I am a sole proprietor, I have both a federal ID and a SS.

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PostPosted: Sat Feb 16, 2008 12:32 pm   Post subject:   

Mike,

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If I have no contract with and insurer,
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First of all in a DRP it will be in the contract that they actually do what is written on the est=FRAUD--in DRP shops which is what this thread pertains to
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why would I be liable for any federal income taxes on services not provided.
All companies that I am aware of (within the last few years many much longer) have to include (per the IRS) your fed.tax id number (usually starts with 43-something) on all draft payments that include a company or vendor whatever you want to call them that is completing work...(including contractors etc on homeowner claims) now for awhile we got away with not doing this if the company was incorporated, why? I don't know don't ask me I have no idea what the difference is...What I do know however is that every draft (in the company I work for which is one of the top three auto insurers) that has a body shops name on it has a fed.tax number which reports this total amount of the estimate to the IRS. What you do about it is your deal...if you want to pay taxes on money that you didn't get (because you didn't do all the repairs and either gave money back to the owner or covered the deductible that way) I guess you can but doesn't sound like a very good business practice to me....
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then how can I be a party to fraud
again, the thread is about DRP's, but another problem can arrise for the insured when they have another claim six months from now and that bumper cover wasn't repaired, and they want the ins company to pay for it again...not happening Mike...
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It's the leinholder and vehicle owner's property. If the leinholder waives and signs the insurance draft and tells the property owner fix what you want then would you consider that fraud or evasion of paying taxes?
(NEVER EVER have I heard of a leinholder saying, 'fix what you want'-not saying it hasn't happened, will say in 22 years I've never heard it..if they did say that of course then you are correct, aside from that) NO and here's why, if the leinholder and insured are on the draft (no shop) and that leinholder is silly enough to just sign that draft over without making sure those repairs are made....I'm off the hook (an an insurance company) on the other hand....By putting the shop on the draft, if the shop doesn't do the repairs that were paid for and that vehicle is repopped, then it's the shop and the insured that will be held liable and have to pay that amount to the lein holder not the insurance company...and yes I 've seen it happen both ways....as an example...the young adjuster issued payment only to the owner of the vehicle 1k in damages, the owner blew the money on everything BUT the repair, that vehicle is repo'd the leinholder gets the car back and there is 1k in damage on it, they come to the insurance company and say, 'what's up with this?" ins company says, 'oh crap' because we didn't protect that leinholder we (as an insurance company) will have to pay that claim AGAIN...now, same scenerio only the adjuster put the shop and owner on the draft to 'insure' repairs are made...again vehicle is repo-d, but only 500 in damages are repaired, leinholder calls ins company who says, we paid Mike of the Ozarks based on our estimate to fix all 1k of the damages, he never contacted us with any different information, he knows what we were paying for....so now the leinholder calls you (and the insured) and says, 'hey were you paid among other things to fix this bumper?' yes, mr. leinholder I was, but the insured didn't want to so I just gave him his money back' ok, now we can go to the insured and he will have that added to his debt....or when the leinholder calls Mike, you say, 'well it's like this, the guy was more concerned about us putting new wheels on the car, so instead of replacing that bumper cover we used that money for new wheels'' ain't gonna go over Mike...in ''our'' state that is.....I'll have to be honest and can't say that I know the outcome of these, many with insureds, but can remember only three where body shops were brought into the action...I honestly don't know the outcomes, if the shops got out of it or ending up having to pay all or a portion....I'll try and remember the names/shops though, and talk to the owners (if I can remember) and see what did happen...

Also if the insured and leinholder are the only ones on the draft then there wouldn't be a tax number on the draft (not always on the draft by the way but is in the computer)....then if the insured pays you a portion to do whatever actual repairs you did do then that is between you and the IRS and no different what so ever than a 'customer pay' job.
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Should I have to hire a private detective to chase down every person who has forged my name to an insurance draft to cash or deposit into their account because I am liable for earned income from a payment received from someone I did not have a contract with?
No but you'd better bet if it happened to me I'd be getting a copy of that draft from the insurance company and heading straight to the prosecutors office on the double...why would you want to pay taxes on money you didn't get? You should be furious about that! And yes, I have seen a couple of those cases successfully prosecuted...
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If Uncle Joe paid 2000 dollars to have his nieces vehicle repaired, is he required to send a 1099 in to the government for that payment even though he did not contract the repair?
nope...
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I'll grant you that my invoices had better be in order to prove my earned income but I can not be held liable for taxes on income not earned regardless of how many 1099's I receive.
No but you sure can be held responsible for the taxes on payments issued to your for a job, based on that job...and what a mess to have to sort that out....I'm not saying that you might not be able to (hopefully) prove to the IRS if you are audited that yeah, I got a 1099 for 3k from blah blah insurance company, but I only really got 1k ...again as you said you'd better have your files in order, and I'm sure ''you'' do....and personally if I were in your shoes and routinely doing this...I'd have those ready as they come...do you go thru every single 1099 and put it with the J.O.? and change it to the actual amount of work you did? You'd have to, in order to make sure that your not paying taxes on more than you should....


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PostPosted: Sun Feb 17, 2008 11:18 pm   Post subject: Just some clarification.  

I am a sole proprietor, I have both a federal ID and a SS. I pay taxes as a sole proprietor based on income not what 1099's say I have earned, but I do pay taxes with my SS based on what my invoices say I have earned on my schedule C.



