shop will repair vehicles for them at the lowest rate that they charge to any insurance company, fleet account or individual.
Paint and material caps can also be included in the contract between insurer and shop. What this means is that the normal method of charging for material is overridden at a set amount. When this cap is met, the shop is then expected to absorb the additional cost of materials in the repair.
Other considerations shops may provide for an insurance company include, but are not limited to, free evaluations and free storage for total loss vehicles. It is often agreed that the insurers’ repairs are given preferential treatment. This last clause has led to insurers holding shops responsible for delivery times. If the repair takes longer than the mandatory time the repair shop would then be liable for the cost of the rental car.
The consumer is told that the insurer “warranties” the repairs. However, closer inspection of both the insurance/body shop contract and the customer warranty finds that the warranty will be the shop’s responsibility.
Consumers need to question how they will benefit from the relationship of the insurance company and body shop. How will substandard parts, discounted labor, paint & material caps and time repair guarantees produce high quality repairs to their vehicles?
Monday, December 15, 2008
Radio Show
Thank you all for listening and a special thanks to those that participated by calling in and emailing.
Jeff a shop owner from Chicago calling in about liability insurance problems.
Peggy from Chicago calling in with her previous steering experience.
Mike calling in about how to protect themselves from insurance buy backs.
Kevin from Chicago, a previous client of mine who was kind enough to share what he had learned working with me in the past. What a marvelous consolation of the entire process. Kevin, if you are reading this I would appreciate your forwarding your email, entering it here in the comment section or both.
Dennis and Mike Orton from Missouri that emailed in. Dennis with a question about the National Motor Vehicle Title Information System that was the subject of an earlier blog. Mike's question was more legal in nature, but a wonderful question.
Participating on the show was much fun for me and while the time didn't allow the moderator to develop those questions as deep as they could have, I will answer them here in the near future.
Mike Harbor, the moderator of the show, has asked me to be back on soon and I will be looking forward to participating again in the future. I will let you know when I am scheduled to appear again.
Jeff a shop owner from Chicago calling in about liability insurance problems.
Peggy from Chicago calling in with her previous steering experience.
Mike calling in about how to protect themselves from insurance buy backs.
Kevin from Chicago, a previous client of mine who was kind enough to share what he had learned working with me in the past. What a marvelous consolation of the entire process. Kevin, if you are reading this I would appreciate your forwarding your email, entering it here in the comment section or both.
Dennis and Mike Orton from Missouri that emailed in. Dennis with a question about the National Motor Vehicle Title Information System that was the subject of an earlier blog. Mike's question was more legal in nature, but a wonderful question.
Participating on the show was much fun for me and while the time didn't allow the moderator to develop those questions as deep as they could have, I will answer them here in the near future.
Mike Harbor, the moderator of the show, has asked me to be back on soon and I will be looking forward to participating again in the future. I will let you know when I am scheduled to appear again.
Wednesday, December 10, 2008
Ten Worst Insurance Companies
It was recently brought to my attention that on July 9, 2008, The American Association for Justice (AAJ), an association of Trial Lawyers, offered its list of “The 10 Worst Insurance Companies.”
Allstate was selected as the worst insurance company in America. This is no surprise that a company that has been the subject of a book written by David J. Berardinelli. The title of his book is “From Good Hands To Boxing Gloves.” Originally released as a handbook for Personal Injury attorneys and now a hardcover book that documents Allstate’s claim handling process is a very interesting read in either version.
The complete ten were in order:
1. Allstate
2. Unum
3. AIG
4. State Farm
5. Conseco
6. WellPoint
7. Farmers
8. United Health
9. Torchmark
10. Liberty Mutual
Many will recognize several of these companies as relating to auto insurance while others represent health, life and disability insurance. We have heard for years what health insurance companies will do to us with regard to our bodies, so why would we ever be surprised by what they do to us with regard to our property?
The AAJ repeats one constant throughout its report. That one constant is industry wide greed. It reports financial wealth beyond what normal people could ever fathom while producing profits over policy holders rights. This industry uses a method of Deny, Delay and Defend.
This method has been exploited in From Good Hands to Boxing Gloves, as well as Vulture Culture: Dirty Deals, Unpaid Claims, and the Coming Collapse of the Insurance Industry a book by Eric D. Gerst. Further evidence has been the portrayal of insurance companies in movies such as Rainmaker and A Civil Action. Both movies were adapted from books, Rainmaker was written by John Grisham and A Civil Action by Jonathon Harr. Even a cartoon movie, The Incredibles, takes a shot at insurance company behavior when the hero works as an insurance adjuster and is reprimanded for paying claims.
