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THE ONLY WAY:
Why OEM Procedures Are No Longer a Choice PLUS ENDING
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Contents
March 2020
on the
cover
Official publication of the Auto Body Association of Texas
THE ONLY 14 WAY:
ABAT BOARD OF DIRECTORS Vice President Eric McKenzie
President Burl Richards Burl's Collision Center burl@burlscollision.com (903) 657-8082
Why OEM Procedures Are No Longer a Choice
Chairman of the Board Corey Pigg S&W Expert Collision Repair coreyp@swcollision.com (936) 634-8361
PRESIDENT’S MESSAGE By Burl Richards On the Road to Change EXECUTIVE DIRECTOR’S MESSAGE By Jill Tuggle The Secret’s Out! 2020 TEXAS AUTO BODY TRADE SHOW ANNOUNCEMENT
Executive Director Jill Tuggle jill@abat.us (817) 899-0554
Larry Cernosek Deer Park Paint & Body lcwrecker@comcast.net (281) 930-1539
Robert McDorman Auto Claim Specialists rmcdorman@autoclaimspecialists.com (817) 756-5482
Chad Kiffe Berli's Body & Fine Finishes chadk@berlisbody.com (512) 251-6136
Logan Payne Payne & Sons Paint & Body logan@payneandsons.net (214) 321-4362
Kevin Ellison Westway Ford kellison@vtaig.com (972) 584-9033
John Kopriva Kopriva Body Works jtkopriva@gmail.com (713) 923-4412
Greg Luther Helfman Collision gluther@helfman.com (713) 574-5060
EDITOR’S MESSAGE By Joel Gausten Finding Your FIt LOCAL NEWS State Farm Denied Motion to Dismiss, Protective Order in ABAT Member Case
Chad Neal Innovative Collision Equipment Chadwneal@yahoo.com (817) 527-2143
Manuel Rubio Miracle Body & Paint manuelr@miraclebp.com (210) 843-9564
Darrell Smith McDaniel’s Quality Body Works Inc darrell-mcdaniels@sbcglobal.net (903) 753-5391
PUBLISHER Thomas Greco / thomas@grecopublishing.com SALES DIRECTOR Alicia Figurelli / alicia@grecopublishing.com
SAVE THE DATE Dean Griffin Memorial Skeet Shoot
GRAPHIC DESIGNER Lisa M. Cuthbert / lisa@grecopublishing.com
ASK THE EXPERT By Robert L. McDorman “What Would Be the Next Step in the Battle?” GUEST EDITORIAL By Ware Wendell, Texas Watch Insurers Need to Stop Playing Games With Appraisals
ASSOCIATION NEWS 18 ABAT MEMBER PROFILE
Treasurer David Osburn South West Collision Center dosburn@southwestautogroup.com (855) 395-2720
ABAT BOARD MEMBERS
DEPARTMENTS
6 8 8 12 16 17 20 24
Park Place Dealerships emckenzie@parkplace.com (214) 443-8250
26 ABAT MEMBER APPLICATION
EDITORIAL DIRECTOR Joel Gausten / joel@grecopublishing.com EDITORIAL/CREATIVE COORDINATOR Alana Bonillo / alana@grecopublishing.com OFFICE MANAGER Donna Greco / donna@grecopublishing.com Published by: Thomas Greco Publishing, Inc. 244 Chestnut Street, Suite 202, Nutley, NJ 07110 Corporate: (973) 667-6922 / FAX: (973) 235-1963
ADVERTISERS’ INDEX 300 Advantage ....................................................16 AkzoNobel ............................................................11 Axalta ......................................................................IFC BASF........................................................................25 Beacon Equipment Resources ........................10 CAR-O-LINER Southwest ..................................7 Complete Collision Equipment ........................15 Dallas Parts Distribution Center ......................OBC Ecotech ..................................................................IBC English Color ........................................................12
FindPigtails.com ..................................................6 Finish Master ........................................................17 Innovative Collision Equipment........................9 Park Place ..............................................................3 PPG ..........................................................................4Reliable Automotive Equipment............................13 Sherwin-Williams/Matrix ....................................21 Tasco Auto Color..................................................19 Wheel Technologies............................................23 ZB Negotiations....................................................10 5 March 2020 Texas Automotive
www.grecopublishing.com TEXAS AUTOMOTIVE is published monthly and is sent to ABAT and HABA members free of charge. Subscriptions are $24 per year. TEXAS AUTOMOTIVE is published by Thomas Greco Publishing Inc., 244 Chestnut St., Nutley, NJ 07110. The editorial contents of TEXAS AUTOMOTIVE are copyright © 2020 by Thomas Greco Publishing Inc. and may not be reproduced in any manner, either in whole or in part, without written permission from the publisher and/or editor. Articles in this publication do not necessarily reflect the opinions of Thomas Greco Publishing Inc. Stock Images courtesy of www.istockphoto.com.
