Texas Automotive April 2021

The official publication of the Auto Body Association of Texas (ABAT)

April 2021 $5.95

CONSUMER RIGHTS MATTER MATTER:: ABAT Calls for Appraisal Clause Reform via HB 2534

PLUS:

• Texas Auto Body Trade Show Update • Big Questions for the TDI • From Hail to Headaches

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Contents

APRIL 2021

on the

cover

Official publication of the Auto Body Association of Texas

CONSUMER RIGHTS MATTER:

ABAT BOARD OF DIRECTORS

ABAT Calls for Appraisal Clause Reform via HB 2534

14

by Joel Gausten

DEPARTMENTS

4 5

PRESIDENT’S MESSAGE by Burl Richards Questions for the Texas Department of Insurance

8 9

EXECUTIVE DIRECTOR’S MESSAGE by Jill Tuggle My Adventures in Dating Venues

10

EDITOR’S MESSAGE by Joel Gausten The Journey So Far

16 20

ABAT MEMBER APPLICATION

2021 TEXAS AUTO BODY TRADE SHOW: SAVE THE DATE!

President Burl Richards Burl's Collision Center burl@burlscollision.com (903) 657-8082

Vice President Eric McKenzie Park Place Dealerships emckenzie@parkplace.com (214) 443-8250

Chairman of the Board Corey Pigg S&W Expert Collision Repair coreyp@swcollision.com (936) 634-8361

Treasurer David Osburn Paint Works davidosburn@paintworkstyler.com (817) 648-5797

Executive Director Jill Tuggle jill@abat.us (817) 899-0554

ABAT BOARD MEMBERS Bobby Beason DeMontrond Collision Center bobby.beason@demontrond.com (936) 577-2747

Robert McDorman Auto Claim Specialists rmcdorman@autoclaimspecialists.com (817) 756-5482

Larry Cernosek Deer Park Paint & Body lcwrecker@comcast.net (281) 930-1539

Chad Neal Innovative Collision Equipment Chadwneal@yahoo.com (817) 527-2143

Kevin Ellison Westway Ford kellison@vtaig.com (972) 584-9033

Logan Payne Payne & Sons Paint & Body logan@paynescollision.com­ (214) 321-4362

Chad Kiffe Berli's Body & Fine Finishes chadk@berlisbody.com (512) 251-6136

Manuel Rubio Miracle Body & Paint manuelr@miraclebp.com (210) 843-9564

John Kopriva Kopriva Body Works jtkopriva@gmail.com (713) 923-4412

Darrell Smith McDaniel’s Quality Body Works Inc darrell-mcdaniels@sbcglobal.net (903) 753-5391

Greg Luther Helfman Collision gluther@helfman.com (713) 574-5060

Mike Williams All Star Collision Center sales@allstarcollision.us (903) 589-3160

Published by: Thomas Greco Publishing, Inc. 244 Chestnut Street, Suite 202, Nutley, NJ 07110 Corporate: (973) 667-6922 / FAX: (973) 235-1963 PUBLISHER Thomas Greco / thomas@grecopublishing.com

ASK THE EXPERT by Robert L. McDorman How Could State Farm Undervalue My Tacoma, Deem it a Total Loss and Deduct from My Settlement?

THE CONSUMER’S VOICE From Hail to Headaches: A State Farm Insured Pushes Back

SALES DIRECTOR Alicia Figurelli / alicia@grecopublishing.com EDITORIAL DIRECTOR Joel Gausten / joel@grecopublishing.com EDITORIAL/CREATIVE COORDINATOR Alana Bonillo / alana@grecopublishing.com OFFICE MANAGER Donna Greco / donna@grecopublishing.com PRODUCTION COORDINATOR Joe Greco / joe@grecopublishing.com

ADVERTISERS’ INDEX 300 Advantage..................................................... 4

Innovative Collision Equipment........................ 22

Auto Claim Specialists........................................ 17

Network1 Solutions.............................................. 21

Beacon Equipment Resources......................... 10

Paint Works Dallas............................................... IFC

BOLT ON TECHNOLOGY.................................. 6

Reliable Automotive Equipment....................... 12-13

CAR-O-LINER Southwest................................... 18

Sherwin-Williams.................................................. OBC

Charles Maund Toyota....................................... 11

Tasco Auto Color................................................. 21

Ecotech................................................................... IBC

USI North America............................................... 7

FindPigtails.com.................................................... 11

Wheel Technologies........................................... 19 3 April 2021 Texas Automotive

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TEXAS AUTOMOTIVE is published monthly and is sent to ABAT 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 © 2021 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

QUEStions for the texas department of insurance

I

If you check out the “About” page on the Texas Department of Insurance’s website (tdi.texas.gov), you’ll see that the Texas Insurance Code requires the TDI to (among other things) “protect and ensure the fair treatment of consumers.” Unfortunately, what is stated on that website is nowhere near what I’ve experienced in the real world.