I agree with you if a policy holder has been paid for damaged parts and they did not fix them, you do not owe the entire cost of replacement again in a subsequent wreck unless they can prove they were replaced. This has no bearing on what the shop did or did not do if they invoiced the vehicle owner. Again the DRP arrangement is different I agree. I know of shops that are on all three of Missouri's top insurers programs and routinely abuse this invoicing. They have been caught and yet they remain on preferred programs. Parts dealers from another state confide in me that some DRP shops routinely order oem part for invoices and ship them back, show the invoice for oem or new parts to the vehicle owner if questioned and substitute cheaper a/m parts to comply with a parts useage requirement to keep their csi report card in order. There are just so many of these types of fraudulent practices going on that I question myself, why would I want to be a party to an arrangement that created the potential for corruption.



If a customer comes to me with an insurance draft and my invoice is less than the amount the insurer estimated, my name isn't on the draft and I do not have a contract with the insurer, any overpayment goes back to the policy holder. If the leinholder, as they often do, feels their collateral is sufficiently protected by virtue of the vehicle owner having subtantial equity in the vehicle, and the repairs the consumer wishes to make are different than the insurer estimate, the leinholder often allows the consumer to make the choice of repair. Indemnification does not require repair of the property but for does require payment of the value of the loss on an acv. The insurer may be beholding to the leinholder and state but the non drp repairer is not beholding to the insurer or the leinholder who may elect to that right or protection.



If my shop name is on an insurance draft, that does not obligate me to repair as the insurer estimated. It also tells me that the vehicle most likely has a lein on it. I tell the customer up front, if you have a lein on your property, and you want to fix it differently than you have been compensated to protect your leinholder, then have your leinholders name placed on the check, take mine off, and I'll fix it according to my estimate and invoice if your leinholder puts that in writing or allows you to cash the check. Afterall the purpose of naming the repairing party or leinholder on a check is not to force the vehicle owner to repair the car, it's to protect the leinholders securtiy in the car. Many times banks have homes, boats, cars, businesses secured by collateral and they really don't care whether the vehicle owner puts barn siding on their car or plywood as long as they pay their notes and are not upside down in their finances.



Not legal but my opinion based on interpetation and consultation by an attorney.



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PostPosted: Thu Feb 21, 2008 4:18 pm   Post subject: DRP  

I was a DRP for a major insurance company. I was told by my DRP Co-ordinator that I was to repair vehicles the insurnance company way, not my way. I was told to blend the clearcoat into a sail panel. I provided documentation from: Dupont, Glasurit, RM Sherwin Williams and other paint manufacturers, documentation from Nissan, Toyota, Ford, Gm and other vehicle manufacturers that a blended sail panel will fail. I was told to blend or get off the program. I have an extreme dislike for Taiwanese parts. They have proven over and over to not be the same in both form or function. I told my Co-ordinator that I could not tell the vehicle owner that these parts were any good. I was told to lie. I was told to keep my opinion to myself and to say "these parts are guaranteed by the insurance company". You need to get out of your Ivory Tower and into bodyshops, find out the truth about DRP's. It is only about the money, not quality OR safety.


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PostPosted: Fri Feb 22, 2008 2:21 pm   Post subject: DV is a fact of life.  

Lori you state

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I'm saying that simply by fact that a vehicle was in an accident and repaired does not in an of it's self result in a diminished value, if the shop did it's job....


Actually you are wrong there. I have managed a new car dealership for over 10 years. If a customer knows that a used vehicle they are thinking of buying has been in an accident, (no matter how light, whether or not they can tell it has been repaired) then that vehcile is automatically worth less in their mind. Let me say that again AUTOMATICALLY WORTH LESS in their mind.



That fact is the very definition of diminished value.



You body shop folks and insurance folks may debate the existence of DV all day long, from whatever motivated position you hold. But if you want to know the truth, ask someone in the used car appraisal/sales business.



We ALL know it. We ALL appraise clean original vehicles for more money than one that has been hit and repaired. We have to, because 99 percent of our cutsomers do (I say 99 percent because I suppose a few of them will be shop guys or insurance people pretending not to care)

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PostPosted: Fri Feb 22, 2008 2:55 pm   Post subject:   

Dealer Guy, you have answered your own query and made my point exactly,

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then that vehcile is automatically worth less in their mind. Let me say that again AUTOMATICALLY WORTH LESS in their mind.
"in their mind", does not make it so !!


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PostPosted: Fri Feb 22, 2008 4:12 pm   Post subject: That is the very concept of inherent diminishment of value  

The public perception that a vehicle that has been repaired is not worth as much as one that has never been wrecked, drives the market value of those vehicles. The mere existence of Carfax is for consumers to guard themselves from purchasing previous train wrecks if a consumer or dealer does not disclose the damage history intentionally or by their ignorance of the unknown facts. By the way, the government has ignored a law that was passed in the early nineties, to build a federal database for consumers to have this information freely. There is currently a lawsuit aimed at rectifying this failure to implement the program.



If a customer had a choice of buying a 2004 bmw that has no accident history, and carfax verifies that, or buying one that had 10,000 dollars worth of damage and repaired by a certified dealer, the customer will not give as much for the damaged vehicle. That's the facts Jack! The newer the vehicle and the lower the mileage, the dimishment is greater.