President’s Message
On The road to change
I
I’ve been all over the place lately. A few weeks ago, I traveled to Austin to meet with our lobbyist, Jacob Smith, and Senator Robert Nichols to discuss ABAT’s legislative goals and set our course at the Capitol next year. Byron Campbell of Capitol Insights (who represents the Alliance of Automobile Manufacturers) and Leighton Yates of the Alliance of Automotive Innovation also attended this meeting, and the conversations we had about the future of our industry were encouraging. From there, I went to Arkansas to meet with some industry pros from out there who are looking to start a new association. After that, I went to Newport Beach, CA to speak at the 2020 VeriFacts Symposium. I don’t mention these things because I want this message to be all about me. In truth, I’m not the only member of the ABAT Board of Directors who does things like this. Every single member of our Board
devotes their time to the association for the love of this industry. With the exception of our executive director, Jill Tuggle, none of us draw a salary from our involvement in ABAT. When I travel, everything – the hotel, airfare, gas mileage, etc. – is paid for out of my own pocket. Just like you, I have a business to run. At the end of the day, I do what I do because I want to help make this a better industry. Everyone who gives ABAT their time away from their companies wants the same thing. You have read all about the work Board member Robert McDorman has been doing with the Texas Department of Insurance to address issues with the Appraisal Clause. at’s just one of many examples of the dedication that drives ABAT. All that we ask in return is that you support us through your membership. at is the key to keeping ABAT going, and we can’t do it without you.
As an aside, Senator Nichols had a sign in his office that caught my eye. It read, “In God We Trust. Everyone Else Needs Data.” Isn’t that perfect Burl Richards for our indusABAT President try? We have the data from the crash tests we performed with Todd Tracy, and body shops are looking up OEM repair procedures every day to use as data to back up their desire to perform safe and proper repairs. I hope you’ll keep this sign in mind the next time you negotiate with an insurance appraiser over what’s best for the customer. TXA burl@burlscollision.com
6 March 2020 Texas Automotive
7 March 2020 Texas Automotive
Executive Director’s Message
THE SECRET’S OUT!
W
We have been keeping a secret, and I am SO EXCITED to finally share the news with you all! What’s not a secret is that the Texas Auto Body Trade Show is ABAT’s favorite event every year. So much thought goes into every detail of it – the date, theme, class offerings, timing of breaks, crowd flow and much more. Perhaps the most important detail is location. is year, the Texas Auto Body Trade Show is moving its location! I have so much to tell you about the Convention Center, the hotel and the surrounding entertainment district. Yes, a whole district of fun. e last two years at the Will Rogers Memorial Center have been great. We loved the staff and the “cowboy cool” feel of Fort
Worth, but there was a convenience factor that was lacking. So, along came the search for a new venue. We needed hotels and restaurants within walking distance, night life, easy access from all areas and a list of amenities for our exhibitors. With my checklist in hand, I set out to find our perfect new home. And I found it! e Irving Convention Center at Los Colinas has it all. And I mean all. e venue is a 275,000-square-foot, state-of-the-art facility that is less than 10 years old. Its modern architecture and sleek design is as impressive on the outside as it is inside. e exhibit hall and load-in areas will allow us to bring some fun activities into our Trade Show space this year. We are considering
2020
