Today, as in the past, there are three primary data base providers for total loss vehicle valuations. Each individual state allows for their use by the various insurance carriers, to provide insurance settlements in their respective state. Based on what we continue to see, it is our opinion that licensing is still a rubber stamp approval with minimal, if any over sight. There is also one other consistency, the excuse used by insurance carriers when questioning information provided on a total loss report, “they are licensed by the state”.
In the past, we have commented on the use of Data Base Systems used by insurance carriers in determining total loss vehicle valuations. Based on our continued experience in dealing with these systems while assisting clients, it is time for an update to our prior observations.
Total loss valuation reports provide comparative for sale or sold units to help determine the actual cash value (ACV) of the totaled vehicle. These reports are often unchallenged or impossible to understand. One inherent flaw is the ability of data base companies to present prior unit sales as a basis for current comparable valuations. However, those comparable unit sales can be as much as 90 days old and therefore do not reflect current data. It is difficult, if not impossible, to determine how those comparable units can be used for the current vehicle valuation.
While carriers make deductions for conditions noted on the total loss vehicle, the same cannot be said for the comparable units. At no point does the valuation report disclose prior damage to the comparable vehicle, a rebuilt title, prior accident history or if in fact if the vehicle is in operating condition. We have seen what would be called “a parts car’ used for comparative purposes, but was listed as for sale. How can that be a comparative vehicle for valuation purposes?
ZB Negotiations reviews total loss valuations daily and works to understand what is being presented when determining how fair a settlement is. Picture the consumer who is insured by a carrier and receives one of these valuation reports. What is their first impression? Based on our experience, and many discussions with clients, their initial reactions are confusion and acceptance. “It must be correct or the insurance company would not have provided it to me”.
The insured is lulled into this belief by the carrier, who on first and subsequent contact tells the insured to just sign the title and send it in the provided return envelope. Up to now it surely sounds like there is concern, a kind approach and an expression of caring. That kindness and understanding soon goes away when the insurance carrier is questioned about the value, and if it is a fair offer. In fact, that might be the time when communication by the carrier becomes more of a demand such as, “take your personal belongings out of the car and release it for salvage pick up”. This is usually followed by another demand, ”you need to return the rental vehicle tomorrow”. The lesson is simple, do not be fooled by what you might think is understanding and kindness.
In the past reports from one data base provider a detailed listing of options on a comparable vehicle basis. One carrier has now taken to sending comparable valuation reports that just list vehicles’ in a columnar manner, with no detail. When questioning the carrier, they claim that the detailed version is no longer available from the database company. That is a blatant lie, as every other insurance carrier obtains the detailed version from the same data base company. When this issue was surfaced to a state insurance commission for assistance in valuing a vehicle, they supported the insurance carriers story. Why is that the state’s response? This is just another example of the rubber stamp approach that states follow when dealing with insurance carriers.
The carrier noted above has now become emboldened in another state. In order to obtain a fair settlement on a recent total loss, we elected to use the appraisal clause for valuation purposes, and the insurance carrier has refused to comply. The carrier’s opinion is that calling used car dealerships and getting a verbal quote is acceptable in this circumstance. This obvious departure from mandated rules was brought to the state authorities who responded with, ”we have no authority to make the carrier comply with the law”. So why do we have an agency such as DFS in New York or in other states’ insurance departments, if they have no enforcement capabilities? Better yet, why is there a legal ruling by the Office of General Counsel in New York that directs specific types of treatment and is considered the legal precedent and guide?
For those who have never read their insurance contract, there is an option that is available for valuation purposes when you cannot agree on the settlement value. This is known as the appraisal clause and can be seen as the leveling method to arrive at a fair economic or settlement value. Using this method, both the carrier as well as the insured must have independent appraisals prepared and allow their representatives to agree on a fair unbiased value. This does not include using any data base system. Today, some carriers are attempting to get states to eliminate this option. If eliminated, the insurance carriers approach to providing its version of biased information would go unchecked.
ZB Negotiations uses the appraisal clause in obtaining fair financial settlement when necessary. Recently a carrier representative informed us that the Mitchell/JD Powers data base system was the equivalent of an independent appraisal that we had opted to utilize. If the carrier spent more on educating and developing its staff versus senseless commercials, we would not have had to insist that upper management explain the requirements and appraisal rules. We are now in the process of settling this claim as required. In those situations where you elect to use the appraisal method you can depend on a delay by the carrier in finalizing settlement. This is an old tactic by the carriers, to get you to accept their original offer.
Data base systems can attempt to present fair valuations for most vehicles. Unfortunately, this fair valuation rarely occurs when a truck is deemed a total loss and the data base system is the source for valuation. We have assisted many truck owners in obtaining fair financial settlements for their vehicle and have achieved settlements that in most cases exceed a 20% increase in value. This percentage increase has been achieved regardless of year, make, mileage or options. We caution truck owners to be suspect of the valuation of their vehicle if deemed a total loss and to seek professional assistance.
Unfortunately there has been little change or improvement in the valuation systems for total loss vehicles. Carriers appear to be bolder in their approach to settling claims fairly which is evident by their efforts to eliminate the appraisal clause and should alert you to their approach. States by their actions and lack of enforcement demonstrate their less supportive approach to helping the consumer either with interpretations or obvious violations.
Remember, ZB Negotiations is there to assist you in obtaining a satisfactory financial settlement. Do not just accept what a carrier tells you as fair. Our results prove the fact that we are fighting a battle for an appropriate financial settlement.