As president of ABAT, I have communicated directly with the TDI on a number of issues that directly impact Texas motorists.

So far, I have been disappointed with the Department’s apparent unwillingness to get involved in addressing the consumer abuse that goes on every day at the hands of insurance companies. These offenses include everything from shortchanging policyholders on claims to insisting that shops use substandard parts. When I’ve brought up these matters to TDI representatives, I’ve been told that

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they don’t decide what is reasonable and customary when it comes to paying claims or dictate which parts should be used during a repair. On top of that, I’ve never talked to a body shop that has had positive interactions or results with the TDI. It is clear to me that the TDI has no appetite to get involved in genuinely protecting and ensuring the fair treatment of the consumers it supposedly represents.

Of course, I’d be delighted to be proven wrong, so let’s put my assumption to the test. I’d like to publicly ask the TDI the following questions: • How many TDI employees have received collision repair industry training (I-CAR, etc.) in the past year?

• How does the TDI define a “safe and proper repair”?

• What is the process for investigating consumer complaints submitted to the TDI against auto insurance companies?

• What information (crash test data, etc.) are insurers required to submit to the TDI in regard to the replacement parts they include on estimates during the repair process?

I look forward to receiving answers from the TDI, which has several representatives who I know for a fact receive this magazine.

Although I’m asking these questions in a collision repair trade publication as the president of an auto body trade association, the fact is that I’m also a consumer. I have a right to know how this state agency is working to ensure that I receive fair treatment from my auto insurer.

The people who work for the TDI are also consumers. Don’t they want to make sure their insurers would be looking out for them if they are ever involved in an accident? Don’t they want to rest easy knowing their fully indemnified friends and family members are out there driving or riding in vehicles that have been properly repaired?

As collision repairers, we have the experience and expertise necessary to perform proper repairs and truly protect the customers who depend on us. At the end of the day, the TDI should be looking to us for direction and information – not the other way around.

burl@burlscollision.com

To learn more!

TXA 4 April 2021 Texas Automotive

5 April 2021 Texas Automotive

6 April 2021 Texas Automotive

Russell & Smith Logging Big Paint Hours with USI Booths & Prep Station Buying a paint booth is a huge investment, and there are many factors to carefully consider before selecting one. Will the booth work well in a region where there’s a ton of humidity and with drastic changes in the weather? How long do you think the booth will last and will it require a lot of maintenance? Will your painters be comfortable using it every day and finally, will the company making the booth provide solid training and reliable customer service?

To answer these questions before acquiring two Chronotech spray booths and a prep deck from USI ITALIA back in 2004, Collision Center Manager Kevin McIllveen at Russell & Smith Body Shop in Houston, TX spent six months studying the market. He was looking for the best booths that matched his needs to use in a brand-new 36,000 sq. ft. facility that the company built from the ground up.

Mcllveen, age 56, entered the industry more than three decades ago as an estimator and has worked for Russell & Smith Body Shop since 1993.

His goal with his new spray booths was to improve the efficiencies in his paint department and to accommodate his production, he said, while simultaneously saving time and energy if possible.

The vetting process was arduous but worth it in the end. "We did our research so that we could make an educated decision," he said. "I went to NACE two years in a row and talked to literally everyone and asked a lot of questions. We knew that this was going to be a very significant investment, so we took the time to perform our due diligence to cover all our bases. We invested in their prep stations as well, which was another good decision, because my guys can work so much faster and effectively with five different places where we can spray. We put a curtain up in the prep booth that provides us two additional spaces that are heated and properly ventilated. So, when we are really jammed, we can handle the workload and maintain our cycle time without interrupting or slowing down our production."

After using them for a very short time, Mcllveen could clearly see that his Chronotechs were more than capable as they quickly became a centerpiece in his new, high-end, modern shop.

"We have four paint teams here, consisting of a painter and a painter’s helper and we consistently log approximately 600-700 paint hours weekly,” he said. “We switched to waterborne paint when we opened this facility because we want to provide a healthier climate for our employees and the community as a whole.”

Why was Mcllveen able to improve his numbers by simply adding two USI booths? “In the end, it all comes down to their airflow because we never need blowers or additional air to cure these vehicles. The fans in these Chronotechs are exceptional because they feature variable speeds, so we can switch depending on the parameters of each job. Our painters are producing an impressive product day after day, so these booths are saving us both time and money. We paint an average of 400 cars every month, so

we push these booths and they never let us down.”