Of course if there are repair related flaws and defects, or the insurer refused to pay to remove the engine and work a buckle down on the frame rail or they insisted on the use of aftermarket parts, that too will drive the value down even further.



Sadly the industry average on the quality of repairs are bad. Too many shortcuts taken to make up for time not paid to do the job right because too many shops refuse to look at who's name is on the front of their business and who their customer is, choose the path of least resistence and work for what the insurer feels is adequate.



Oh that bmw, by the way, by my calculations and inspection and appraisal, has a value or less than two thirds what it should sell for without any damage.



While I am not using the program that T said was a joke, I am using a software program to organize the preloss values determined by recognized appraisal data along with comparable available vehicles for sale in that market, with a visual inspection assessing the severity of the repaired and non repaired damage, to arrive at a post loss value.



The diminishment in value is not a figure a program spits out, it is based on an investigation and assessment based on ove 30 years experience of repairing, selling, and appraising vehicles. DV is calculated by simply subtracting the postloss value from the preloss value. Those are your damages due to the negligence of the party that caused the loss. And in virtually every state in this country, you can collect for those damages once you have proven them. You do not have to sell your car and the shop that repaired your vehicle is not liable if it was repaired to your satisfaction.



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PostPosted: Thu Feb 28, 2008 6:43 am   Post subject:   

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If a customer had a choice of buying a 2004 bmw that has no accident history, and carfax verifies that, or buying one that had 10,000 dollars worth of damage and repaired by a certified dealer, the customer will not give as much for the damaged vehicle. That's the facts Jack! The newer the vehicle and the lower the mileage, the dimishment is greater.
I hear this a lot. But can you site any cases where two identical cars were sale side by side and one was known to be damaged and the other not? Truth is, it does not happen. So your _still_ stuck convincing people that every pays less for a vehicle that has been damaged and completely repaired to exactly like it was before (example: fender was dented and replaced with a brand new OEM fender). Your also stuck telling us that vehicles that have been repaired never sell for the same price as vehicles with no damages. Do you have anything to back _that_ up?



I've traded in _many_ vehicles and I've _never_ (never) had a dealer ask me if the vehicle had been damaged and repaired. Perhaps this is not normal but it's never happened to me.



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While I am not using the program that T said was a joke, I am using a software program to organize the preloss values determined by recognized appraisal data along with comparable available vehicles for sale in that market, with a visual inspection assessing the severity of the repaired and non repaired damage, to arrive at a post loss value.
Does that translate into English in anyway? Your saying insurance companies pull figures out of the air but you see no problem with your statement above? If I understand your above quote correctly, your saying you looked at the vehicle and made a judgement call as to what it was worth after the accident. Did I miss anything? Was this "software" called a "calculator"?



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DV is calculated by simply subtracting the postloss value from the preloss value.
Who determines the post loss value? Sure it's simple... you use one value based on unknown data used by a company such as NADA (were any of those vehicles damaged and repaired?) and then make up the other piece of data.



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virtually every state in this country, you can collect for those damages once you have proven them.
Out of 50 states, how many is "virtually every state"?49, 48? I can probably name 3 or 4 off the top of my head that don't recognize DV. You really want to stick with "virtually every state" or do you perhaps want to modify that statement?



It is a little funny to hear a repair person complain that using anything but OEM parts is not putting the vehicle back in the same condition but then also stating that even when using OEM parts, people don't perceive the vehicle to be in the same condition. It's pretty much a no win situation for the insurance company, huh? I take my car into the dealership and they tell me the only way the vehicle can be put back in the same condition is to use their parts. I turn around and want to trade it in and the same dealer tells me that it's _not_ in the same condition.



I guess to be fair the insurance companies could just all use OEM parts, pay whatever any shop wants, pay for DV and then raise every one's rates to 5x what they are being charged. Perhaps everyone would be happy then. You okay with that?



Personally I live in the real world. I know there are two sides to every story.
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PostPosted: Thu Feb 28, 2008 12:37 pm   Post subject:   

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I've traded in _many_ vehicles and I've _never_ (never) had a dealer ask me if the vehicle had been damaged and repaired. Perhaps this is not normal but it's never happened to me.
Me either tcope and the reason behind this is, 'don't ask don't tell', if the dealer KNOWS there is prior damage over a certain amount (state dependent of course) then they are required to disclose this....if they don't know they can't disclose it right? I see cars all the time, that have prior poor repairs, when I ask the owners , you know this vehicle has been repaired before right (for a variety of reasons) they more times than not have no idea, ''I just bought it two months ago and the dealer never said that" or more common, the prior repair sure does hurt the owner on the 'trade in' value, but go look at that car on the front line a week later and see if the new buyer is both told about it, and if they receive this huge discount of diminished value...NOT!



I have never understood how a body shop owner/tech/whatever, could say, (in effect) "yep, we fixed that car back to pre-loss condition, she's perfect now! But it's not worth near what it was before WE FIXED IT!" How aburd! So you don't do near the quality repair you thought I guess? Never have I been able to understand anyone in the collision industry agreeing with this logic...keep that up and we will come to a point of NEVER repairing ANYTHING! Why should ins carriers do that? If after paying for this quality repair you then have to pay diminished value as well? Why not total 'em all? Confused



RE:
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virtually every state in this country, you can collect for those damages once you have proven them.
I can tell you one that doesn't and excludes it right in the policy for first party claims Mike and that's your own state!
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(Mo policy A-20.5-A) "Repair does not mean the restoration of pre-damage value nor does it include compensation for the diminution of value the accident caused..."