What the AJJ doesn’t disclose is a Ten Best Insurance Company list. I am not certain that one exists. How about it readers, any suggestions as to who belongs on a 10 best or comments on the 10 worst list? Share positive or negative claim experiences.
To read the AJJ report: “The 10 Worst Insurance Companies.”
Allstate was selected as the worst insurance company in America. This is no surprise that a company that has been the subject of a book written by David J. Berardinelli. The title of his book is “From Good Hands To Boxing Gloves.” Originally released as a handbook for Personal Injury attorneys and now a hardcover book that documents Allstate’s claim handling process is a very interesting read in either version.
The complete ten were in order:
1. Allstate
2. Unum
3. AIG
4. State Farm
5. Conseco
6. WellPoint
7. Farmers
8. United Health
9. Torchmark
10. Liberty Mutual
Many will recognize several of these companies as relating to auto insurance while others represent health, life and disability insurance. We have heard for years what health insurance companies will do to us with regard to our bodies, so why would we ever be surprised by what they do to us with regard to our property?
The AAJ repeats one constant throughout its report. That one constant is industry wide greed. It reports financial wealth beyond what normal people could ever fathom while producing profits over policy holders rights. This industry uses a method of Deny, Delay and Defend.
This method has been exploited in From Good Hands to Boxing Gloves, as well as Vulture Culture: Dirty Deals, Unpaid Claims, and the Coming Collapse of the Insurance Industry a book by Eric D. Gerst. Further evidence has been the portrayal of insurance companies in movies such as Rainmaker and A Civil Action. Both movies were adapted from books, Rainmaker was written by John Grisham and A Civil Action by Jonathon Harr. Even a cartoon movie, The Incredibles, takes a shot at insurance company behavior when the hero works as an insurance adjuster and is reprimanded for paying claims.
What the AJJ doesn’t disclose is a Ten Best Insurance Company list. I am not certain that one exists. How about it readers, any suggestions as to who belongs on a 10 best or comments on the 10 worst list? Share positive or negative claim experiences.
To read the AJJ report: “The 10 Worst Insurance Companies.”
Saturday, December 6, 2008
Certified Used Cars
You think “I’m going to buy a Factory Certified Used Car so I don’t need to have it inspected by an independent inspector.” Not so fast. That Certified Used Car may have had a 100+ point inspection or something comparable, but it may not have a complete warranty.
It is fact that prior accident damage history, no matter how severe, will not eliminate it from “Certified” status. However, accident damage history will void the warranty were ever applicable. Meaning if the passenger’s fender was damaged and repaired, the factory paint and rust through warranty is void on the passenger’s fender. The more severe the damage the more of the “Certified” warranty is voided. If the repairs included replacement of the air conditioning condenser with an aftermarket condenser (editor’s note; an aftermarket part is a part made by someone other than the Original Equipment Manufacturer [OEM]) the entire air conditioning system is at risk. Likewise if the radiator is replaced with an aftermarket unit the cooling system in its entirety is at risk. The greater the amount of damage and repair a vehicle has sustained, the greater the risk of lost warranty.
Frame damage is not one of the points listed on the Factory checklists at last check.
Certified Used Cars are marketed as “almost as good as new.” As a result purchasers take that for granted, do not look closely enough at them and pay a premium for them, often higher than top dollar. However, when they have a prior collision damage/repair history that has not been disclosed, consumers are over paying. You should always have a professional inspect your potential purchase to protect your pocketbook and safety.
Additional information is available at MSN Money's article "Are Certified Autos Worth the cost?";
It is fact that prior accident damage history, no matter how severe, will not eliminate it from “Certified” status. However, accident damage history will void the warranty were ever applicable. Meaning if the passenger’s fender was damaged and repaired, the factory paint and rust through warranty is void on the passenger’s fender. The more severe the damage the more of the “Certified” warranty is voided. If the repairs included replacement of the air conditioning condenser with an aftermarket condenser (editor’s note; an aftermarket part is a part made by someone other than the Original Equipment Manufacturer [OEM]) the entire air conditioning system is at risk. Likewise if the radiator is replaced with an aftermarket unit the cooling system in its entirety is at risk. The greater the amount of damage and repair a vehicle has sustained, the greater the risk of lost warranty.
Frame damage is not one of the points listed on the Factory checklists at last check.
Certified Used Cars are marketed as “almost as good as new.” As a result purchasers take that for granted, do not look closely enough at them and pay a premium for them, often higher than top dollar. However, when they have a prior collision damage/repair history that has not been disclosed, consumers are over paying. You should always have a professional inspect your potential purchase to protect your pocketbook and safety.