Any issues that Russell & Smith Body Shop have encountered with their USI ITALIA booths have been rare and far between. But Mcllveen feels good knowing that if called upon, the company will respond and find solutions promptly. “If you do your scheduled maintenance and keep everything clean, these booths will last you 30 years and maybe even longer. The issues that we have encountered with the Chronotechs have been minor and quickly solved, which is impressive when you think that we have been using these booths daily for the last 16 years. I tell people that these booths will be here long after I’ve retired!”

After training provided by USI ITALIA, Mcllveen’s painters were able to start spraying after one day, he said. "The Chronotechs are designed to work with waterborne paint, which makes it easier for our painters to do their work.

After a very short time, all of our guys were comfortable and the results were consistently exceptional.”

Mcllveen is also impressed by the Chronotech's sturdy construction and durability.

"Some booths are just a box, but these are wellbuilt," he said. “I know, because I've seen them all and there isn't anything like a USI ITALIA booth."

His career in collision repair industry has been a great experience and products like his USI ITALIA spray booths and prep station are a part of that, he said. “We haven’t had to furlough anybody here and that’s because we value our people and, in the end, our Chronotechs are part of the team.”

USI of North America | 565 Commerce Street Franklin Lakes, NJ 07417 | 201-405-7761 | s.moretto@usius.com | www.usius.com 7 April 2021 Texas Automotive

Executive Director’s Message

my adventures in dating venues

T

The Texas Auto Body Trade Show is a two-day event that began as an educational seminar and has morphed into a full-blown Trade Show with educational events. This Trade Show has people flocking from all over Texas and the US to attend. This is no ordinary event; each year, we have added something extra to take the Show to the next level, and 2021 is no different.

The Trade Show has grown every year, but it has always been missing something.

That “something” isn’t always the same each time; planning a show like this is so involved and has so many factors that you must weigh your options and give and take a little. Our rapid growth forced us to move facilities a couple of times, so we have had the opportunity to try on a few places for size. It has felt a lot like the dating world; in 2019, we had to have the dreaded “it’s not you; it’s me” talk with our facility. We have “dated” quite a bit in these past six years, looking for “the one.”

There was Richardson with its

fast-paced Dallas feel. Easy to get to but hard to grow with. The kind of facility that drives a motorcycle and has tattoos. Hurst was more than just a pretty face, but she was almost too pretty. Not the kind of place where you lay a Car-O-Liner on the floor, if you know what I mean. We had been to Fort Worth before and decided to return for its cowboy-cool vibes and easygoing attitude. Will Rogers was solid and established (even our moms liked it), but the facility was difficult to navigate. It also lacked a key component: Convenience.

Fort Worth was fun – you know that if you ended up at Pete’s Piano Bar any evening after the Show. Everything was a short cab or Uber ride away, but we have the standards of a private-schooled blonde with the keys to Daddy’s Mercedes. We can’t have y’all running all over town, so we broke up with sweet, solid Will.

So, once again, I set out to find the perfect Trade Show location. I was starting to wonder if Cinderella would ever find her

glass slipper. I was told by my last realtor that I have “champagne taste Jill Tuggle and beer money,” ABAT Executive Director but I’ll tell you what – with a little patience and a little bit of looking, you will find what suits you.

The courting began as I toured facility after facility. Most were too small, one had the space but not our available dates and another had the dates but no nightlife – only a Cracker Barrel in the parking lot. One sales guy sent me a homemade video sales pitch afterward…so awkward.

I was realizing quickly that finding a mate for you folks was actually going to take a LOT of patience and a LOT of searching.

But I didn’t want the topic to come up at Thanksgiving, so I kept on.

Then, there she was: The Irving Convention Center. Don’t be fooled by the vanilla name. (My craziest college friend was named Edna.) She’s young, fun and has it all. She’s a centrally located, state-of-the-art facility with two GORGEOUS hotels just steps away. She has drive-in loading ramps and is surrounded by 23 bars, restaurants and things to do. It’s got the “wow” factor we have been looking for. Let’s just say we signed the contract and we’re looking at rings. Yes, she’s the one.