Actually to the contrary all the research I have just done (took me about ten minutes) tells me that MOST (all but eight or nine) states do NOT allow it
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Except in Georgia, coverage has traditionally provided for repair of damages. Eight other states allow for diminished-value coverage
,



Quote:
States That Allow Diminished-Value Coverage



Delaware Yes Delledonne vs.

State Farm (1992)

Iowa Yes Hawkeye Motors

vs. McDowell (1995



Mississippi Yes Potomac Insurance Co.

vs. Wilkinson (1952)





North Dakota Yes Sullivan vs.

Pulkrabek (2000)



Ohio Yes Allstate Insurance Co.

vs. Reep (1982)

Tennessee Yes Senter vs. Tennessee

Farmers Mutual (1985)



WITH CONDITIONS:



Delaware Diminished value for flood damage

is covered. If policy language is

ambiguous, however, payment for

diminished value is required.



Holds policy does not obligate

insurer to pay for diminished

value.



Georgia Court recognizes diminished value

as an element of loss covered

under State Farm's policy

language.



Iowa Court affirmed that proper measure

of damages is the difference

between the car's market value

before the accident and its market

value after the accident.



Kansas When insurer attempts to repair or

rebuild under a "repair, restore

or replace clause," insurer is

obligated to return the damaged

property to substantially its

original condition so it is as

valuable as it was before damage

occurred.



Under Wausau's promise to "repair

or replace the damaged property

with material of like kind and

quality," the general coverage of

the policy extended not only to

the cost of repairs but also to

the diminution in value of the

repaired vehicles.



Mississippi Held that if, despite repairs,

there remains "a loss in actual

market value, estimated as of the

collision date, such deficiency is

to be added to the cost of

repairs."



North Dakota Third-party diminished value claim.





Ohio Third-party diminished value claim.

Court held that the owner of a

damaged vehicle may prove and

recover the reasonable cost of

repairs provided that the cost of

the repairs does not exceed the

diminution in market value or the

fair market value of the vehicle

before the damage was sustained.



South Dakota Diminished value applies only when

vehicle is damaged beyond repair.



Tennessee If after repair, auto is restored

to function and appearance but not

to fair market price, the insured

can recover for the difference.



Source: National Association of Independent Insurers

Total Auto, Top Writers


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PostPosted: Fri Feb 29, 2008 1:33 am   Post subject: I thought the subject was third party DV  

I have to say that I am a little disappointed in both you guys in regards to disclosure of vehicles that have previously repaired damage when you consider trading them in. Sounds a lot like "Buyer Beware". Every car that I have ever repaired and sold or had an accident history, I have fully disclosed that fact and let the chips fall where they may with regard to market value. As a professional in the service industry and anyone as a professional employed in property casualty should have concern that the potential buyers have full knowledge of pre-existing accident histories before they lay down hard earned money or extend their debt to purchase junk.



Didn't State Farm Insurance run to every state's attorney general to make a sweetheart deal to cover their tracks in regard to consumers in every state buying previously totaled state farm salvage? Seems like the bean counters realized they could get more salvage value from vehicles that did not possess a salvage titles at auction. I inspected some of these cars for an attorney that worked to get information released to those consumers to let them know that vehicles they were driving had severe accident histories and known previous damage and that they should have a reputable shop inspect the vehicle for defects? Even though those victims received a compensation from that settlement, it was no where near enough to repair the damage on them to make them safe to drive. State farm should have had to buy these cars back if the consumers had an option, but the attorney generals thought the insurers were good ole boys for bringing up their sins and rewarded them by accepting the settlement offer.



I will agree with you both that only three states pay first party DV. I thought that the subject was over third party DV. While I believe that first party DV exists, I understand that insurers have been able to have it written out of the policies.



In one huge case the last couple of years a collector of a fine piece of art, insured that work for diminishment of value because it was undergoing a cleaning. In the process the work of art got punctured and a claim was filed for first party DV. The insurer refused to recognize that there was any loss of value, but a jury agreed that the work of art was no longer pristene and was simply not worth as much as before it was restored. The settlement was to the tune of over 100 million dollars and the painting was previously valued at 56,000,000. There is a long case history for recognizing loss of value. After all, a cash value policy promises to repair, replace, or pay for the total loss of a piece of insured property. The language of the policy promises pre loss which in and of itself is usually unattainable I'll agree in most cases. Hey, I didn't promise pre-loss the policy does. The insurance industry has been able to successfully remove payment for first party loss of value by the getting all but three departments of insurance to allow insurers to exempt it from policies.



I bet you both have seen the Antiques Roadshow. If you have, I'll bet you have seen the appraiser inform the holder of the object that the value of the object is not worth what it could be, because of flaws, defects, or repairs that compromise what otherwise would have been a pristene undamaged artifact, vase, painting, piece of furniture or whatever.



The previous discussion was dealing with third party loss of value. If anyone can prove a loss of value due to the negligence of the tort feasor (at fault driver) or your insured, the insurer must pay for that loss of value due to the fact that they insure that negligent driver with liability coverage. Virtually in all 50 states according to the re-statement of torts. It has nothing to do with the contract of insurance because the third party is only limited to the amount of liability coverage in that policy as to how much the insurer is on the hook for. A third party claimant in not bound by policy language of exemption of payment for loss of value in a liability claim or any other terms and conditions to a contract that they are not a party to.

