Ask an Expert: What is going on with the insurance industry?

by John Theresa Kightlinger

It seems like every day we are hearing about cases of less than ethical behavior by some insurance companies.

One prime example is a bad situation that’s gotten worse regarding total loss settlement practices.

Here’s one scenario: The consumer gets into a collision and the insurer inspects the vehicle and writes a lowball estimate. The insurer hopes the vehicle’s owner will take the settlement and not get the vehicle repaired, or will go to a low-quality repairer who will try to repair it for the estimate amount (rather than lose the job).

However, if a vehicle owner wants his vehicle repaired and goes to a quality-conscience repairer who determines his own assessment, the insurer is faced with the option to either provide for a quality repair or to deem the vehicle to be a total loss.

Of course, the most economic choice is the one that is often taken and the vehicle is considered a total loss.

Once determined to be a total loss, some insurers attempt to have the vehicle removed
from the repairer to stop storage charges and have it moved to a storage-free holding area such as a salvage yard or auto auction facility. But what about making a total loss settlement offer to the vehicle owner for the replacement of the vehicle? Shouldn’t that take place first?

But like a good neighbor, the customer trusts the insurer and authorizes the release of the vehicle from the body shop to stop storage charges. After all, what could possibly go wrong?

Sometime later, the insurer provides the consumer with the offer for the pre-loss
replacement value of the vehicle, which is considerably lower than the owner had anticipated. The vehicle owner raises his concerns and the insurer sends him a multi-page valuation report supporting the offer with quotes and comparables. They then advise the customer he  has until the next day to accept the settlement offer or he will no longer have a rental car!

This leaves the vehicle owner no time to check out the comparables provided in the insurer’s valuation to see if they exist, have been sold, or if they are even similar to his vehicle, let alone the time to shop around for a replacement.

So, the vehicle owner, feeling he has no choice as he needs a vehicle to get his life back in order, begrudgingly accepts the insurer’s lowball settlement and then pleads to keep the rental car for a few more days to secure a replacement vehicle.

The insurer reluctantly allows the owner three more days of rental and then issues a “full and final settlement” payment to the vehicle owner. The only problem is, the vehicle owner finds the amount far less than he has agreed to accept. He is told that the insurer has deducted the amount that was paid to the body shop for charges the insurer didn’t believe they should pay for.

So now the consumer is left with less settlement and only a couple of days with a rental. When complaining to the insurer, the insurer responds with: “Unfortunately for you, your chosen body shop overcharged you for their services. No other shops charge for these types of charges or charge such high rates as they do.

“We only owe for what is reasonable and customary in the market area. This shop is known for overcharging and if you had asked us early on we could have referred a dozen shops that wouldn’t charge you for such charges. You need to go see your shop to try and get your money back!”

You should never release the vehicle until you have settled with the insurance company. At that time, they will pay the body shop charges to pick up your vehicle.

Why are insurers often successful in such activities that harm consumers and repairers? Because consumers are not being made aware of such issues and concerns or being educated as to how to protect themselves.

Quality-oriented repairers will help their customers in their time of need so they know the facts and be in a position to protect themselves and their family’s personal safety and economic well-being.  These repairers will use proper procedures, parts and materials to restore a vehicle to the best possible pre-loss condition.

John and Theresa Kightlinger own My Body Shop at 401 N. Clinton St., Stockbridge.The couple have lived in the area and raised their children here over the past 20 years. John has been in the auto body business since 1985, and Theresa began work at General Motors after high school. Between the two, they have been working on cars for more than 75 years.