several ideas, including a car show and collision-related contests throughout the weekend. Our host hotel, Texican Court, has 152 retro-inspired Jill Tuggle rooms, and the en- ABAT Executive Director tire property has a Tex-Mex (or as they call it, “Texican”) theme. Each room boasts unique south-of-the-border furnishings and a full-sized and fully stocked bar fridge. Continued on page 17
Irving Convention Center at Las Colinas 500 West Las Colinas Blvd., Irving, TX 75039
TEXAS AUTO BODY TRADE SHOW September 18 - 19 For more information, please contact
Host Hotel:
Texican Court 501 West Las Colinas Blvd., Irving, TX 75039
Jill Tuggle (ABAT executive director) at (817) 899-0554 or jill@abat.us 8 March 2020 Texas Automotive
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11 March 2020 Texas Automotive
Editor’s Message
finding your fit
T
Time is tough. No matter how much we plan ahead, it seems that the hours of our lives are flying by faster all the time. It’s hard for anyone to keep up with everything that’s impacting the automotive world, and that’s why being connected with ABAT is so important. By being a member, you are part of a network of dedicated professionals – mostly volunteers – who are working hard on your behalf. Best of all, there is a place for you within the ABAT community no matter what you’re able to give in return. If there’s one thing I’ve learned from working with auto body associations for the last 20 years, it’s that every member matters. Even if your schedule prevents you from attending meetings and events on a regular basis, making a call or sending a quick email to Executive Director Jill Tuggle or any member of the Board with an
idea or concern will help ABAT chart its Joel Gausten path moving forward. While the association Editor would love to have your direct participation as much as possible, simply paying your membership dues is enough to steer your industry in a better direction. How much you are able to devote to ABAT is up to you, but the most important thing is that you contribute something. Of course, Texas Automotive is always here for you as well. Please don’t hesitate to reach out to us if you have exciting news, an interesting lead or just want to share your experiences in the industry. We are another avenue for you to have your voice heard. Collision repair is not an easy profession by any means, but you never have to navigate it alone. TXA
joel@grecopublishing.com
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COVER STORY
By Joel Gausten
The Only Way:
Why Researching OEM Procedures is No Longer a Choice “I will not improperly repair a car knowingly.” ABAT Board member Greg Luther (Helfman Collision Center; Houston) may have been the industry professional to say these words during a recent conversation with Texas Automotive, but he speaks for a growing number of repairers in the Lone Star State who are strengthening their commitment to doing things right. With all eyes on Texas as a result of the history-making John Eagle Collision verdict and increased technological demands pushing technicians to refine their skills and training, ABAT is one of many state associations urging members to follow OEM procedures as the definitive standard of repair. “Five or 10 years ago, the industry didn’t hear that much from the OEMs,” observes ABAT President Burl Richards (Burl’s
Collision Center; Henderson). “As technology has increased, the automakers have become more involved. Just a few years ago, the only time we would look up a procedure was when we were sectioning in a structural panel. We weren’t looking up OEM procedures for repairing a bumper cover. But now, the manufacturer might say you can’t repair the bumper cover in that area.” It is a standard practice at Luther’s operation to extensively dig up the correct procedures “multiple times a day, every day.” In some cases, he’s gone as far as to reach out to automaker engineers if he needs a repair procedure that hasn’t been published. “As the cars progress, things are changing rapidly. e thought process that goes into the engineering of the vehicle is changing even faster than the OEs can keep up with.”