We'll have to agree to disagree on whether, you as adjusters and appraisers, believe any loss of value exists. If it didn't, why would juries award it, and with insurer's huge checkbooks and legal staffs, why would they pay any loss in value to anyone. You could out litigate just about everybody in the country. The fact is that most insurers negotiate the settlement or they force the party all the way to the court house steps to make sure the expenses will be huge for the damaged party, pick a jury, go through depositions, and then settle before going to trial because they know they would lose in court on any third party claim regarding loss of value.



I have written over ten appraisals for loss of value last year, and some insurers even agreed to arbitration, rather than litigate, and lost. But after some negotiating by an attorney who works on contingency for the loss in value only, all recieved substantial diminished value settlements.

I have even written diminished value appraisals for insurers that have been directed by a Kansas state department of insurance to pay for any claims owed by Missouri insurance companies when presented with claims by Kansas vehicle owners



The sad fact is, that repairs can never restore the value or eliminate the accident history. It is the accident history that is the mitigating factor that determines a car that has been damaged and repaired is not worth what a vehicle is that has never been in an accident.



If you had an actual cash value policy on a diamond ring, and that diamond was damaged or stolen, the payment for loss would be on the value of that diamond at the time of loss or damage. Using insurer logic that a generic diamond or zirconium diamond looks just like a diamond to the untrained eye, it cuts just like a diamond, it may even fit the ring like the original diamond , but it would not be equal to the diamond that was lost. However the insurer might say that all we owe you for zirconium.



Just like that zirconium in my example, generic parts are similar. They may look similar, might even occassionally fit but will definately lower the value of a vehicle when the customer knows the repairs were made with inferior parts. A part made from taiwan with metal that is not as pure as american standards; not the same thickness; made from imitiation molds formed from reverse engineering; no galvanized rust protection, are not just like the original parts and will lessen the value of that repair or the value of the car and will not place the vehicle owner in pre-accident condition. That is, unless he had a generic fender on there from a previous accident.



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PostPosted: Fri Feb 29, 2008 1:12 pm   Post subject:   

Quote:
I have to say that I am a little disappointed in both you guys in regards to disclosure of vehicles that have previously repaired damage when you consider trading them in. Sounds a lot like "Buyer Beware". Every car that I have ever repaired and sold or had an accident history, I have fully disclosed that fact and let the chips fall where they may with regard to market value. As a professional in the service industry and anyone as a professional employed in property casualty should have concern that the potential buyers have full knowledge of pre-existing accident histories before they lay down hard earned money or extend their debt to purchase junk.
I don't know where you got that I don't think there should be full disclosure Mike I never said that, I think there should be full disclosure, I just don't think/buy into there being an automatic, (in fact I think it is extremely rare) diminished value of the ACV simply because it has been repaired....period...that's my point....that the mere fact a vehicle has been in a collision does not in and of it's self cause a diminishment of the value, assuming of course the vehicle was repaired correctly.





Now Mike we are not talking about rebuilders here, so that arguement is of no use to this thread, I don't think anyone would say that hiding the fact that a vehicle was a prior total and sold as a clean title is a different topic, and cannot see how anyone would agree that that is ok, (without disclosure)...two totally different topics Mike.
Quote:
I will agree with you both that only three states pay first party DV. I thought that the subject was over third party DV. While I believe that first party DV exists, I understand that insurers have been able to have it written out of the policies.
I thought we were talking about dv period....the point was that the vast majority of states disallow right in the policy first party dv...



Quote:
In one huge case the last couple of years a collector of a fine piece of art, insured that work for diminishment of value because it was undergoing a cleaning. In the process the work of art got punctured and a claim was filed for first party DV.
Ok stop stop stop, this is a homeowners policy you are talking about....we are discussing auto dv and auto policys....there are way too many differences in the policys and wordings, and endorsements etc...the one you refer to also

Quote:
I bet you both have seen the Antiques Roadshow. If you have, I'll bet you have seen the appraiser inform the holder of the object that the value of the object is not worth what it could be, because of flaws, defects, or repairs that compromise what otherwise would have been a pristene undamaged artifact, vase, painting, piece of furniture or whatever.


Yes actually I'm a big fan, and most of the time it is because the repair or cleaning were not done CORRECTLY, or was frankly a hack job...big difference and again we are talking about personal property not autos..



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We'll have to agree to disagree on whether, you as adjusters and appraisers, believe any loss of value exists. If it didn't, why would juries award it,
I'm not saying now nor have I ever said that there is NO dv, there is albeit rare...I'm saying that the mere fact it was in a wreck and repaired does not automatically create dv assuming the vehicle was repaired correctly...
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If you had an actual cash value policy on a diamond ring, and that diamond was damaged or stolen, the payment for loss would be on the value of that diamond at the time of loss or damage. Using insurer logic that a generic diamond or zirconium diamond looks just like a diamond to the untrained eye, it cuts just like a diamond, it may even fit the ring like the original diamond , but it would not be equal to the diamond that was lost. However the insurer might say that all we owe you for zirconium.
again mike, apples to apples please, you're comparing apples to oranges, there is no true substitue (as yet) for a diamond, none that will act or preform in the same manner....