The 2021 Texas Auto Body Trade Show is a true destination event. Mark your calendar, bring your spouse and make September 17-18 your work/play weekend of the year.

jill@abat.com

TXA 8 April 2021 Texas Automotive

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Editor’s Message

The Journey so far

I

It’s hard for us at Greco Publishing to believe it, but we’re only five issues away from celebrating the third anniversary of Texas Automotive. Personally speaking, my time spent working with ABAT in producing the editorial content for this magazine has been a blur. Over the last 31 months, I’ve had the pleasure of reporting on: • two Texas Auto Body Trade Shows; • two ABAT Skeet Shoots (including one in memory of Board member Dean Griffin); • one of the industry’s very first virtual statewide events (months before COVID-19 became a national crisis); • the creation and distribution of ABAT-branded masks during the pandemic; • emotional 2019 testimony by Marcia Seebachan in support of ABAT’s consumer-protection legislation; • ongoing work by ABAT President Burl Richards, Board member Robert McDorman and others to promote the benefits of the Appraisal Clause for consumers; and

Joel Gausten Editor

• a host of ongoing legislative efforts to improve the lives of Texas motorists and repair professionals.

These are just some of the highlights of ABAT’s very busy schedule and agenda. If you’re a member, I urge you to stay engaged and active in adding to the association’s call for change and progress in this industry. If you’re not a member, now is the time to sign up and keep ABAT moving forward.

As for Texas Automotive, we will continue to give your shops – and your consumers – a voice in our pages. Never hesitate to reach out to us if we can provide you with resources or share news on your struggles and successes.

Our work with ABAT has been an amazing journey so far, and we can’t wait to see where ABAT’s commitment to the Texas collision repair community will take us – and our readers and loyal advertisers – next. joel@grecopublishing.com

10 April 2021 Texas Automotive

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11 April 2021 Texas Automotive

Cover Story

CONSUMER rights matter: abat calls for appraisal clause reform via hB 2534 The spirit of the Appraisal Clause is to resolve loss disputes fairly and in a timely and cost-effective manner. Invoking the Appraisal Clause removes inexperienced and biased carrier appraisers and claims handlers from the process, undermining their management’s many tricks to undervalue the loss settlement and under-indemnify the insured. Through 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 more costly and time-consuming methods, such as mediation, arbitration and litigation.

If you’re a regular reader of Texas Automotive, then you’ve come across the above words more than once in the “Ask the Expert” features by ABAT Board member Robert L. McDorman (Auto Claim Specialists). Now, with a powerful new bill working its way through the Legislature, this statement could soon become more relevant than ever.

Sponsored by Representative Travis Clardy (R-Nacogdoches), House Bill 2534 seeks to amend the Texas Insurance Code to establish that “a personal automobile insurance policy must contain an appraisal procedure.” [Emphasis added.] Additional provisions include (but are not limited to) the following: • An insurer or the named insured may demand an appraisal no later than the 90th day after the date a proof of loss is filed with the insurer if the insurer and insured do not agree on the amount of the loss. Each party shall appoint a competent appraiser and notify the other party of that appraiser’s identity no later than the 15th day after the date an appraisal is demanded.

• If, at the end of the appraisal process, the amount of loss is determined to be more than one dollar greater than the amount of the insurer’s proposed undisputed loss statement, the insurer shall refund the named insured’s reasonable out-of-pocket expenses for the insured’s appraiser’s fees and expenses. If, at the end of the appraisal process, the insurer’s proposed undisputed loss statement is determined to be just, the named insured shall refund the insurer its appraiser’s fees and expenses. All other appraisal expenses, including umpire expenses, are shared evenly between the parties.

“ABAT will always stand in full support of the consumer, and House Bill 2534 is one of the truest consumer-protection bills ever introduced in Texas,” comments ABAT President Burl Richards. “A collision repair facility can’t invoke the Appraisal Clause; this legislation has nothing to do with the financial

standing of the collision repair industry. This bill simply provides the consumer with the means to address a dispute with their insurer without having to pay for an attorney and spend time in court. The Appraisal Clause process puts the decision in the hands of unbiased appraisers and an umpire, and that decision is binding.

I’ve never had a customer invoke the Appraisal Clause and have an award less than the insurance company’s estimate.”

Ware Wendell, executive director of the non-partisan citizen advocacy organization Texas Watch (texaswatch.org), is another consumer representative who is actively promoting the bill for the benefit of the motoring public.

“It’s really important that consumers get what they pay for when they purchase insurance. We are required, as a condition of insurance coverage, to pay 100 cents on the dollar for our insurance premiums. If we’re even a dollar short, we don’t have insurance coverage. They require us to do everything the right way in order to qualify for insurance coverage, and we think it’s only fair, right and just that insurance companies step up to the plate and do everything that we need them to do when we have a claim.

“Sometimes, I think insurance companies forget that it’s our money,” he adds. “We give them our money in the form of premiums, and we expect them to take good care of that money, to invest it wisely and manage it – and for there to be that money available to pay us in our time of need under the policy. House Bill 2534 is really common-sense legislation. It’s making sure the insurance appraisal process is actually fair, that it’s truly a two-way street and that there’s no gamesmanship being used in that appraisal process. Appraisal, properly understood, is a way to resolve a dispute before litigation and to really get to the right number in terms of the amount or the value of the loss.”