14 March 2020 Texas Automotive
As anyone who has printed out 50 to 100 pages of repair procedures via numerous websites knows, there is a considerable amount of time and administrative activity needed to track down and utilize the correct information – and all three major Information Providers acknowledge this reality. According to information obtained from the Database Enhancement Gateway (DEG; degweb.org), the CCC P-Pages state that labor time does not include “access to repair information/subscription cost” or “repair information retrieval/lookup.” In a response to DEG Database Inquiry #12,442, Audatex noted that “[a]ny labor related to research and/or investigation of OEM EPC and/or service information is not included in Audatex-provided labor values. Additionally, any relative OEM information subscription costs are
not included in parts nor labor values provided.” In its response to DEG Database Inquiry #13,388, Mitchell stated that “[l]abor associated with purchasing an OEM subscription is not factored into any published labor allowances.” Although it is becoming increasingly clear that researching OEM procedures is a needed and not-included operation, receiving proper compensation from insurers – who already balk at shops that simply perform OEM repair procedures in some cases – has been problematic for many. “[Researching information] is definitely a billable [item], but collection is the issue,” Luther says. “It’s so new, and there are so few people doing it. We just get told, ‘No, no no.’ We still do it; we have no choice. We accept the liability to the repairs on that car, and the only way we can mitigate any of that liability is to do what the person who designed the car tells us to do.” As he works to maintain multiple OEM certifications as director of body shop operations for Park Place Dealerships, ABAT Vice President Eric McKenzie has experienced similar issues when seeking payment for OEM research. “You have to ask for it first and foremost before you’re ever going to have a conversation about getting paid, but it’s kind of hitand-miss on whether insurance companies will reimburse or not. I would say we’re more successful on collecting it on total losses where we had to do a lot of research to get the vehicle to the point where [the insurer] ultimately totaled it.” Naturally, Texas Automotive receives regular reports from readers that insurers are refusing to pay for OEM research because the practice is not “prevailing” in certain markets. While such a position is frustrating for any shop looking to get compensated for all it does to perform a proper repair, the unfortunate fact is that the insurance industry isn’t wrong. As revealed in the Q3 2019 “Who Pays for What?” survey conducted by Collision Advice and CRASH Network, only 21 percent of respondents nationally said they always research OEM repair procedures at the time they write an estimate, while 33 percent reported that they do so “most of the time.” In Richards’ mind, the more consumer-minded shops take a stand for what is necessary to keep vehicle passengers safe, the more likely it will be for bill payers to see the light. “You have to be committed as a shop and say, ‘I’m going to put safety and a proper repair in front of my profits.’ en, you need to decide if you’re going to buck the system and demand indemnification for looking up a procedure because the manufacturer says it’s what you need to perform a repair.” “I take issue with ‘prevailing’ as even a reason to justify paying for anything one way or the other,” adds McKenzie. “Because one shop asks for it when others don’t does not mean that the shop shouldn’t get paid for it if [the charge] is justified and legitimate.” While industry figures indicate that more work needs to be done to ensure that shops receive suitable compensation for looking up the right procedures, Richards insists that the importance of the activity far outweighs its financial component. “You need to do it. If you’re not, then you’re not making a safe and proper repair.” TXA
15 March 2020 Texas Automotive
LOCAL NEWS
State Farm Denied Motion to Dismiss, Protective Order in ABAT Member Case
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A lawsuit against State Farm filed last year by ABAT Board member Larry Cernosek (Deer Park Paint & Body; Pasadena) is moving forward after the insurer’s motion to dismiss was denied during a pre-trial hearing last month. As previously reported in Texas Automotive, Cernosek’s suit alleges that the insurer committed tortious interference on five repairs by refusing to pay for a variety of charges that his shop deemed justifiable. Earlier this year, the insurer filed a motion to dismiss the case, arguing that Cernosek “lacks the legal standing to assert [his] plead cause of action and cannot prove all elements of its cause of action against State Farm.” Additionally, State Farm had filed a protective order in an attempt to prohibit the shop owner from directly commenting on the case to media. is request was also denied during the pre-trial hearing. Cernosek’s request for discovery in regard to State Farm’s definitions, estimating software, prevailing rate determinations and appraiser training was granted, as the Court did not consider these trade secrets nor confidential information. In State Farm’s favor, the Court found that Cernosek could not maintain his cause of action of tortious interference on three of the five repairs in question, as the customers in these instances were State Farm insureds. Cernosek and State Farm now have until early March to amend their pleadings. In other news, a tortious interference suit filed by Cernosek last August against USAA is scheduled for mediation this month. He is seeking $10,000 from the insurer for “payment of all reasonable and necessary charges” to TXA put four vehicles “back into pre-accident condition.” Texas Automotive will continue to follow and report on both cases as they develop. TXA