Now you have taken used parts out of your agrument? your last paragraph only references a/m....all other posts have intimated used parts as inferior as well....but if I am understanding you, you still maintain, it really doesn't matter, if you put all brand spankin' new oem parts on the car you still have a dv claim....I hardly disagree....again, assuming it is a quality repair.


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PostPosted: Fri Feb 29, 2008 4:31 pm   Post subject: apples to apples is what I am talking about  

Whether a policy is a home owners or auto, it is an actual cash value policy. We are discussing, or at least I am, the premise of diminishment in an acv policy. Both are based on the New York 165 lines of insurance policy from which all acv policies originated.



It is a common argument used by the insurance industry. If you fix the car the way they estimate, and correctly, there is no DV. Well which way is it? The amount insurers pay based on their estimate or the correct way which is a matter of expert opinion based on which side of the issue you stand. If I fixed vehicles based on the insurer estimate instead of the repair invoice that the law says I must produce and become liable for, many cars would not be fixed properly.



The internet news links that I could provide if we were able to paste links would show you the problems allowing insurers to dictate repairs. There is a inherent problem when you have the fox guarding the hen house. Insurers are looking for cheap fast repairs instead of quality repairs. Even the supreme court recognized the inherent conflict of insurers owning bodyshops by rejecting allstates claim they have a right to own and operate their own bodyshops by ordering them out of the business in Texas.



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PostPosted: Sat Mar 01, 2008 2:55 am   Post subject:   

WOW !!!



I don't know how to quote, other wise I would ...



First, on the subject of diminution of value, or DV. Easch and every state recognizes DV in a third party setting, with the possible exception of Michigan with their archaic "no-fault" laws.



Lori, the quotes you've posted are in reference to FIRST party claims, which are governed by the contract of insurance. Third party claims, on the other hand, are NOT governed by the insurance contract, instead, they re goverened by tort law. Essentially, the law of torts aims to restore an injured party to as good a position as they held prior to the loss. If the vehicle is not worth as much after the reapirs as it was prior to the loss, then the vehicle owner was not restored to their previous position.



Let's talk about this "diminishment". Someone said that the loss is in the propsective purchasers mind. The problem is that their mind translates quite quickly to their wallet.



Those who keep mentioning "restoring the vehicle to pre-loss condition" are missing a few vitally important points.



First, the repair industry cannot duplicate the factory. Not when it comes to factory robotic welds. Not when it comes to dipping the body for corrosion protection. Not evn when it comes to the finish itself (factory piant is chemically substantially different from aftermarket paint).



Have you ever seen bird droppings on a repainted vehicle ? They'll etch the finish down to the substrate - not so with the factory finish.



Also, the manufacturer's warranty is voided by any collision repair (on the parts affected by the repair). NO MANUFACTURER warranties work done as a result of a collision, with the possible exception of those manufacturers like BMW when the repairs are done at a certified BMW repair facility. Even then, if there is body filler in the panel, the warranty on that panel is voided.



You could try to argue that the insurer warranties the repair (and aftermarket parts for that matter, but those warranties are not transferrable like the manufacturers warranties are.



So in reality, the potential purchaser "thinks" it's worth less, so they are willing to pay less - guess what ? It becomes a reality.



Of course, this presumes that all relevant facts are known - full and open disclosure of the damage history. Please don't use the feeble "argument' of "if it was't disclosed, they would pay the same, making the DV non-existent". That's the same as someone paying for a diamond when it's nothing more than a piece of glass being sold by an unscrupulous salesman.



(by the way Lori - you're right- it IS "don't ask, don't tell", plausible deniability, but even then, as alleged experts, especially when a dealer does an inspections, this has bitten quite a few dealers)



So, shops can't really restore a vehicle to true loss condition, and market forces, defined as paying consumers, have decided that DV is real.







As far as shops giving their tax number ... that's just silly. Really. Unless the shop is doing work FOR the insurer, the insurer should NOT be paying them.



Unless something has drastically changed, the shop owner has a contract to do work for the vehicle owner. It's the vehicle owner who has to pay the bill. If I were a shop wner (I am not) I wouldn't really care where they got the money (well, I might care, but only in extremes). They could get the mmoney from their insurer, or the at-fault party's insurer, or their Uncle Mark and Aunt Pam, or they could sell their furniture - really doesn't make a difference to me.



Perhaps even more simply, it is thevehicle owner who authorized the repairs, it s the vehicle owner who is receiving the benefits of the service, it is the vehicl owner who owes for the bill.



Tell me why the insurer would be paying me (unless I was fixing "IRV") ?







OK, last (at least for me, for now) bt not least, aftermarket parts.



Wow.



OK - first,I want a MSDS for a Ting Coi fender. That dust could contain harmful chemicals, and I want to know about them.



Second - OE panels are glavanized, A/M is not. Instant difference. NOT like kind.



Let's go ack to the warranty issue again. OE parts arry a 12 mo/12 mile warranty - or te balance of the manufacturer's applicable warranty, whichever is GREATER. In most cases, the longest warranty is the outer body rust through warranty. A/M has no such warranty. A/M "warranties" offered by insurers (which may or may not be lega to begin with, yet another story) are NOT transferrable.



A/M parts, for the majority, are not truly LKQ.







