Shop Talk
Welcome to the Gold Coast Auto Body “Answer Blog,” where we periodically post news updates, technical articles, and other items of interest to our customers and friends in the luxury car community.
Category: Repairs
Total Loss and Diminished Value Claims: What they mean to you
Overall, auto insurance is a good value proposition for every car owner. The premise is that for an affordable monthly sum, you get peace of mind that if anything happens to your vehicle it will be repaired or replaced.
But for all the benefits they provide, insurance companies can be frustrating when it comes to getting a fair appraisal for total loss claims and diminished value claims.
Understanding these two terms is the first step to getting the most value from your insurance claim after an accident. So let’s take them one at a time.
Total Loss Claims
Insurance companies label a vehicle as a “total loss” when the estimated cost to repair the car or truck exceeds what they deem the vehicle is worth.
According to Auto Claim Specialists, a national public insurance adjustor agency with whom GCAB works on a regular basis, at least 50% of the cases determined to be total losses by insurance companies are incorrectly ruled. This is because of the way that the perceived value of the vehicle is calculated by insurance companies. Remember, they are in business to make money, so sometimes you need to take extra steps to ensure they are doing right by you in all ways possible.
In the case of an accident that insurance companies advocate as a total loss, we highly recommend getting a comprehensive auto appraisal report by an independent appraiser. Such reports provide in-depth analysis of what your specific car was worth at the time of the accident, rather than what cars like yours are generally worth.
The difference can be substantial. In fact, 25-30% of the time your vehicle may actually be deemed repairable and not a total loss. And even if it’s not repairable, you’ll know the real replacement value to ask for.
Diminished Value Claims
“Diminished value” refers to the loss in market value from a vehicle’s pre-wreck fair market value due to damage that requires cosmetic and/or mechanical repairs.
In layman’s terms, this boils down to the fact that a vehicle that has been wrecked and repaired will not sell for same price as a like-kind vehicle that has not been in an accident.
According to Robert McDorman, founder and proprietor of Auto Claims Specialists, 43% of people surveyed would not buy a car that has been in a wreck and repaired. More to the point, 45% would only buy a post-wreck car if the price were deeply discounted.
Which is why in case of an accident where your car has been damaged and the other driver has been deemed at fault, you may be entitled to the monetary difference between the value of your vehicle prior to the accident and what the diminished value of the car is after repairs.
Of course, any accident can be traumatic, whether it is your fault or not. The last thing you need is for your insurance company to add to the trauma. Remember, part of what you’ve been paying them for is peace of mind. Make sure they deliver by correctly calculating the total value of your loss, and paying the full amount you are entitled to.
This article can help you understand your options in the case of a total loss. Similarly, this article will help you understand how to get an insurance company to pay the full amount due in the case of a diminished value claim. If you still have questions, contact GCAB. We’ll be happy to help you navigate the process.
Direct Repair Programs: We Don’t Do Them. Here’s Why.
In our ongoing discussion of auto insurance issues, today’s topic is DRPs, short for “direct repair programs.” In case you’re not familiar with the term, a DRP is a relationship formed between an insurance company and autobody shop in which the insurer guides business to the shop in exchange for adherence to certain service guidelines involving, among other things, labor rates and limits and replacement parts.
The benefits to both parties are self-evident: the insurer is able to control costs, while the shop receives a steady stream of customers. The benefit to those customers, however, is less clear.
The biggest problem is quality. Many shops find the rate structures and labor limits of many DRPs to be incompatible with doing the job right. The same holds true for OEM replacement parts, which few DRPs require.
Another problem is the estimating process. We’ve already covered the inadequacies of photo-based estimating, which nearly all major DRPs rely on. But beyond that is the practice of systematically underestimating work in order to land a given job – often at the direction of the DRP insurer. According to a recent article in Body Shop Business, many shops will write artificially low estimates to “get the keys.” In other words, they are focused on getting your car in your shop and then upping the cost.
That’s not to say that all DRPs are inherently unethical or incompatible with quality work. But we’ve found most to be incompatible with our way of doing business, the caliber of cars we work on, and customers we serve.
Which is why GCAB does not participate in any direct repair programs that in any way compromise our ability to deliver the best possible work at a fair price. We simply want to do every job right – not as defined by a third-party insurance company, but according to the standards of auto manufacturers, our technicians, and of course, our customers. It’s not the easiest way to do business these days. But it’s the best.
The Reality of Photo-Based Estimating
When it comes to repairing your car, you want the best work you can possibly get. But let’s face it: your definition of “best” probably isn’t the same as your insurance company’s. If they’re like most, they’re less interested in quality than they are in speed – or efficiency, as they like to call it. Which can lead them to do things that are downright detrimental to the integrity of the repair process.
Case in point: photo-based estimating.
In photo-based estimating, pictures are taken of the damaged vehicle and submitted for a virtual repair quote. Seldom is the photographer a trained claims adjuster. More often it is you, the car owner, taking the pictures yourself.
While there is the benefit of not having to take your automobile in for an estimate, the positives of photo-based estimating pretty much end there. The process only captures the most obvious damage, and doesn’t measure such important details as angle of impact and energy path at all. And the more expensive the car, the more costly the unseen damage is likely to be.
Of course, that hasn’t stopped more and more insurance companies from jumping on the photo-based estimating bandwagon and using it to help them cut costs – and people. Last year, Allstate alone eliminated more than 500 claim adjusters from their payroll.
During the Collision Industry Conference in Palm Springs earlier this year, naysayers took to the mic to decry the shortcomings of photo-based estimating and claims that it increases efficiency. Several articles in the industry press back them up. According to this report in Body Shop Business, Clint Marlow, director of claims innovation for Allstate, acknowledged that the best way to gain a full scope understanding of what damage has been done is to disassemble the vehicle – not just take a picture. And this piece in Autobody News points out that while a photo estimate may be effective to get the ball rolling, it should by no means be seen as an end-all, be-all solution.
The bottom line is this. A picture may be worth a thousand words, but it can’t compare with a hands-on expert inspection of a damaged vehicle. If you’re like most GCAB customers, you’ve made a very significant investment in your car. If it has to be repaired, you want it done right.
Our Customers Weigh In
We take great pride in the work we do here at Gold Coast Auto Body, and we’re not the only ones. Read a few of the recent endorsements we’ve received from thousands of satisfied customers who know first-hand the quality and commitment we bring to every job we do.
