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Wednesday, 21 December 2011 20:58

Delray Beach, FL, Shop Owner Opposes GEICO’s 10% Charge on Domestic OEM Parts

Eddie Quintela wants to know why GEICO is charging his customers a 10% deductible on their domestic OEM parts, regardless of fault, and in addition to regular deductible and/or applicable betterments.

Quintela asks why GEICO is apparently assessing this fee in Palm Beach county but not in nearby Polk county; and why is it that an insured driving a foreign made vehicle is not deducted 10% for OEM parts, but one driving a vehicle made in the United States is made to pay 10% extra for their parts?

Quintela sent his first email to GEICO’s Dan Maloney, his local claims supervisor, on Dec. 7:

Dan, I called you twice and left two voice messages and haven’t heard back from you yet. I am writing in regards to the 10% parts discount that you have taken from the estimate on claim # 0088707650101145-01. As you are aware of, we do not offer any parts discount to Geico or any other insurance company which we do not have a direct repair agreement with.

I spoke with our customer, your insured and asked them if there is anything in their policy that states that they are responsible for anything other than their deductible or any applicable betterments. As per Mrs. Wrubel, she is unaware of anything in her policy that states that she will be responsible for anything other than her deductible or applicable betterments. She stated that there [was] nothing stated about being responsible for 10% of the OEM part costs.

Can you forward either her or me the part of her policy that states that the insured will have to pay 10% of the OEM part costs? If you cannot provide that, we would appreciate that you complete a supplement removing the 10% deduction. I hope that you will respond promptly to this email so that we can get this matter settled as quick as possible so that we can better serve our mutual customer.
The following day Quintela copied the previous email to Maloney’s supervisor prefacing with the following text:

Good morning Mr. Nicely,
My name is Eddie Quintela. I operate a collision repair facility in Delray Beach, FL. I am writing to you to see if I can obtain some assistance with an issue that we continue to have here in Palm Beach county, FL. I am forwarding you an email that I sent to your local claims supervisor Mr. Dan Maloney.

Your company continues to take a deduction of 10% off of any domestic OEM part on all your estimates. This leaves your insured’s to pay an additional out of pocket expense besides their deductible and/or any applicable betterments as described in your policies. I have yet to see where this additional deduction is spelled out or listed in your automobile policy. What is even more troubling is that it is also applied to claimants estimates where a Geico insured is at fault, thus placing an expense on a claimant that had no fault at all. Mr. Maloney did call me this morning to inform me that Geico ‘s position will not change and that they will have their insured pay the additional monies. As I asked Mr. Maloney in my email, can you please show your insured or me where it is written in your policy that they will be held responsible for this?

I believe that Geico wants to treat every customer the same in every aspect, but how can an insured in Palm beach county not be made whole after a loss but an insured in Polk county, FL, can? How can an insured that drives a foreign made vehicle not be deducted 10% for OEM parts, but one that drives a vehicle made in the United States be made to pay 10% of their parts? My customers that own and insure American vehicles are infuriated when I have to explain that they owe additional monies on top of their deductible because they drive a domestic vehicle.

Mr. Nicely, I have already taken one of these claims to court and was awarded a judgment for the 10% and attorney fees. Your company has asked for a stay on the judgment and we are scheduled for another hearing on January 9, 2012. The 10% that we are suing for in that claim was a mere fraction of the attorney fees that we incurred and ordered to be paid by your company. I cannot see how that makes a sound business decision by your local management. It not only shows poor customer service on your company’s part towards their own insureds, but it deteriorates relationships between your company and the hundreds of collision repair facilities here in south Florida.

If you can look into this matter and advise me if there is anything you can do, both your insured and I would greatly appreciate it. I would like to avoid any costly legal proceedings if at all possible. I would like to thank you for your time and I look forward to hearing from you.

Quintela then received a phone call from Dan Maloney, the local claims supervisor, who told Quintela that the domestic OEM parts discount was customary in the market, a surprise to Quintela, who called several local shops and dealers, then emailed back seeking written confirmation:

Good morning [Dan Maloney],
Thank you for your call yesterday. As per our conversation; you told me that your position on the 10% domestic OEM parts discount will not change and that it is customary in our market. I must say that I was taken aback by that statement. Besides Geico, there are no other insurance companies (that I am not a DRP for) that take this so called customary 10% discount. Since you told me that most shops and dealers accept this, I decided to make some phone calls to other shops and dealers and ask them if they offer this 10% discount or if Geico just “takes” this discount. As I thought, everyone that I spoke with told me that Geico just takes the 10% discount. I spoke with 2 shops in particular that stated that they must always charge your insured the 10%.

Since you made the statement that this is customary in the market, I have begun to wonder, when was the last time that Geico surveyed the “market”?