Additional information is available at MSN Money's article "Are Certified Autos Worth the cost?";
Sunday, November 30, 2008
Body Shop Labor Rates
As a consumer, what concern should body shop labor rates be to you? After all, collision repairs are very expensive and often the cost of the repair is paid for by an insurance company less any deductible that might be involved. Because of the importance of the safety involved in collision repair and the post repair value of the vehicle, it is an area that bears looking at.
If you have made a trip to the New Car Dealership recently you would find that the labor rates in the Service Department are $90 and up while a peak inside the Dealer’s Body Shop, if they even still have one, are below $50 an hour. How can a business under the same roof have such vastly different rates? Are the service rates unrealistically high? Are the real estate taxes less in one area than another? Are the costs of heating and electric less? Are the skill levels less? The answers to all of those questions is no. Then why is there such a large disparity in labor rates? The simple answer is insurance companies.
After an accident you may have taken or towed your car to a shop that you have experience with before you contact the insurance company. Then when you contact the company they may “suggest” using one of its repair shops. How strongly they make this suggestion varies from company to company. However, if you are persistent they will send an appraiser (read cost containment officer) to assess the damage. By this time a reputable repair shop will have already prepared a damage estimate for you. The repair shop’s estimate is actually required in the State of Illinois as a consumer protection under the Collision Repair Act.
Although your chosen repair shop has prepared a detailed repair estimate it is extremely rare that the insurance company representative would accept that or write one of its own that mirrors your professional’s opinion. But for today’s exercise we will only consider the labor rate. The insurance appraiser uses the labor rate approved by the insurance company.
When questioned by a claimant, every insurance company will parrot the same excuse, “we pay the prevailing labor rate in the area.” Who establishes this prevailing labor rate? Each individual insurance company does, that’s who. They do this by writing its own estimate and refusing to pay any rate above its chosen “prevailing rate.” If it is a true prevailing rate, then every company would pay the same rate. But they don’t. One company might pay $48, another $46 and others $44 or $42. Some sub standard insurers are still writing $22 to $24 and as recent as 2007 I saw one company write an estimate at $18 an hour. Clearly there is no such thing as a prevailing rate.
You may ask doesn't quality stand for something? Not to an insurance company. While they will say they want quality repairs what they really want are company profits and it doesn't matter who pays. And ultimately it is the vehicle owner who will pay. Controlled labor rates control the quality of repairs and ultimately the safety and value of the vehicle.
If you have made a trip to the New Car Dealership recently you would find that the labor rates in the Service Department are $90 and up while a peak inside the Dealer’s Body Shop, if they even still have one, are below $50 an hour. How can a business under the same roof have such vastly different rates? Are the service rates unrealistically high? Are the real estate taxes less in one area than another? Are the costs of heating and electric less? Are the skill levels less? The answers to all of those questions is no. Then why is there such a large disparity in labor rates? The simple answer is insurance companies.
After an accident you may have taken or towed your car to a shop that you have experience with before you contact the insurance company. Then when you contact the company they may “suggest” using one of its repair shops. How strongly they make this suggestion varies from company to company. However, if you are persistent they will send an appraiser (read cost containment officer) to assess the damage. By this time a reputable repair shop will have already prepared a damage estimate for you. The repair shop’s estimate is actually required in the State of Illinois as a consumer protection under the Collision Repair Act.
Although your chosen repair shop has prepared a detailed repair estimate it is extremely rare that the insurance company representative would accept that or write one of its own that mirrors your professional’s opinion. But for today’s exercise we will only consider the labor rate. The insurance appraiser uses the labor rate approved by the insurance company.
When questioned by a claimant, every insurance company will parrot the same excuse, “we pay the prevailing labor rate in the area.” Who establishes this prevailing labor rate? Each individual insurance company does, that’s who. They do this by writing its own estimate and refusing to pay any rate above its chosen “prevailing rate.” If it is a true prevailing rate, then every company would pay the same rate. But they don’t. One company might pay $48, another $46 and others $44 or $42. Some sub standard insurers are still writing $22 to $24 and as recent as 2007 I saw one company write an estimate at $18 an hour. Clearly there is no such thing as a prevailing rate.
You may ask doesn't quality stand for something? Not to an insurance company. While they will say they want quality repairs what they really want are company profits and it doesn't matter who pays. And ultimately it is the vehicle owner who will pay. Controlled labor rates control the quality of repairs and ultimately the safety and value of the vehicle.
Subscribe to:
Posts (Atom)