Fully embracing consumers’ need for legitimate and acrossthe-board Appraisal Clause options, Texas Watch has gone into high gear. The group’s extensive activities in recent times include producing “#NoMoreGames: Appraisal Fairness Now,” a special consumer-facing YouTube video in support of House Bill 2534 (as well as its companion, Senate Bill 1706, sponsored by Senator Cesar Blanco). The video received nearly 3,000 views in just the first three days of its posting. Additionally, an online form has been made available at texaswatch.org/no-more-games for Texas citizens to fill out and send to lawmakers.

“What we have on our side is people,” Wendell observes. “We have professionals in terms of body shops that are doing the job the right way and who are leaders in terms of safety […] What we need is an outcry from the public in Texas. We need citizens to stand up and say, ‘I want to have rights when I have a dispute with my insurance company. I want the claims process to be fair; I want to have the ability to recover my full policy benefits and not be [beaten down] into accepting 50 cents on the dollar just because

14 April 2021 Texas Automotive

by Joel Gausten

the insurance company has all the money and all the lawyers.’ We need people to take action.”

In ABAT Lobbyist Jacob Smith’s mind, House Bill 2534 is easy legislation for lawmakers to get behind.

“What we’re asking for is already in 97 percent of all auto policies in the state; we’re just asking that it is mandated in all policies so people don’t have to guess if they have this dispute resolution in their particular policy. The Appraisal Clause is not something that’s unique to the auto industry; it’s in a lot of insurance policies. It’s a great process that brings in a third-party umpire to determine who was accurate and who wasn’t.”

Additionally, Smith believes that the bill provides a muchneeded alternative to consumers having to address matters in courts that are severely backed up due to COVID-19. Having the ability to find a quicker resolution through an umpire as opposed to retaining a lawyer is a welcome relief to consumers who are already overwhelmed by everyday living under the weight of the pandemic.

After years in the field fighting for the rights of Texas insurance consumers, McDorman is adamant that the Appraisal Clause should be a mandatory element of all auto insurance policies sold in the state. However, he is also aware that House Bill 2534 could face resistance from those who benefit most from the status quo.

“The more success the appraisal process has, the most likely it is for the carrier to remove it as a relief mechanism for the consumer. It is my professional opinion that a motor vehicle policy with limited or restricted appraisal rights leaves insureds facing harmful loss dispute situations more times than not. The biased, manipulative and overly profit-minded insurance carrier should never be given the absolute right over the liquidity of the insured’s loss. Protection of the party’s appraisal rights should be mandatory on all elements of the covered loss.”

Unfortunately, the Texas Department of Insurance has been notoriously reluctant to take a proper stand on the Appraisal Clause issue. As of this writing, the page on the TDI’s website in regard to auto insurance complaints (tdi.texas.gov/consumer/ auto-insurance-complaint.html) advises consumers that their policies “may include an appraisal process to resolve complaints.”

[Emphasis added.] Wendell is quick to share his past experiences in attempting to bring Appraisal Clause-related issues to TDI’s attention.

“Unfortunately, through the years, we’ve seen the TDI take a hands-off approach to many disputes […] More times than not, what they hear back from the TDI is, ‘You know what? This is a factual dispute; this is a legal matter. You’re going to have to go through that process.’”

Ironically, the Texas Supreme Court appears to be in support of consumers using the appraisal process. In his 2019 opinion in Barbara Technologies Corporation vs. State Farm Lloyds, Supreme Court Justice Paul W. Green shone a positive light on the method: “Access to the appraisal process to resolve disputes is an important tool in the insurance claim context, curbing costs and adding efficiency in resolving insurance claims.”

As House Bill 2534 gains momentum, McDorman stresses that it is not anti-insurance legislation. If anything, the bill’s

90-day timeframe for participants to pursue appraisal serves to expedite the process for insureds and carriers.

“I see carriers having a little heartburn with the timeline that’s in the bill, but that timeline is meant to deter either party from dragging out this process. It’s designed to protect both parties – the insurer and the insured. This is in no way a one-sided bill.”

On March 22, ABAT hosted a special Zoom meeting to update members on the association’s efforts in support of both House Bill 2534 and House Bill 1131 (which was covered in last month’s Texas Automotive cover story). Wendell and Representative Clardy joined ABAT Executive Director Jill Tuggle in the informative discussion.