I have yet to ever fill out or participate in a Geico survey. I also asked every shop owner and manager that I know if they ever filled out a Geico survey and I was astounded to find out that no one has ever been surveyed. If you never surveyed a shop in the “market,” how can you make such a statement? If I spoke to over two dozen shop owners and managers and none offer this 10% discount, how is it “customary” in our market?

Mr. Maloney, I am willing to team up with Geico and do a survey of the south Florida market. Let the market speak for itself and let’s finally put this issue to rest. If you are confident that your position is correct and customary, let’s conduct a true survey and find out. Let the facts speak for themselves and we will have the correct data to determine what is fair and reasonable in our market.

Quintela then followed up with a copy of this email to Supervisor Nicely asking for written confirmation of the policy and repeating his offer to help GEICO with its survey of the market:

Good morning Mr. Nicely,
I emailed you last week regarding an issue that I am having with your company. I have yet to receive a response in writing from either you or your local claim supervisor, Dan Maloney. I do not believe that this is typical of you or your employees, but a response in a timely matter would have been appreciated.

Mr. Nicely, I also copied you on an email that I sent to Mr. Dan Maloney regarding Geico ‘s survey practice and idea of the local market area. If you or your company disagree with my findings or have information to illustrate that my findings are not accurate, than please respond in writing as to any inaccuracies or differences of which Geico may have within five, (5) business days. Should I receive no written response within this reasonable time frame than it will be agreed that the aforementioned facts are true and accurate as reflected herein.

I look forward to hearing from you. I hope that we can work this matter out without any further complications. I thank you for your time.

GEICO responded with a hand delivered letter dated Dec. 13 saying:

Dear Mr. Quintela,
The e-mails that you sent to Mr. Nicely have been forwarded to our attention.

Our experience is that we reach an accepted price on the vast majority of claims in your area. We rely on our experienced staff to let us know when accepted prices cannot be reached and it occurs very infrequently. When we are unable to reach an agreed price, we have been able to resolve those matters through the appraisal clause of the policy.
Tony Lodato
Auto Damage Manager [Geico]

Quintela gave his last response, as of this writing, via email:

Mr. Nicely,
Thank you for forwarding my emails to your local auto damage manager, Mr. Tony Lodato. Please see the attached written response that was handed to me by Mr. Ladato & Mr. Dan Maloney yesterday, 12-14-11. I would have preferred if you had contacted me directly, or had someone other than a local manager respond to me since they are the root cause of my concerns. I would like to know if you have read and approved of your company’s response to my concerns?

Mr. Nicely, your Auto damage manager, Tony Lodato has incorrectly addressed the appraisal clause as a possible solution to my concerns. The appraisal clause would come into play if we did not agree upon the method of repairs, labor times, or if we had a disagreement over repair or replacement of a part or parts. We have no such disagreements. We are on the same page as far as these items go. What the concern is over, is the fact that Geico takes a 10% discount off of domestic OEM parts that we both agree need to be replaced. I still find it difficult to understand how Geico can take a discount on something that we do not offer.  An insurance company, I understand, is to fully and properly indemnify an insured for their entire loss (less their deductible if applicable); but deducting 10% off of parts is not indemnifying your insured fully or properly, but is a breach of the policy contract and an act of bad faith.

I am still baffled by the logic which your local management conducts itself by. How can an insurance company take a 10% domestic parts discount when it is never mentioned in the policy? What is worse is when you fail to protect your own insured as stated in the policy when they are the tortfeasor [wrongdoer]. How can Geico justify having a claimant pay 10% of their parts when they were a victim of your policy holders’ negligence? That would cause a claimant to pursue legal action against your policy holder, and therefore causing another breach of contract on Geico‘s behalf. I believe that your local management has been breaching the policy contract and acting in bad faith in regards to this issue. I know that I have spoken to well over two dozen collision repair facilities and all seem to agree that this is taking place in on a wide scale throughout the south Florida area.

I have offered to work with your company to do a survey of the market and determine what the true fair and reasonable labor rate and charges are.

As I have stated in my past emails, I have yet to find a collision shop that is not a direct repair shop that offers this discount to Geico, they have all stated that Geico just takes it. I am respectfully asking for your intervention in this matter so that we can avoid any further complications. I would like nothing more than to arrange a meeting with you, your local management, and a group of my peers to sit and discuss this issue. I would like to be able to serve our mutual customers in the future without having to expose them to these unnecessary difficulties. We both know how hard it is to keep and retain customers, I can’t imagine a Geico customer would want to renew their policy after having to pay 10% of their parts costs on top of their deductibles; especially when it is not written in their policy contract. That also brings up the fact that I have yet to be shown where in Geico ‘s policy it states that the insured would be responsible for 10% of their parts cost if they drive and insure an American vehicle. I have a copy of your policy and have not been able to find this in it.

Please feel free to contact me at anytime to discuss this further. I do hope that we will be speaking in the very near future.

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