Update 2/12/2015 - The insurance industry's crooked, dangerous dealings have now made headlines - State Farm figuring prominently - as some 500 auto repair shops - fed-up with being bullied - join together in a lawsuit. Yet to be aired is the "total loss" racket, whereby insurance companies estimate repair costs for OLDER vehicles based on OEM parts in an effort to increase the estimate, declare total loss, and bully owners into buying new vehicles. Owners of older vehicles should be given a choice between acceptable used parts, etc. or paying the difference to have OEM parts.
"Total loss" used to simply mean that repair costs came to more than a vehicle was worth. But "thar's money in them thar hills," and lobbyists have quietly persuaded legislators to pass laws which mandate declarations of total loss if repair costs exceed a certain percentage of a vehicle's "actual cash value." In South Carolina, for example, the law requires insurance companies to declare vehicles a "total loss" if repair costs equal or exceed 75% of a vehicle's "actual cash value" (good luck getting your insurance company to set a fair market price). Declarations of "total loss" are increasing, people are being bullied into handing over their cars, and auto-related industries are making enormous, often illegal, profits.
"Total loss" used to simply mean that repair costs came to more than a vehicle was worth. But "thar's money in them thar hills," and lobbyists have quietly persuaded legislators to pass laws which mandate declarations of total loss if repair costs exceed a certain percentage of a vehicle's "actual cash value." In South Carolina, for example, the law requires insurance companies to declare vehicles a "total loss" if repair costs equal or exceed 75% of a vehicle's "actual cash value" (good luck getting your insurance company to set a fair market price). Declarations of "total loss" are increasing, people are being bullied into handing over their cars, and auto-related industries are making enormous, often illegal, profits.
When your car is "totalled," the insurance company gives you two options:
1. Lose your vehicle: Accept the amount (minus
your decuctible) your insurance company says your vehicle was worth before the accideent, and turn
the vehicle over to them. This is what you're "supposed" to do.
2. Keep your damaged vehicle, but
have a ruined title: Accept the amount your
insurance company says your vehicle was worth before the accident, reduced not only by your
deductible, but also by the "salvage" value your insurance company places on your unrepaired vehicle. You also agree to have "salvage" permanently branded
onto your vehicle's title, whether you have it repaired or not. If you repair it, you pay the state
an inspection fee. Many insurance companies won't insure a "salvage" vehicle. Others charge extra and refuse complete coverage. Banks won't finance one, and if you decide to
sell, be prepared to get about half of what the
vehicle would be worth with a clean title. Makes no difference if the repaired "salvage" vehicle is as safe, sound, and enjoyable as it ever
was.
There's actually a
third option (which State Farm quickly mentioned since I didn't like #1 or #2).
You can withdraw your claim and foot the bill yourself...
Bad faith efforts to
declare "total loss" are a nightmare. And forget about state insurance
commissions coming to your rescue. Leading consumer advocate Fight Bad Faith Insurance Companies has yet to
hear of a single case where a state insurance commission directed an insurance
company to do the right thing.
In my case, it was several weeks
(expect "delays") after the accident (single car, no injuries, drove the vehicle
home) before a State Farm claims adjuster finally contacted me. My car had been
setting in a shop awaiting repairs, and I had never received an
itemized, written estimate. A law has been proposed that would require repair
shops to provide customers with such estimates, including the type
of parts a repair shop plans to install. But as things now stand, many repair
shops are puppets for the insurance company. Offend an insurance company, and a
shop might find themselves blacklisted for future business. According to a "Smart Money" article, State Farm's Service First program even includes a gag clause that prevents shop owners from talking to customers about their cars until they've cleared it with State Farm.
The claims adjuster
"misread" the mileage on my car, overstating it by more than 30,000 miles. The adjuster rattled off that my car was a
"total loss," blabbered about repair costs, and then
made a ridiculously low offer. State Farm would either pay me a pittance and take my
car, or pay me even less, and allow me to keep the unrepaired car, along with a
"salvage" title. When I asked about getting things in writing, I was told that I
wouldn't get anything in writing until I agreed to settle the case. I was hamstrung from the get go, having to guess what specific damages
State Farm was alleging, the kind of parts that would be used for repairs, and the
cost of those parts. I was kept in the dark about virtually everything associated with the claim.