Representative Clardy noted that House Bill 2534 “levels the playing field” between insurers and insureds and would ensure that customers “get a fair value” and that “the repairs were properly done and paid for” under Texas auto insurance policies.

“One of my biggest frustrations is that the Texas Department of Insurance acts like they don’t have the authority to enforce the current laws, which is why we’re going forward with the new laws,” he added.

Although ABAT’s bills stand a strong chance of earning support from those who put the consumer first, Representative Clardy cautioned that lawmakers are currently dealing with a vastly different legislative session than the previous go-around.

In addition to grappling with the COVID-19 recovery (plus the ongoing logistical restrictions of the pandemic), the Legislature is overwhelmed by the “chilling effect” of the recent weather emergency. Representative Clardy also noted that the Senate is traditionally a more “insurance-favorable body” than the House.

Despite these roadblocks, he urged meeting attendees to increase their efforts in gaining support for both bills and keeping them front and center during a very crowded and fractured session. Both bills have been referred to the House Committee on Insurance, while Smith is currently working on getting hearings scheduled.

With more static in Austin than perhaps ever before, it is critical that ABAT members and their consumers make their voices heard during this session. In Wendell’s mind, success under current circumstances will come down to shops making a greater effort to inform their customers of the reasons for these bills and encourage them to get their area representatives on board.

“I think it’s important to remember how influential you are [and] how many connections you have to your community. You’re the ones who support the Little League team. You’re the ones who throw the barbeque picnics for charity in your community. You’re the ones who come into contact with dozens and hundreds of people every single day in the form of your customers.”

“For so many years, we have told ourselves and really believed that we don’t stand a chance against the insurance companies and that they’re so much bigger than us,” commented Tuggle during the March 22 virtual meeting. “Not until we embarked on this legislative journey did I realize that our voice really does matter […] No matter how in bed anybody is with an insurance company or a lobbyist, nothing trumps the constituents’ voice.”

The complete text of House Bill 2534 is available at bit.ly/ HB_2534. TXA

15 April 2021 Texas Automotive

Ask The Expert

by Robert L. McDorman

How Could State Farm Undervalue My Tacoma, Deem it a Total Loss and Deduct from My Settlement?

Dear Mr. McDorman: Auto Claim Specialists recently helped increase the total loss settlement on my safely repairable 2009 Toyota Tacoma after State Farm elected to deem it a total loss after first authorizing it to be repaired at the collision facility.

Then, to add insult to injury and harm me even further, they deducted $1,751.96 from my settlement. When I resisted State Farm’s total loss offer, objecting that it had undervalued my Tacoma and refused to repair it as it had initially agreed, the company refused to even listen to me. I was left confused and unsure how to deal with this unexpected and demoralizing situation and reached out to you at the advice of my trusted collision facility.

Auto Claim Specialists reviewed my loss statement with State Farm and recommended I invoke my policy right of appraisal in contest of the State Farm loss statement. At the end of the appraisal process, my strong hunch turned out to be true. State Farm had undervalued the actual cash value of my Tacoma by $2,646 (or 19 percent). How could State Farm undervalue the actual cash value by such a significant percentage and then refuse to take my complaints seriously and ignore my desire to repair my truck rather than deem it a total loss? Replacing a perfectly repairable truck, while maybe in State Farm’s best economic interest, was certainly not in my best interest. I have been a State Farm policyholder for well over 40 years. Do you see this type of under-indemnification often, and do carriers often place their own best financial interest ahead of the insured?

Thank you for your question. Yes, we see this type of gross under-indemnification regularly by carriers. However, State Farm often stands out as the worst of the worst. The State Farm policy gives the company broad control over the loss type and liability, and we tend to see many different loss disputes from its insureds.

We appreciate your calling Auto Claim Specialists to help resolve your loss dispute. Unfortunately, due to the policy you agreed to with State Farm, we could only assist you with the actual cash value dispute. With a different carrier, we could have probably helped you get your Tacoma safely fixed.

We see many State Farm clients in the same situation as you due to their policy language. Under Limits and Loss Settlement – Comprehensive Coverage and Collision Coverage, the State Farm policy states the following: 1. We have the right to choose to settle with you or the owner of the covered vehicle in one of the following ways: a. Pay the cost to repair the covered vehicle minus any applicable deductible. b. Pay the actual cash value of the covered vehicle minus any applicable deductible. c. Return the stolen covered vehicle to its owner and pay […] for any direct, sudden and accidental damage that resulted from the theft.