To learn more! 16 March 2020 Texas Automotive
Save the Date! DEAN GRIFFIN MEMORIAL SKEET SHOOT Friday, May 8 Elm Fork Shooting Sports 10751 Luna Rd., Dallas, TX 75220
Prizes, gun raffle, hand-rolled cigars, crawfish boil and more! For more information, please contact Jill Tuggle (ABAT executive director) at (817) 899-0554 or jill@abat.us
Executive Director’s Message Continued from page 8
From the craft coffees to the cactus-framed pool area, you will feel like you are staying at an adults-only resort built by Walt Disney himself – that is, if Walt Disney was a vaquero. e venue and hotel are in the heart of the Toyota Music Factory, a purpose-built entertainment district. It offers indoor and outdoor live music all year round. For some after-show fun, you can catch a DJ in one of the many bars or two-step to some homegrown Texas country at Mama Tried Honky Tonk. ere’s also a movie theater, and you can test out your axe-throwing skills at Stumpy’s Hatchet House. e food offerings are endless: sushi, Cajun, Brazilian steakhouse, gourmet popsicles, burgers, gastropub (another word for “fancy bar food” - I had to look it up), pizza or 15 other restaurant choices. ere are bars that specialize in wine, mezcal and beer. Plenty to eat, drink and do, making the 2020 Texas Auto Body Trade Show a true destination event. I also should mention that all of this is just STEPS away from your hotel room. Once you arrive, you won’t need to take a single cab ride to experience all of this awesomeness. Come early or stay late, but one thing is for sure, the Texas Auto Body Trade Show is only the tip of the iceberg for a fun weekend September 18-19. TXA
jill@abat.com
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ABAT MEMBER PROFILE
By Alana Bonillo
Payne & Sons has built a reputation for customer support and strong participation in ABAT.
Paint & Body Shop
Payne & Sons
ree generations of the Payne family have made Payne & Sons Paint & Body Shop one of the top choices for collision repair needs in the Dallas/Fort Worth Metroplex area of Texas. “Our quality of work is second to none in our market,” states Logan Payne, the facility’s third-generation owner/operator. e family’s story in the industry began with Logan’s grandfather, Bill, whose auto body career started as co-founder of Herb’s Paint and Body Shop in 1968. He was instrumental in growing that business to the largest independent shop in Dallas at that time. In 1981, Bill sold his percentage of the shop and branched off on his own. Together with his son Alan, he opened Payne & Sons, quickly building a reputation for doing quality repairs in a timely manner for a fair price. “When I came onto the scene, our reputation for doing quality work was already well known,” Logan says. “My dad developed a culture at our shop by caring for our employees as much as he cared for our customers. By doing so, our technicians have always performed at a higher level.” Alan remained active with the shop and his side business (A&M Glass Service; Dallas) for many years before the reins were
turned over to Logan in 2013. e immediate area experienced a massive hail storm at the time, and Alan had no choice but to focus all his attention on his glass business. is gave Logan the opportunity to run the body shop. Logan has fond memories growing up around his father’s body shop. He recalls the days that he and his sister and three brothers would race around the shop with their Big Wheels, watch their father work on his race cars or just hang out with the guys. At the time, he had no idea he would one day fall in love with the work that goes into fixing cars correctly. “My parents tried to keep me from going into the industry,” he admits. “ey wanted me to go to school and find something else to do because they knew of the struggles of this business, the ups and downs and the confrontations with insurance companies.” In 2007, after a year of college, Logan spent the summer working at the shop and never left. “I spent two months here and fell in love with it.” Quality of work, fixing cars correctly and staying abreast of training and education is what has kept the Payne name prominent in the area. Logan believes education is the key to success. Although the shop is I-CAR Gold, he sees that as the bare minimum. “We require our whole staff to continue training all year whether we have reached the [required] credits or not. We make it a point to take at least one or two I-CAR classes a month. It’s an unwritten requirement where I want them to take all classes until there are no classes left to take. e more we know, the better we serve our customers and repair these cars.” e shop has done well based on its quality of work and reputation. Word of mouth and recommendations from area dealerships are a large part of the shop’s regular business.