I contested the "total
loss" nonsense, and after arguing back and forth for several weeks, I submitted
comparables to challenge the exceptionally low value State Farm had placed on my
vehicle. My comparables showed that State Farm's alleged repair costs (which,
according to State Farm, were somehow getting higher and higher) did not equal
or exceed 75% of my car's value. After more arguing (I had been without my
car for about two months), I rode my bicycle (I've
discovered that I really don't need insurance - er I mean a car - in the first place) to one of State Farm's sales offices and began picketing with a sign that read "UNFAIR TO CUSTOMERS." Their agent - Liz Portee - came out, screamed and
hollered, grabbed my sign (I managed to hold on to it), and called the police.
When the police arrived, State Farm's agent called me an idiot and admitted to
grabbing my sign. The police initially told me I would have to get a permit to
picket, but finally agreed that it was my constitutional right to stand on
public property and hold up a sign. Passing motorists started giving "thumbs up" signals along with friendly beeps and waves. Next morning, State Farm called and said
they would take a closer look at the value of my car. After several days, they
called again and agreed to repair my car instead of declaring it a
total loss. Then they proceeded to quietly run up
the repair costs in an effort to meet the legal requirement for "totalling" my
car. New OEM mechanical parts were installed, when used OEM parts should have
been offered. I should have been given the option - itemized in writing - of
paying the difference if I wanted new OEM parts, and the cost to repair my car
should be based on used OEM parts, not new ones. No wonder State Farm
didn't want me to have a written, itemized estimate.
After mechanical repairs
were completed, my car was driven to a body shop. That shop did the right thing
and gave me a written estimate for body repairs. I approved their estimate and
thought the repairs to my car would soon be completed. At that point, State Farm
sent a claims adjuster to the body shop and directed the body shop to add an
additional damage estimate for nonsensical items not associated with the accident. That brought the
entire bill (mechanical and body work) to over 75% of what State Farm had set as
the "actual cash value" of my car. On this purely fictitious basis, State
Farm is once again declaring my car a "total loss." They insist on either writing me a
check and taking my car, or writing me a smaller check and allowing me to keep
the unrepaired car with a salvage title.
Both of the afforementioned
shops have assured me that my car is readily repairable with no lingering safety
issues. Mechanical repairs (close to half of the entire bill) have been
completed, and my car handles as well as it ever did. Legitimate repair costs do
not equal or exceed 75% of the "actual cash value" eventually set by State Farm, even with
the extra expense of the new OEM parts. There's no justifiable reason for State Farm
to refuse to complete the repairs. The cost to State Farm would be $6,500 after
my $2,000 deductible. Since $4,000 worth of repairs have now been completed, State Farm is refusing to pay $2,500 to complete the repairs. Talk about ridiculous. I've been a State Farm customer for
decades (multi-line), and I have an
excellent record - including a safe driver discount - when it comes to
accidents and claims.
Nobody can be faulted for speculating as to why State Farm exhibits such a keen interest in taking possession of my car. Companies bullying owners into turning over their vehicles by threatening to ruin the title is hardly unheard of. After taking possession of a vehicle they've "totalled," companies have been known to "forget" that the law requires them to record "salvage" on the title. Then they sell the "clean titled" vehicle for more money than they could have gotten if "salvage" had been disclosed. Not long ago, State Farm was fined for not stamping "salvage" onto the titles of thousands of vehicles they had "totalled." The "good neighbor" sold the vehicles with clean titles, raking in enormous, illegal profits.
My
car is a bright red 2000 MR2 Spyder, sporting a nice, clean title. It's been meticulously maintained, has always been
housed in a garage, and it's been parked in the
shade when I'm out and about. It's loaded with desirable options including a
beautiful, black leather interior (smells like new 'cause I'm a
non-smoker), and has been driven only about 63,000 miles. At 30,000 miles, the
engine was completely rebuilt and a new exhaust system was installed (both items via a Toyota
manufacturing defect, which took $8,500 outta my pocket). This makes my car exceptionally desirable, because there's reason to believe that the defect in my engine was permanently corrected (Toyota continues to stonewall). Not many MR2 Spyders were produced, and they were no
longer manufactured in the U.S. after 2005. The cars have become collectibles,
values have increased, and it's very difficult to find an MR2 Spyder for
sale that's in top notch condition like mine.
Is anyone surprised that State Farm wants my
car?