This policy language allowed State Farm to replace your Tacoma and not follow through with the repair as previously authorized. The State Farm policy limits the insured’s right to

Robert is a recognized Public Insurance Adjuster and Certified Vehicle Value Expert specializing in motor vehicle-related insurance claim resolution. Robert can be reached at (800) 736-6816, (817) 756-5482 or via email at AskTheExpert@autoclaimspecialists.com.

challenge the loss type, loss settlement or any loss related to collision facility charges it paid and subsequently withheld from the settlement. We routinely see the insured blindsided by their carrier on total loss associated fees due to the collision facility that carrier agreed to pay and then subsequently deducted from the policyholder’s settlement.

Unlike most policies in Texas, the State Farm Appraisal Clause is limited to the actual cash value dispute only. As we see below, the State Farm policy states: Limits and Loss Settlement – Comprehensive Coverage and Collision Coverage b. Pay the actual cash value of the covered vehicle minus any applicable deductible.

(1) The owner of the covered vehicle and we must agree upon the actual cash value of the covered vehicle. If there is a disagreement as to the actual cash value of the covered vehicle, then the disagreement will be resolved by appraisal upon written request of the owner or us, using the following procedures: (a) The owner and we will each select a competent appraiser. (b) The two appraisers will select a third competent appraiser. If they are unable to agree on a third appraiser within 30 days, then either the owner or we may petition a court that has jurisdiction to select the third appraiser. (c) Each party will pay the cost of its own appraiser, attorneys and expert witnesses, as well as any other expenses incurred by that party. Both parties will share equally the cost of the third appraiser. (d) The appraisers shall only determine the actual cash value of the covered vehicle. Appraisers shall have no authority to decide any other questions of fact, decide any questions of law or conduct appraisal on a class-wide or class-representative basis.

16 April 2021 Texas Automotive

continued on pg. 19

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17 April 2021 Texas Automotive

Founder Robert McDorman

18 April 2021 Texas Automotive

Ask The Expert

continued from pg. 16

(e) A written appraisal that is both agreed upon by and signed by any two appraisers, and that also contains an explanation of how they arrived at their appraisal, will be binding on the owner of the covered vehicle and us. (f) We do not waive any of our rights by submitting to an appraisal.

As you can see, the State Farm policy you agreed to has a limited appraisal process to resolve loss disputes that can arise between you and State Farm pertaining to a covered loss. Most (if not all) other policies in Texas provide for any covered loss being subject to appraisal in the event of a loss dispute between the insurer and the insured. State Farm limits the appraisal to only disputes over the actual cash value.

You were absolutely right about questioning the State Farm repair-or-replace methodology. It should not come as a great surprise that after State Farm originally elected to repair your Tacoma and subsequently deemed it a total loss during the repair process, the Texas Department of Motor Vehicles records show that when the insurer transferred the title into its name, it elected to NOT title the vehicle as salvage. We routinely see carriers do this for economic reasons. The salvage auction website states that titles that are unbranded and indicate no damage history have the highest resale value.

In your situation, as it relates to the actual cash value dispute, State Farm – with the help of Audatex – had determined the market value of your Tacoma to be $13,454. State Farm calculated by a formulated valuing methodology a salvage value on your Tacoma of $6,500. (By the way, according to salvage sales records, your Tacoma actually sold for $7,450, so paying you the value of a salvage title vehicle and selling it without the salvage title made the company an extra $950. However, since your truck was always safely fixable, that $950 really came right out of your pocket.)

Burl’s Collision Center, after a thorough inspection, determined the complete repair cost including sales tax to return your Tacoma to its pre-loss condition was $12,665.01.

Upon your providing us with the State Farm Audatex Market Valuation Report, we sent it to our subsidiary, Vehicle Value Experts, to issue a certified appraisal. The State Farm policy limit of liability under comprehensive coverage and collision coverage is the actual cash value. Vehicle Value Experts quickly identified that State Farm had undervalued the Tacoma a minimum of $2,500.

We recommended you retain Auto Claim Specialists as your public insurance adjuster agency, use Vehicle Value Experts as your independent third-party appraiser and invoke your policy right of appraisal to define the actual cash value. At the end of the appraisal process, Vehicle Value Experts and the State Farm independent third-party appraiser defined the actual cash value of your Tacoma as $16,100.

Thus, through the appraisal process to define the actual cash value, it was realized State Farm under-indemnified you $2,646 from the previously undisputed liability offer of $13,454, before applicable sales tax. However, the State Farm policy does not allow you a relief to contest the under-indemnification of the $1,751.96 liability for associated fees paid to the collision facility by State Farm and subsequently withheld from your settlement, leaving a net in the original undisputed settlement before applicable sales tax of $894.04. Please note that the offset of the $1,751.96 collision facility liability from the $2,646 increase in the actual cash value

arrived at through the appraisal process is a mockery that left you under-indemnified $1,751.96. It is our position from reviewing the collision facility’s invoice relating to this claim that the charges were State Farm’s valid liability. Unfortunately, and by design, these charges paid by State Farm and then wrongfully deducted from your settlement were not applicable to appraisal under the State Farm policy.

