Changes in the Threshold for Totaling a Vehicle Last April, for the first time in nearly a decade, new passenger car sales overtook new SUV sales, mainly due to the spike in gas prices. Although gas prices have come down, the consumer move to more gas-efficient vehicles is seen to be permanent and the market value of a gas-guzzler has tanked. The threshold for when this vehicle will be declared a total loss has also dropped. The insured wants to fix the vehicle after the accident but the adjuster sends him a check for the market value. Oftentimes that check will not even cover the balance on his loan. He can’t even keep the car unless he buys it back from the company. We will let you explain the deal to him. What are the policyholder’s rights? I have been studying just that as I wrote my latest self-study CE book: The Collision Loss: Total or Repair. I reviewed how a total loss is handled by the industry and also the issues surrounding a vehicle repair: betterment, after-market parts, and diminution in value. The final section addresses auto issues such deciding on deductibles, when to drop collision, and problems when repairing the rental car. The book is approved for 3 CE credits in Wisconsin & Ohio and approval is pending in Michigan. I will have copies with me until the end of the year or call Angela at 800-326-4741 for more information.
Residential Salvage Recovery (RCR) What is new in claims? Companies have begun experimenting with Residential Salvage Recovery, RCR. While salvage programs have long been used on large commercial losses, carriers have not taken the same approach on residential and small commercial losses. With these losses, the carrier will often pay for the loss of an item and then leave that item with the insured, allowing them to dispose of it. Historically, salvage attempts by carriers have not been efficient or effective. Now the industry is taking a second look at the issue, assisted by new technology. A recent article in Claims magazine cites the example of a juke box for which the carrier had paid a total loss. The policyholder asked to keep the item for sentimental reasons and offered to pay the company $300 for the salvage. The carrier, using an auction site available, discovered the item was worth $1500 even in its damaged condition. When presented with this information, the insured agreed to pay the higher amount. If one of your companies starts the practice, learn how it works and how it impacts a typical claim. If the practice catches on, look for it to emerge as a specialized area of claims handling. If you see it popping up, let me know. Then I can go shopping on the virtual salvage mall for your Christmas present next year. Must-Read Book “Mistakes Were Made (but not by me): Why we Justify Foolish Beliefs, Bad Decisions, and Hurtful Acts”
Written by Carol Tavris and Elliot Aronson
In putting together our public seminar schedule for the New Year, I have added new “applied ethics” courses. One of those classes is “Let’s Stop Making Excuses!” On a recent visit to Barnes and Noble, this book found me, somehow knowing it was something I needed. It has challenged me to analyze some of the ruts I have created in my life and look for a better way to do things. I am now applying the concepts to the challenges agency people face. It is a new paradigm. Read the book and then clue me in on some areas we should be challenging conventional wisdom in our work. Quote of the Month
“What we refer to confidently as memory is really a form of storytelling that goes on continually in the mind and often changes with the telling.” William Maxwell
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