Oh - and back to the DV/properly repaired issue for a minute ... how in the world does John and Jane Doe know if a vehicle IS properly repaired ? Answer: In most cases they don't. I clearly remember when "bondo" was a taboo - everybody knew that it would evnutally bubble (70's & 80's era and maybe a bit later).



It is at least in part this "fear of the unknown" that furthers the positionof DV exists.







I hope everyon here understands that I am not tying to be combattive or condescending, I am merely tying to clarify, factually, a few issues that I've seen discussed here.





Just my nickels worth.

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PostPosted: Sat Mar 01, 2008 1:49 pm   Post subject:   

Good morning Alex and welcome!

Quote:
Lori, the quotes you've posted are in reference to FIRST party claims
Thank you Alex I know that as I said either in this thread or another one....All states may 'recognize' dv, meaning as we all know a third party is not contractually bound to the policy. Their was no statement that we were talking about exclusively third party claims when this assertion was made re dv.....
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And in virtually every state in this country, you can collect for those damages once you have proven them
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Have you ever seen bird droppings on a repainted vehicle ? They'll etch the finish down to the substrate - not so with the factory finish.
I don't know who's refinishing the cars you're seeing this in....The shops I handles ALL have bake booths, I was a shop manager myself for several years NEVER once had this complaint, have had vehicles repaired myself, one I still have that was painted five years ago...NEVER seen this.....EVER......
Quote:
Also, the manufacturer's warranty is voided by any collision repair (on the parts affected by the repair).
Sorry Alex this is absolutely NOT TRUE...if you are saying that a manu voids (or can, because they can't) their warranty on a vehicle because a used or a/m fender is put on that car...you are incorrect, in fact there is a thread around here with tons of research in it showing same...I've even talked to and have the info somewhere I'll look for it, showing that they cannot do this....if however you are stating they won't warrant that particular part, ok I agree with that....I disagree with the transfer of both the new manu warranty and the repair warranty though....you'll need to show that to me....I'm looking at a brand new car warranty of my own (10yr/100k) that is NOT transferable...
Quote:
this has bitten quite a few dealers
I agree happens all the time and rightfully so, that they are burned, when (and yes I've seen it) they 'ding' the trade in, but 'forget about it' when they re-sell.
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As far as shops giving their tax number ... that's just silly. Really. Unless the shop is doing work FOR the insurer, the insurer should NOT be paying them.


This is something you'll have to take up with the IRS I suppose, because the state I'm in we are required to do so, and IF a draft is issued to a provider (shop, vendor etc) and that number is not found on the draft the insurance carrier is fined, and fined big....another thing is lets not forget that the leinholder must be protected...again I'm talking about first party claims, claimant, doesn't matter, we don't have the contract with them, nor must we protect their leinholder in anyway-
Quote:
...Let's go ack to the warranty issue again. OE parts arry a 12 mo/12 mile warranty or te balance of the manufacturer's applicable warranty, whichever is GREATER. In most cases, the longest warranty is the outer body rust through warranty. A/M has no such warranty. A/M "warranties" offered by insurers (which may or may not be lega to begin with, yet another story) are NOT transferrable.
Wait a minute here, and you can't just write this off, if the owner gets a warranty from the insurer that says for as long as they own that vehicle the repairs and parts are covered, and yes before you go there I have been party to coming back years later and repairing or replacing something that has failed, you can't deny that benefit...which is far greater than OE/AM or most shops will provide...The warranty I'm talking about even covers the repair if that shop goes belly up....so atleast give that some credance....









Quote:
Oh - and back to the DV/properly repaired issue for a minute ... how in the world does John and Jane Doe know if a vehicle IS properly repaired ? Answer: In most cases they don't. I
again EXACTLY so because they don't know we will AUTOMATICALLY say that there is dv simply by virtue of a repair? no....I say.....



Another thing that has always bugged me about this dv thing...let's say a 7year old car had ONLY a rear cover replaced, let's say for the sake of argument it's new oem....let's further say that the orginal one while needing replaced from this loss, was not in good condition prior to the hit, dings/scratches, even the paint or clear coming off of it, in other words it was an eye sore...(no betterment taken) so we replace this crappy cover (before the wreck) that in truth would've had a prospective buyer wanting to to pay less...now you're telling me he also has a dv claim, when in fact his vehicle is worth MORE post loss/repair? And it is, you can't deny that (worth more given the points in this example)........



Quote:
I hope everyon here understands that I am not tying to be combattive or condescending, I am merely tying to clarify, factually, a few issues that I've seen discussed here.


No one thinks that Alex you are a respectful poster and we welcome your opinions... Smile


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PostPosted: Sat Mar 01, 2008 2:31 pm   Post subject:   