18 March 2020 Texas Automotive
“We’ve been in the area a long time, and a lot of people know us.” As a strong advocate for consumer protection, following procedure and repairing vehicles the right way, Logan is very active with ABAT and was recently made a member of its Board of Directors. “I joined because I recognized the goals that Jill [Tuggle, executive director] and Burl [Richards, president] are trying to achieve to make the industry better and make repairs safer.” As a new Board member, he hopes to bring some new ideas and different ways of thinking to the table. “I feel the industry as a whole needs more knowledgeable shops. Shops need to know where their place is in the collision repair industry. Our customers trust us with their vehicle; our first job is to write an accurate repair plan to ensure the vehicle is repaired safely by following the instructions set out by the vehicle makers. We then need to ensure that the repair plan is executed without fail. Oftentimes, we are accused by insurance companies of being the only shop
Logan Payne & his father, Alan in the area doing this, as if it were a bad thing. It’s bad for them because it’s more expensive and takes longer to do it right. ey use that to try and convince customers to take their vehicles to shops they are partnered with because they feel it can be done cheaper and faster. Our job is then to educate the customer into making the best
19 March 2020 Texas Automotive
decision for them and their families. ere are many things that can be done to save time and money during the process of a repair, but that doesn’t necessarily mean they should be done.” Looking back on his career path, Logan knows there really isn’t another profession that would give him the same joy as he gets from helping costumers in the collision repair business. Car accidents hit home to the Payne family, as Bill – the shop’s founder and namesake – passed away in a collision nearly two years ago. “Now, it’s even more important to me to make safe repairs.” Will there be a fourth generation of Paynes taking over the business one day? Logan has a lot of years left in him; at this point in time, he has no idea if his two daughters will want to follow in his footsteps. If the time comes and one of them approaches him about it, he would most certainly let them have a shot at it. “I suppose I could change it to Payne & Daughters,” he chuckles. TXA
Ask the Expert
By Robert L. McDorman
“WHAT WOULD BE THE NEXT STEP IN THE BATTLE?” Dear Mr. McDorman:
Robert is a recognized Public Insurance Adjuster and Certified Vehicle Value Expert specializing in motor vehicle-related insurance claim resolution. As the general manager of Auto Claim Specialists, Robert expertly leads this National Public Insurance Adjuster Agency, which is currently licensed in 22 states and specializes in providing automotiverelated claim liquidation techniques, strategies and motor vehicle valuation services to all parties, including individual consumers, body shops, auto dealers, repair facilities, towing and storage operations, lenders, finance companies, banks, legal professionals, governmental agencies and others. The firm’s consistent success can be attributed to Robert’s 35+ years of automotive industry knowledge, practical hands-on experience and multiple certifications, including licensure by the Texas Department of Insurance as a Public Insurance Adjuster. Auto Claim Specialists clients can absolutely trust that they will be provided with analytical, sophisticated, state-of-the-art, comprehensive, accurate, unbiased and up-to-date data and information that all parties can rely upon as both factual and objective. Robert can be reached at (800) 736-6816, (817) 7565482 or asktheexpert@ autoclaimspecialists.com.
