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

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?";