Mike,

Quote:
It is a common argument used by the insurance industry. If you fix the car the way they estimate, and correctly, there is no DV. Well which way is it? The amount insurers pay based on their estimate or the correct way which is a matter of expert opinion based on which side of the issue you stand. If I fixed vehicles based on the insurer estimate instead of the repair invoice that the law says I must produce and become liable for, many cars would not be fixed properly.
Are you saying that you never get an acruate estimate from an insurance carrier? See I'm just not getting this, when I write a sheet before I 'lock' it, I go over it with whomever has the authority, are there supps some times? Sure, but by and large there are NO ARGUMENTS, I might have missed something, or the shop did, we discuss it and come to an agreement, it appears from all your posts that you don't think there is one adjuster out there with the knowledge to properly repair a vehicle...please make yourself clear on that point.......
Quote:
Insurers are looking for cheap fast repairs instead of quality repairs.
Well kind of, the insurer is looking to have the vehicle repaired quickly for the least amount of money, but you are dead wrong when you say ''INSTEAD'' of QUALITY REPAIR....and that's just plain not fair, to say that I (as a 'pd' adjuster, writing sheets all day) am not concerned with the quality of the repair..that is number one! PERIOD....I don't write to repair ANY car any differently than I would my own.....and to make it sound like there is absolutely no concern for the quality or more importantly the safety of the owners and occupants of the vehicle, well Mike that's just wrong, and the same as me saying, ALL body shop owners, lie, steal, cheat, charge for things they don't do, blah, blah, and are ONLY concerned with their bottom line, and to hell with the quality and safety of the repair, if the owner can't see it, butch it....I don't believe that nor do I think the majority of shops operate in this manner there are some though, just like there are some carriers that do business the way you are insinuating all do....
Quote:
There is a inherent problem when you have the fox guarding the hen house
And you don't see it as this if a repairer has an open check book, which is what it appears you want....just have the owner drop off the car, and when it's done I'll call you and tell you how much it costs? No options nothing? I don't see how this could work....what other industry has this? What a sweet deal...I'm not saying that you wouldn't be by the book Mike, but you and I both know this would lead to horrificly high premiums.

There has to be 'someone' policing the repair, otherwise we'd be painting the entire car, to match because we put a fender or bumper cover on the car Mike...
Quote:
the premise of diminishment in an acv policy.
how so? Also you have to remember when you are comparing an auto vs homeowners policy that the h.o. policy is not always an acv as many have replacement cost endorsements, as well as guarantee rebuild, etc....not the same at all.


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PostPosted: Sat Mar 01, 2008 5:12 pm   Post subject: We could beat this horse from today til this time next year.  

This will probably be my last post regarding this topic as it probably does not answer questions that consumers really understand and it has ventured away from the original discussion. Since this forum is to benefit consumers and vehicle owners, our discussion serves no purpose for them rather than to see their is a devide between the insurance and collision industry. Insurers should never have been allowed into the collision industry to be able set controls on pricing and practices, but too many collision owners thought that a partnership may be the best way to serve mutual customers.



The insurance industry knows that there are more shops than vehicles needing repairs. The odds are in the insurer favor, knowing that they can dangle a relationship for the promise of referrals and some shop will take that agreement even if it means low profit margins that will drive them out of business. The collision industry does not owe the insurance industry and endless source of cheap labor so they can provide cheap policies. Something has to give and it is happening. Many shops operating on fumes and cash flow will go out of business. Those that survive will ultimately be able to price their services comparable to other trades using similar skillsets. When there are insufficient shops to service those contracts of repair for insurers, the day of the insurance industry dictating to us how to repair vehicles and for what compensation will cease to exist. And yes insurance rates will go up or your corporate profits will diminish. If our industry had been allowed to be indexed to the cost of living over the last 30 years, shop rates would have been exceedingly higher and deservedly so.



From my perspective, I do not believe the insurance industry has a right, obligation, or legal standing to tell me as a business person the method or cost to repair a vehicle for whom I have a contract with the owner of that vehicle.



You can choose to pay based on your investigation, the amount you feel is required based on policy and state statutes to the vehicle owner. It may be more or it may less than my invoice. It matters not to me and many other independent business people as we recognize that we are not obligated to negotiate the terms, conditions, or the costs of repair based on a contract that we are not a party to.



Nearly every estimate that a consumer brings to me is deficient to properly restore a vehicle. I have a vehicle in for repairs now, that my original estimate was 6200.00. the insurer estimate was for 3400.00. When I realized that the vehicle was close to a total loss, I spoke with the owner and asked what their preference was. Did they want to repair if possible or allow it to be totaled after they presented the insurer our cost of repairs. They chose to repair. I located some used parts, I personally made a concession to the vehicle owner to repair some things that should have been replaced to properly restore so as to keep the vehicle from totalling.



All said and done, the insurer paid the vehicle owner based on my invoice which was around 5800.00. Had the vehicle owner (third party) accepted the insurer check and estimate as the cost of repairs and traded that vehicle in, they would have been shorted 2300.00. This is typical and not uncommon as insurance adjusters and hired appraisers are told to write only what they can see from the outside.



There was a study conducted by a collision repair group that took insurer estimates and compared them to final bills. The consensus or only conclusion that could be drawn as to why insurers underpay initially on claims was that it was either intentional or from the lack of training and experience in understanding the repair concept. We must conclude that if the insurer only paid based on their initial appraisals, claimants( both first and third party) are being taken advantage of if they do not repair their vehicles or accept only what the insurer is willing to pay based on their investigation.



I don't lump all adjusters into the same group as far as being dishonest or unqualified. However, if you ask me whether an appraiser or an adjuster that works for an insurance company is allowed to use their acquired knowledge and training to write an estimate that is accurate, complete, and totally unbiased, I would say most are not permitted to do so. You can not write an unbiased and accurate estimate if you are restricted by company criteria and guidelines that only allow the vehicle owner partial funds. The only reason a company appraiser should be allowed to inspect the vehicle is because the policy requires that they be allowed to inspect the damage.



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