I have been following your recent Texas Automotive editorials in reference to Auto Claim Specialists having identified a widespread unfair claims settlement practice being committed by certain Texas carriers related to their not honoring the policy right of appraisal when their estimates of loss are in dispute. We routinely see this type of action from various carriers. When this happens, we always recommend to our clients that they issue a formal complaint to the Texas Department of Insurance. However, we have never actually seen the TDI take an action against a carrier to remedy this situation. We keep hoping the Department will take formal action and issue some type of sanctions against the carriers that blatantly violate their policyholder rights. In your February 2020 article, “Will the TDI Act on Unfair Settlement Practice Violations?” you wrote, “In early January, I was told by the Texas Department of Insurance that they had received all documents and responses from the parties and that this topic has been placed on its agenda to address and finalize within the next 60 days.” Has the TDI responded back to you concerning this matter? If the TDI fails to address this issue in a way that helps Texans get relief from under-indemnification, what would be the next step in this battle? ank you for your interest in the carrier scheme Auto Claim Specialists uncovered in Texas in which select carriers are refusing the insured’s right of appraisal, refusing to fund the loss settlement after a binding agreement has been reached by the independent third-party appraisers and other various bad faith and contract violations. We have been in contact with the TDI several times since that article. e Department last reached out to me on February 12 seeking additional support for our complaint against various carriers that have refused the insureds’ policy right of appraisal. We provided the requested information on that same day. e information, documents and audio files we have provided are so compelling that I cannot begin to imagine that the TDI will not act appropriately to protect the insureds’ rights and put a stop to this injustice and harm to Texas citizens. e scheme
clearly identifies a pattern of bad faith and policy violations. e policy right of appraisal is an absolute policy right of the insurer or the insured once invoked by either party. Both parties are required to retain independent third-party appraisers. e final agreed decision between two of the appraisers is binding on the parties. As an example of the magnitude of the scheme against the insured, we currently have 20 clients (10 GEICO, four Progressive and six USAA) with cases in which liability was accepted, original undisputed liability was funded, the insured invoked their policy right of appraisal in contest of the loss and the insurer rejected such policy right. In each of these 20 claims, we analyzed the undisputed loss settlement and discovered that the algorithm used to arrive at the loss settlement did not arrive at the true actual cash value (ACV), thus under-indemnifying the insured and not making them whole. We advised each of these clients of their policy right of appraisal to resolve the dispute over their unsatisfactory loss settlement offer. In support of our advice, we sent them to the “Automobile Insurance Made Easy” section of the TDI website, which advises the insured what to do if they have a dispute over the loss with their carrier. e TDI advises the insured to invoke their policy right of appraisal should there be a dispute over a loss. Each of these 20 insured followed the TDI’s advice and invoked their policy right of appraisal in contest of the loss. On each of the 20 claims, GEICO, Progressive and USAA refused to honor the policy right of appraisal. During the same time period as these 20 cases, we have represented 21 policyholders of the same three carriers (seven GEICO, nine Progressive and five USAA) where the carrier funded the undisputed loss, the insured later invoked their policy right of appraisal in a contest of the loss and the carrier honored the insured right of appraisal. e average settlement increase on these 21 claims was $2,487, or 17 percent. at is correct; GEICO, Progressive and USAA under-indemnified these clients on average by 17 percent. If these insureds had not come to us to analyze their settlements, they would have never known of this abuse of trust. Let’s discuss the 20 clients who took the same course of action as the 21 policyholders but for some inexplicable reason had their policy right of appraisal rejected. Based upon our preliminary analysis, we believe their level of under-indemnification is even greater than 17 percent. e decision on the part of
20 March 2020 Texas Automotive
Continued on page 22
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these three carriers to deny them their policy rights is alarming, to say the least. We have over 100 other potential clients who wish to dispute their loss but are waiting to see if appraisal is really a viable means to achieve fair settlement. To limit, deny or prohibit the appraisal process to resolve disputes over the loss would be detrimental to the insurer or the insured due to the subjectivity of these type claims. e Supreme Court has held that if the insured has suffered no prejudice due to delay, it makes little sense to prohibit appraisal when it can provide a more efficient, timely and cost-effective alternative to litigation. I remain optimistic that the TDI will punish these offenders of policyholder rights. We understand that the Department has a process it must follow, and we have tried to remain patient while the evidence has been examined. However, based upon what we have been told, the process should be coming to closure soon. Auto Claim Specialists is licensed as a Public Insurance Adjuster in over 22 states. We have noticed, documented and identified several Texas insurance carriers disregarding their own stated policy rights when it works out against their favor. GEICO, Progressive and USAA are not alone. Numerous carriers in Texas are acting in bad faith by picking and choosing whether they invoke the right of appraisal or deny the insured’s right of appraisal. ese carriers have twisted the appraisal process into one they are allowed to use to their own expected advantage. is unlawful action is harming the insured
policyholders of Texas. e under-indemnification in total loss and repair procedure claims in Texas is rampant. We have been increasing the total loss settlement for the eight out of 10 contacts who we end up retaining as clients an average of 28 percent. We have also reduced clients’ out-of-pocket expenses an average of 35 percent on repair procedure disputes. ese underindemnification percentages are staggering and harmful to Texas citizens. We are optimistic that should this issue not be resolved appropriately by the TDI, the right legal team will arrive at a theory to cover their legal fees to pursue these types of claims and put a stop to this injustice. Our files are voluminous and well documented regarding these infractions. e spirit of the Appraisal Clause is to resolve loss disputes fairly and in a timely and cost-effective manner. rough the Appraisal Clause, loss disputes can be resolved relatively quickly, economically, equitably and amicably by unbiased, experienced and independent third- party appraisers as opposed to costly and time-consuming methods such as mediation, arbitration and litigation. Please call me should you have any questions relating to the policy or covered loss. We have most insurance policies in our library. Always keep in mind that a safe repair is a quality repair, and quality equates to value. I thank you for your questions and look forward to any follow-up ones that may arise.
