The Texas House Insurance Committee will hold a public hearing Sept. 6 to “review consumer rights and valuation in auto and homeowners policies,” and the state Department of Insurance is now aware of the changes. Auto Claims Specialists and the Auto Body Association of Texas (ABAT) want when it comes to independent appraisals.
The committee meeting will begin at 10 a.m. central time. Commercial industry practices and interaction with insurers and consumers will also be reviewed. Evidence will also be heard, depending on the meeting schedule.
TDI Deputy Commissioner Luke Bellsnyder recently met with Automobile Claims Specialists Managing Director Robert McDorman, ABAT Chairman Burl Richards and two independent valuation firms to discuss issues relating to the right to the evaluation. The rating companies asked McDorman to keep their names confidential.
Many auto insurance policies include an appraisal clause that allows policyholders to invoke it to have third-party appraisals performed when they disagree with their carrier’s appraisal of their vehicle. Low appraisals often result in total losses on vehicles that could have been repaired. The carrier and the policyholder hire an independent appraiser and if the appraisers cannot agree, an arbitrator is chosen to make the final decision.
All four parties told Bellsnyder that independent appraisals benefit both policyholders and insurers and that TDI should provide a separate list of arbitrators for personal property claims. It currently only provides a list of real estate claims, which McDorman finds “very misleading.”
“Whether mandatory evaluation becomes part of Texas law or not, that needs to be resolved,” he said. “It’s a void in their presentation of the evaluation process.”
Rating companies involved in the conversation agreed that not having a list is a problem, McDorman added.
While TDI did not commit or agree to anything at the meeting, according to McDorman, Bellsnyder said he would raise their concerns with Commissioner Cassie Brown.
Bellsnyder did not respond to Repairer’s Driven News request for comment. The department’s media relations office said: “TDI’s consumer publications generally remind consumers to consider seeking an appraisal for home, auto, TWIA, and flood claims issues,” and provided the following links:”What if my insurance doesn’t pay enough?“Get help with a car insurance complaint,” and “Get help with an auto, home, life/annuity or other insurance claim.”
Richards told RDN that ABAT maintains that the right to an assessment is a mandatory policy provision. He recommends appraisals at his own store to help his customers who are running out of days their rental vehicles will be covered by insurance and, because of this, feel pressured into accepting an unacceptable repair pushed by their carrier.
“From ABAT’s point of view and from a bodybuilder’s point of view, this [appraisal] is really a great option for the insurer when there is a repair dispute because on the side of the collision center there is friction,” said Richards. “You submit a surcharge to an insurance company and the insurance company these days, nine times out of 10, doesn’t even come to see the vehicle and they cut your surcharge sometimes 50, 60, 70%, and a lot of things they deny that they are needed for procedures – OEM recommended procedures. So instead of fighting with an insurance company, what we do is we…give them [customers] the ability to exercise their insurance rights and to exercise their right to an assessment.
“Often, … we just make these repairs to the vehicle and then let the impartial evaluators make their decision. I’m still comfortable with that decision. Sometimes that might not be exactly my repair plan amount; sometimes it’s less, sometimes it’s very close, and in some cases it’s a bit more. But I can go ahead and report my techs to work, get the parts and have the vehicle delivered, so that’s a great option for the consumer and it’s a lot cheaper for them than having to go to court .
A roster of arbitrators would provide consumers and carriers with TDI-approved appraisers, whom McDorman, among other qualifications, would like those on the roster to hold personal property appraisal certification and act as arbitrators on at least 12 personal property claims a year, he said. His recommendations will be passed on to Bellsnyder at his request at the meeting.
“Most of the time, the expertise missions that our customers come to us to help them are not limited to monetary compensation for their loss, but are directly linked to the repair procedure authorized by the carrier, which does not is not a safe procedure and an appropriate repair,” McDorman said. “The appraisal process removes the inexperienced field appraiser or desktop appraiser from the carrier, as well as the collision facility and places that appraisal decision in the hands of unbiased professionals who can come to an agreement of safe and proper repair. It is imperative that the referees have the same training and be of the same mindset.
He added that, although it has not yet been established by the courts, he believes that the independent evaluators and arbitrators are responsible for their decisions because “they make the binding decision on the appropriate repair procedure for this car”. .
ABAT also agrees that umpires involved in evaluations “should have knowledge of what an appropriate remedy is”, he added. When it comes to insurance policies, they’re often written in favor of the carrier, so “they control the repair,” Richards said.
“From a repairer’s perspective, we are responsible for that repair, not the insurance company. … We just feel like it’s something that needs to be addressed.
Richards added that TDI is “disconnected” on the meaning of the right to an expert opinion.
“Thanks to the review clause, that would also get them out. TDI should be the biggest cheerleader up there for this to stop running out of stores because they never do anything about these situations. …I answer these calls every day from body shops all over the state. It’s not just me. We represent those other stores. It’s extremely frustrating and it’s definitely time for something to change.
State Farm is the only carrier in Texas, to McDorman’s knowledge, that does not allow for independent valuation. Due to policy changes that were made about five years ago, if State Farm chooses to repair a vehicle based on unsupported documentation and not OEM repair procedures, there is no mechanism in state and policy to challenge the repair, according to McDorman and the policy document he provided.
The original policy is quite simple. It states that if State Farm and the insureds cannot reach an agreement on the amount of the loss, either party may require an appraisal in which each would hire its own appraiser who will select an arbitrator and then an actual redemption value is reached and is binding. . The policy changes still allow for the right to appraisal, but restrict its use only to determining actual cash value instead of CAV and other loss elements, such as disputes over repair procedure.
“State Farm has clearly put itself in the position of a repair professional and that cannot be allowed,” he said.
Outside of Texas, McDorman has spoken with several state insurance commissioners across the United States who have said lack of assessment rights and undercompensation are national issues.
“This is a problem of epic proportions and we just need to keep beating the drums. … It’s human nature to criticize what you don’t understand, but as leaders in our business and leaders in consumer safety oversight, we have a judicial responsibility to educate anyone who will listen, and those who aren’t listening, we have to keep talking.”
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