Some examples of automobile insurer fraud and unfair or deceptive trade practices include:

-Forcing of claimants to accept non-OEM replacement parts.  An insurer may negotiate with a third-party claimant, but they cannot force a third-party claimant to accept non-OEM parts.  With respect to first party claimants, an insurer may limit by the terms of the policy the insurer’s obligation to only pay for non-OEM parts of similar equal performance, fit and quality.  With respect to first party claimants, insurance regulators need to take action to ensure that insureds can purchase coverage that will truly indemnify.  In addition to forcing the claimant to not have a fully restored vehicle, the insurer refuses to pay for diminution.  Not only does failure to replace damaged parts with OEM parts further diminish the value of the vehicle, but also puts prospective buyers on notice that the vehicle has been in a collision.

-Forcing insureds and third-party claimants to pay betterment/depreciation for covered repairs to their vehicles.  In many instances these charges are sprung on the vehicle owner when they go to pick up their vehicle.  The owner faced with storage charges and loss of their vehicle often pays the betterment/depreciation deduction.  The owner will pay a betterment/depreciation charge not knowing that the insurer has a duty to calculate and document with precision the amount of betterment.  Further, most states require for betterment/depreciation to be allowable that: 1) the value of the entire vehicle to have increased; & 2) the parts replaced be subject to replacement during the normal life of the vehicle (light bulbs, belts, oil and air filters, etc…).

-Refusing to pay for diminution in value for either first or third-party claims. While potentially legal with respect to first party claimants, diminution in value is owed to a third-party claimant, and insurers consistently refuse to pay for diminution.  Insurers are free to negotiate with third-party claimants over the amount of diminution. Insurers do not negotiate, they steadfastly refuse to pay, and tell claimants they will have to sue the insurer to collect the diminution, knowing that their tortfeasor/insured owes the claimant the diminution, and that it is not economically feasible for the claimant to institute litigation just to collect the diminution in value amount.

-Telling third-party claimants that the only thing they are entitled to is a replacement part that fits. This is a clear misrepresentation under well-established law regarding the rights of a victim against the tortfeasor, and consequently their liability insurer.

-Issuing policies with declaration page policy limits such as “$30,000 or actual cash value,” and when the insured makes a claim (where the property was hardly used between the time the policy was issued and the loss occurred, claiming that the actual cash value of the item is only $8,000). The insurer charged a premium appropriate for their accepting a $30,000 risk, yet subsequently claimed that their liability was less than a third of the risk they accepted and charged a premium for. This practice is tantamount to post claim underwriting, a practice which is illegal in most states. We settled this claim on behalf of the insured for $30,000.

-Using economic coercion to force the claimant to use their preferred repair vendor. Many states require insurers to give claimants a choice in repairers. Other states require insurers to guarantee the work of repairers they selected. Insurers illegally control their costs by getting bids from repairs shops that are owned by one or more insurers; Shops that will perform the repairs for less than the market rate. Another scenario is where the insurer insists that it will only pay the labor rate of their preferred repair vendor even though that vendors has reduced the labor rate and inflated the hours allowed for the repair (i.e., the total cost is the same but the insurer refuses to budge on the labor rate).

-Many policyholders purchase replacement/substitute vehicle coverage so that while their vehicle is being repaired, they will be insured for the cost of a rental car. Despite the already meager allowance by the insurer, some insurers who take the car to get repaired by one of their preferred repair shops, will take longer to repair the vehicle than they will pay for you to have a rental car, leaving the insured to pick up the difference.  Sometimes this is due to the preferred repair shop having difficulty finding a junkyard part to use in repairing your vehicle. Once again the insurance company realizes that the usually minimal amount $100-$200 makes it not worth the insured’s time to file a suit in order to recover the difference.