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22 March 2020 Texas Automotive
23 March 2020 Texas Automotive
Guest Editorial
By Ware Wendell, Texas Watch
Insurers Need to Stop Playing Games with Appraisals Texas Watch has fought for the rights of consumers and taken on the insurance lobby at the Texas Capitol for over two decades. Auto repair professionals hear ridiculous excuses from insurance adjusters every day about why they can’t pay for this part or that part or why they feel repairs don’t need to be made as safely as the manufacturer requires. We’ve also seen a lot from the insurance industry throughout our time in this fight, but a new scheme takes the cake. Appraisal clauses have been in insurance policies for over a century. e appraisal process is intended to resolve
e insurer can say, “is is our last and best offer. Take it or else we’ll send this to appraisal.” It doesn’t matter if that offer is pennies on the dollar; the policyholder is now faced with additional expense and delay late in the dispute. at isn’t right. e flipside of that coin is when the policyholder invokes appraisal early in the process but the insurer comes back and says, “You should have started appraisal earlier. You waited too long. Too bad, so sad, but you have waived that right. e end.” at isn’t right either. You’re damned if you do and damned if you don’t. I think of it as a game of “pin the tail on the donkey” that
We pay 100 cents on the dollar for our insurance coverage, and we deserve full and prompt payment in return from our insurance companies. disputes over the value or amount of a loss. It exists to help the policyholder and insurance company come to an agreement on things like the cost to repair or replace a damaged fender or roof after coverage has been established. Problems arise when insurance companies play games with the timing of the appraisal process and use it as a weapon against unsuspecting policyholders. We have heard reports of insurers waiting until deep in the litigation process to invoke appraisal. Mind you, the policyholder has tried for months, or even years, to get the insurance carrier to pay their claim at that point. ey have gone to the trouble of hiring an attorney and engaged in the discovery process where both sides exchange documents and information. Now, they may find themselves in court-ordered mediation.
the insurance companies force you to play – except they get to spin you around and around and around as much as they like before you have to hit the mark. is isn’t the way insurance is supposed to work. Insurance companies already have a lot of power over us. ey write the policies and endorsements; we don’t get to negotiate the contracts. We are forced to buy their products in order to drive legally on the roads we pay for. ey control the claims process, and we have to pay in full for our premiums each and every time to get coverage. ey hold the cards, and they hold our money. Because of this, consumers need protection from abusive insurance tactics. e Texas Department of Insurance should take enforcement action against carriers that are weaponizing the claims and appraisal
Ware Wendell processes. And we should have clear deadlines on when the policyholder or the insurance company may invoke appraisal. House Bill 4223 (authored by Rep. Yvonne Davis) during the last legislative session would have done just that, requiring parties to invoke appraisal within 60 days after notice of a dispute is given. at is the kind of clarity and common-sense reform we need in our law. Texas Watch strongly supported this legislation, helping it to clear the House Judiciary & Civil Jurisprudence Committee unanimously. We will support it again this session in the hope of getting it across the final finish line. We pay 100 cents on the dollar for our insurance coverage, and we deserve full and prompt payment in return from our insurance companies. We don’t need excuses and gamesmanship. Help us end these abusive insurance tactics by joining the fight. Texas Watch is a non-partisan, non-profit citizen advocacy organization that fights for the rights of consumers. Ware Wendell is an attorney who serves as the organization’s executive director. Learn more at TexasWatch.org and follow them on Facebook, Twitter, YouTube and Instagram. TXA
24 March 2020 Texas Automotive
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