7 minute read
CAR-O-LINER Southwest
Tesla to Texas:
Insurance Has Launched and Landed!
It’s official: Tesla has invaded the Lone Star State. Last year, Tesla CEO Elon Musk moved his personal residence and also began constructing a new factory in Austin. During the same meeting that an announcement was made relating to the OEM’s headquarters’ relocation to the new facility, Musk also revealed that Tesla Insurance is ready to launch into Texas.
Offered to all Model S, Model X, Model 3, Model Y and Roadster owners, Tesla Insurance has been available in California for a couple years, but its Texas iteration plans to use customers’ real-time driving behavior and “safety scores,” rather than credit, age and gender to determine premiums, with the manufacturer’s website indicating that an average driver can expect to save 20 to 40 percent while the safest drivers could cut insurance costs by up to 60 percent.
According to Tesla’s website, they’re able to offer reduced premiums because “Tesla uniquely understands its vehicles, technology, safety and repair costs, eliminating traditional insurance carriers’ additional charges,” reflective of the manufacturer’s “active safety and advanced driver assistance features which come standard on all new Tesla vehicles.” (More information about Tesla Insurance is available at
tesla.com/support/insurance.)
Seems logical and sounds like a great deal for the vehicle owner...but what does the introduction of Tesla Insurance mean for Texas collision repair facilities? ABAT is keeping a close eye on the situation as it develops.
ABAT President Burl Richards finds the topic intriguing.
“It’s interesting when you’ve got an automotive manufacturer that’s going into the insurance industry because shops that want to follow OEM procedures and properly repair vehicles are constantly fighting for the consumer and trying to get proper indemnification. I’m curious to see how a manufacturer that prides itself on these technologically advanced vehicles will behave in this respect: Are they going to put profits on insurance first - or are they going to take care of the customer? What’s more important?”
Although the rollout just happened in October, Richards also has concerns related to a letter he received in early 2020 which indicated the insurer would be paying a reduced rate to Tesla-certified shops, such as Burl’s Collision Center in Henderson.
“We’ve invested in a lot of training and equipment to obtain certification, but my posted rate is my posted rate. I don’t charge more to repair a Tesla than I do any other vehicle, yet this letter said they want me to charge less. I have a problem with that. Now, Tesla builds an awesome vehicle, and we’re proud that we’re certified to repair those vehicles, but regardless of who the insurance company is, an insurer is merely the bill payer – they have no right to dictate what rates a repair shop charges to safely and properly repair that vehicle.”
Late last year and early in 2021, the Texas Department of Insurance (TDI) approved the insurance forms submitted by Austin-based Redpoint County Mutual, the underwriter for Tesla’s Texas insurance program; however, the TDI’s approval holds little weight with Richards:
For now, ABAT is waiting to see what impact Tesla Insurance will have on members and the Texas collision repair industry as a whole.
“It’s a wait-and-see game,” Richards acknowledged. “I honestly don’t care who the insurance company is as long as they pay for all the OEM-recommended processes and procedures to properly indemnify our mutual customer, and we hope that Tesla Insurance will pay for all the necessary processes and procedures that they recommend as a manufacturer. But we also need to see what they want to do with the Labor Rates because their job is to pay the bill, not set the shop’s rate. I’m not okay with them trying to force me to lower my rates, and I know I’m not the only shop concerned about that.”
Stay tuned to Texas Automotive as we plan to monitor this situation over the next few months, and we invite readers’ feedback as Tesla Insurance settles into your market. Please email me to let me know what you’re seeing: chasidy@grecopublishing.com. TXA
Can a Policy’s Right of Appraisal Resolve the Salvage Value Dispute between the Insurer and Insured?
Dear Mr. McDorman:
I own and operate a collision facility in North Texas. I attended your presentation at ABAT’s Texas Auto Body Trade Show about “Repair or Replace Liability Realignment and the Insured’s Contractual Rights.” Each month, you help several of our clients resolve loss disputes with their insurance carriers. When the insurance carrier deems a vehicle an economic total loss, I routinely see Auto Claim Specialists increase our client’s total loss settlement by thousands of dollars; however, I don’t recall ever hearing you mention if the insured can invoke their policy’s Right to Appraisal to contest a carrier’s assigned salvage value. Can the dispute between the insurer and the insured over the salvage value be resolved under the Right to Appraisal?
Thank you for the referral of your clients to us over the years and for your excellent question. Yes, the salvage value dispute between the insurer and the insured can be resolved through the policy’s Right to Appraisal. Just like you referenced above that you routinely see your client’s total loss settlements increased by thousands of dollars, we routinely see salvage value disputes resolved through the Right to Appraisal for thousands of dollars under the carrier’s factored salvage value.
The carrier arrives at their salvage value using a similar method as that used by market valuation firms to determine the adjusted vehicle value. Most carriers use Pro-Quote software to calculate the salvage value. The Pro-Quote valuation tool arrives at the salvage value by using the adjusted vehicle value listed on the market valuation report combined with the cost to repair. The Pro-Quote valuing methodology is extremely subjective - it’s not a science. In some instances, the valuation error is significant enough to impact a carrier’s settlement decision, and when that occurs, the Appraisal Clause can be invoked to arrive at a fair value for the salvage.
The spirit of the Appraisal Clause is to resolve loss disputes fairly in a timely and cost-effective manner. It is unfortunate that insurance carriers are still not giving proper respect to this matter. Some have finally taken notice and now routinely participate in appraisal demands, but others remain remarkably obstinate.
The under-indemnification in total loss and repair procedure claims in Texas continues to run 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 90 percent on repair procedure disputes. These under-indemnification percentages are staggering and harmful to Texas consumers and shops!
Please call me if you have any questions relating to the policy or covered loss. We have most insurance policies in our library. Always keep in mind: A safe repair is a quality repair, and quality equates to value. I thank you again for your question and look forward to any follow-up questions that may arise.
Sincerely, Robert L. McDorman
TXA
