Who benefits?

Excerpts from material posted on the website of Missouri Attorney General Jay Nixon (www.ago.state.mo.us) states that he "…and 48 other state Attorneys General reached an agreement with State Farm earlier this year over the company's reported failure to make certain the (totaled) vehicles were properly titled. The agreement covers approximately 30,000 vehicles nationwide, including the 265 in Missouri, that should have been designated as salvage on their titles.

State Farm is paying $40 million to the consumers who currently own the vehicles. Those owners were recently contacted by letter with information about the settlement by a third-party administrator. The final amounts received by consumers will depend on the current value of their vehicle and how many consumers elect to participate in the payment program. Nixon said the settlement does not preclude those consumers from rejecting the insurer's offer and seeking their own legal recourse, nor does it affect the legal rights of previous owners of the vehicles."

If my math isn't too rusty, it would seem this insurer has arranged a pretty lucrative deal for themselves here (an average of only $1330 reimbursement for each vehicle they failed to report as totaled), while leaving a snarled mess to unravel for state attorneys general and unaware purchasers of these vehicles. Forty million dollars is a drop in the bucket of loss for vehicles that at best are worth no more than 50% of their market value, once totaled. And is this insurer or the attorneys generalof each state going to track down each of these vehicles to reissue titles, and mark the doorjamb of each vehicle "totaled?"

Almost escaping detection, the insurer yet came away looking like a true good neighbor to citizens not directly affected, while profiting to whatever extent from reselling vehicles, many of which likely were otherwise destined for a date with the wrecking yard. With the exception of two states, all insurers and citizens are required by law to report when a vehicle is declared a total loss, some states with very strong language to this end. And since the 48 state attorneys general who agreed to the insurer's self-proclaimed innocent error and settlement almost unanimously accepted its position that it did not "knowingly" commit any illegal acts, in so doing did those attorneys general therewith also waive the right to further prosecute State Farm for criminal charges for breaking the law?

Blind acceptance?

For undisclosed reasons these attorneys general just accepted this insurer's plea of innocence. Some would say they made them look quite incompetent. But again, the point is, what good is it to have laws if they aren't enforced, or only selectively enforced? Let the common citizen or local business owner give a false statement - such as including in an estimate of repairs a dent in the panel next to the panel that was damaged in an accident - and that criminal act makes the front page of the local papers for fraud.

Exact wording in laws is critical; inexact wording leads to misinterpretation. The Massachusetts Code of regulations, 212CMR2.04(e) states, "The appraiser representing the Insurance Company and the registered shop selected by the insured to do the repair, shall attempt to agree on the estimated cost for such repairs." This regulation would seem to leave open to debate whether or not an unregistered shop in that state can be held liable. And, "…shall attempt to agree on the estimated cost for such repairs" sounds good on paper, but where is its teeth? And what constitutes an "attempt to agree" depends on which side of the negotiation fence one is on.

What recourse is there in this law if both parties do make an attempt to agree, and yet there is no agreement? What constitutes "estimated cost for such repairs" is seldom the same between shop-generated and insurer-generated estimates of repair. An estimate is exactly that… at best, an educated guess. So, would it be totally without merit for one to come to the conclusion that the abovementioned law might purposely have been left ambiguous so as to legally enable insurers to steer consumers? How has this law assisted repairers to work for a fair, equitable, and safe repair? And what recourse is there for repairers in states with loosely worded laws and statutes?

Laws damage consumers and industry

Other states have similar laws that are, arguably, equally damaging to consumers and the repair industry. Iowa law has, under its unfair methods of competition and unfair or deceptive acts or practices statutes, laws dealing with misrepresentations and false advertising of insurance policies. "Making, issuing or circulating, or causing to be made, issued or circulated, any estimate, illustration, circular, statement, sales presentation, omission, or comparison which… misrepresents the benefits, advantages, conditions, or terms of any insurance policy."

"Misrepresentation" is sometimes hard to nail down in words (thus the long list of defining terms included in this law). Yet how seldom insurers are called on the carpet for this violation.

Another subsection of this Iowa law warns insurers to not produce "… False information and advertising generally (such as ) making, publishing, disseminating, circulating or placing before the public, or causing, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public in a newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio or television station, or in any other way, an advertisement, announcement or statement containing any assertion, representation, or statement with respect to the business of insurance or with respect to any person in the conduct of the person's insurance business, which is untrue, deceptive or misleading."