The greatest harm we see here in the handling of your claim was that your Tacoma could and should have been safely returned to its pre-loss condition as State Farm originally agreed to, but it subsequently changed its mind in the middle of the repair process.

As previously outlined, State Farm has limited the right of an appraisal to actual cash value disputes only. We clearly can see, from the absolute loss you suffered on this claim, the serious problem when the right of appraisal is limited to only certain elements of the covered loss.

It is my professional experience that a motor vehicle policy with limited or restricted appraisal rights leaves insureds facing this and similar difficult situations more times than not. The biased, manipulative and overly profit-minded insurance carrier should never be given the absolute right over the liquidity of the insured’s loss. Protection of the party’s appraisal rights should be mandatory on all elements of the covered loss.

The under-indemnification in total loss and repair procedure claims in Texas is rampant. Besides the higher settlements for total loss clients averaging 28 percent above the carrier’s undisputed loss statement, we have also reduced clients’ out-of-pocket expenses by an average of 35 percent on repair procedure disputes such as the example provided here. These under-indemnification percentages are staggering and harmful to Texas citizens.

The spirit of the Appraisal Clause is to resolve loss disputes fairly and in a timely and cost-effective manner. Invoking the Appraisal Clause removes inexperienced and biased carrier appraisers and claims handlers from the process, undermining their management’s many tricks to undervalue the loss settlement and under-indemnify the insured. Through 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 more costly and time-consuming methods, such as mediation, arbitration and litigation.

In today’s world regarding motor vehicle insurance policies, frequent changes in claim management and claim-handling policies and non-standardized GAP Addendums, we have found it is always in the best interest of the insured or claimant to have their proposed insurance settlement reviewed by an expert before accepting. There is never an upfront fee for Auto Claim Specialists to review a motor vehicle claim or proposed settlement and give their professional opinion as to the fairness of the offer.

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 question and look forward to any follow-up ones that may arise.

Sincerely,

Robert L. McDorman

19 April 2021 Texas Automotive

TXA

The Consumer’s Voice

by Joel Gausten

FROM Hail to headaches: a state farm insured pushes back Stuart Smith* has been a loyal State Farm policyholder since he was a teenager. More than 40 years after paying his first premium, he had no reason to suspect that the company would do him wrong after his 2009 Toyota Tacoma got pummeled in a hailstorm and required considerable repairs. Unfortunately, his first-ever heavy claim with the insurer resulted in an ordeal that has left him shocked and frustrated.

As detailed in this month’s Ask the Expert feature by Robert McDorman (see page 16 ), things went from inconvenient to emotionally draining. With the matter still not fully resolved at press time, Smith is disappointed with the service he has received from his decades-long insurer.

“What is State Farm going to do for the customers who don’t have the economic means I have? Is the insurer going to hold a customer’s vehicle over them and say, ‘This is the price we’re going to pay you’? I felt like I was being told, ‘Take it or leave it.’ They call themselves a ‘good neighbor,’ but it seems they’re giving their adjusters criteria to get out cheap with every claim theyPage can. 1If they Wheel Technologies Ad_TXA0319.qxp_Layout 1 2/26/19 11:00 AM can do this to me, they’re going to give the same deal to the single moms out there, who would be devastated by something like this.

They won’t have the money to handle this or the ability to find somebody to help them out. That’s my motive in working with Robert and talking about this.

“[My agent] still cares about people,” he continues. “He does everything he can, but insurance companies today aren’t what they used to be. You pay your premium, and then you have to argue with them about what you’re going to do. If you don’t know the criteria and lingo they use, guess what? They’re just going to stick it to you. If the agents don’t have a say on any of this anymore, it’s going to be hard for them to stay in business. Personal relationships between agents and consumers are important, but the corporate side is pushing them apart.”

Fortunately, Smith has a less conflicted view of the body shop he chose to do the repairs. “[Burl’s Collision Center owner] Burl Richards won’t use aftermarket structural parts; that’s the reason I took my vehicle to him. I’d feel terrible if I put my wife or someone else in my vehicle and it was compromised because I went for something cheaper. That just wasn’t an option for me. If I’m going to have a wrecked vehicle in the first place, I want it right when I get it back. I don’t want Chinese parts all over it.

“This is something that needs to come up in the Legislature,” he adds. “Somebody’s going to have to work through this and put some limits on what insurers can and can’t do.” *The consumer’s name was changed at his request.

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