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Discussion Starter #1
A coworker of mine and I got into a "discussion" yesterday about insurance claims and how the money is to be spent.

His daughter backed into a tree and did $1800 worth of damage to her S10 (clear title, so no lien or anything). The insurance cut her a check for the $1800 minus the deductable ($100 I think). They are going to have the truck repaired at MAACO for $600 and pocket the rest.

I said that was BS, and borderline fraud, as insurance settlement money is to repair the vehicle back to its original value, not to line one’s pocket. He said the money is to use as he sees fit.

I thought that years ago, insurance companies stopped cutting checks directly to the individual to stop this practice.

So my question to everyone, is it morally correct to get a sub par repair and pocket the rest of the money? :2huh:
 

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PostSlut
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why not?

you don't have to get the car fixed.....

someone years ago backed into me in a parking lot in my 95 bird....I fixed it for as cheap as I could, bought a nitrous kit, and took my wife shopping.
 

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Discussion Starter #3
Here are my concerns:

If you had totaled out the car the next week, would you have pocketed the whole amount of the value of the car (with no damage), or would you have told them you didn't get it repaired and the value had decreased appropriately. Or if someone had hit you again and the appraiser added the original damage plus the new damage, would you have corrected him?

If you would pocket the most money, then to me that is fraud. Once you accept the settlement from the insurance company, they are expecting the valve of the car to remain the same as before the wreck, not some decreased value.

The insurance company sets the value of the car (excluding stated value policies) based on a non-damaged, non-modified vehicle, or one that has been repaired properly.

For example, say you have a 2003 Cobra and somehow someone ruins the engine where you can submit a claim and have it replaced. You decide to replace it with a used engine from a 94 T’Bird (because you have one lying around that you aren’t using). You keep the coverage on the “2003 Cobra”, the insurance keeps the value the same because as far as they are concerned, it is a 2003 Cobra (because they paid to have the engine repaired), but in reality the value is GREATLY decreased.

Isn’t that misrepresenting the vehicle to the insurance company? Isn’t that the same as with the body work?
 

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PostSlut
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there is no set price on body work......so, to me that does not matter what it costs, as long as it is fixed to be put safely back on the road.
 

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Discussion Starter #5
there is no set price on body work......so, to me that does not matter what it costs, as long as it is fixed to be put safely back on the road.
I agree about anything that is safety related. I’m talking more about something that impacts the actual value of the vehicle. There are definitely levels of quality when it comes to body work.

So you wouldn’t have a problem if the insurance company said, "Just take it to MAACO and have them bondo it up instead of replacing body panels". Would you consider that the same? Would you have an issue with an insurance company that said that?
 

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This is why, as was alluded to, that most insurance companies direct repairs through body shops. I'm really surprised that any companies cut direct checks any more.

Insurance compensates for losses incurred through damage, period. The losing driver's insurer is obligated to do its part to make the winning driver's car right again. If the insurance company decides it wants to settle up by writing a check for the estimated amount needed to perform the repair, then that is their business. The recipient of the check is under NO obligation to repair the car back to specs - or at all. If he wants to be a Bubba and drive a beat-up car, it is perfectly legal for him to do so. Bubba in turn runs the risk that if there was more damage than originally met the eye, it will be much harder, if not impossible, to receive additional compensation as opposed to this being discovered while the car was being torn down and repaired at a company-aligned body shop.

As far as the insurance company trying to cheap out, well, buyer beware. These types of battles are fought every day between estimators, body shop personnel, car owners, and lawyers.
 

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Discussion Starter #7
I agree if it is another company paying as they are off the hook once they pay you for the damage. They have no vested interest in the repaired vehicle.

But when it is your own insurance company paying the tab, and then still insuring the car post repair, don’t they have the right to know that it is now not at the same value as it was before the repair.

It would be like your house burning down, you replacing it with a house trailer, but telling the insurance company your replaced your original house and keeping the coverage the same it was before.

Legality and morality are often two very different things. :D
 

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Hey Don, you know who Diogenes was? I'm gonna buy you a tub........... ;)
 

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I agree if it is another company paying as they are off the hook once they pay you for the damage. They have no vested interest in the repaired vehicle.

But when it is your own insurance company paying the tab, and then still insuring the car post repair, don’t they have the right to know that it is now not at the same value as it was before the repair.

It would be like your house burning down, you replacing it with a house trailer, but telling the insurance company your replaced your original house and keeping the coverage the same it was before.

Legality and morality are often two very different things. :D
That was my thought, also. They'll probably continue to insure that same vehicle and presume it to have the same or close value to what it was. Maybe they should have adjusters check out your car before the claim and after the repair. Then sure, you can keep the check, but we will either cut you off or insure it for less now. Save that money b/c we won't be giving you a check like that again.

I had a claim and a small repair, the cost wasn't small but I didn't get a check, I never saw the money at all. It was all between the body shop and my ins. company. I had no complaint, they let me take it to the more expensive body shop so I was happy.
 

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Discussion Starter #10
Hey Don, you know who Diogenes was? I'm gonna buy you a tub........... ;)
Nope, never heard of him. But I did look him up and I think I would have liked him. :D

And I was in the CG on a 30 year old ship.... so I've lived in a tub. :D
 

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...And I was in the CG on a 30 year old ship.... so I've lived in a tub. :D
Touché - I forgot you were a Coastie. You've probably got a lantern left over from those days too. :)
 

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If you owe on the vehicle, ie a loan from the bank, and you are at fault the insurance company would usually cut the check to you and the body shop of your choice jointly, in order to ensure that the vehicle is properly repaired. As your insurance company, they have a duty to protect you and your lienholder. However, if you are not at fault, the other person's insurance company has no such obligation and can cut the check directly to you. They are only responsible for the $$ damage, and what you do with the money is your business.

-Rob
 

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However, if you are not at fault, the other person's insurance company has no such obligation and can cut the check directly to you. They are only responsible for the $$ damage, and what you do with the money is your business.

-Rob
what this guy said.....is what I was wanting to say..
 

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I actually work as an auto adjuster for an insurance company, and I can tell you that as long as there is no lien on the vehicle, then what they did is completely legit. If there is a lien, then technically you don't own the car, so it isn't up to you to decide how it gets fixed. If you do own the car though, then no insurance company has the right to tell you what to do with your own personal property. You could fix it as they wrote, or fix it cheaper, or not fix it at all, that's entirely up to you. I know at least twice I have come across situations where someone has a relatively new car that they own outright, and it has heavy damage, but not enough to total it, and the person who owns the car doesn't feel comfortable driving it anymore. 2 times that I can think of, we basically paid them for the damages to the car, and they just signed the title for the car over to the shop and went and bought another car. Basically the check from the insurance company is to compensate you for your loss. How you use that compensation is entirely up to you, and the insurance company doesn't care if you fix the car or not. As for your question about totaling the car the next week, the adjusters who evaluate your car are trained to recognize shoddy repairs, and if you totalled the car right after having it poorly repaired, they would deduct for that from the value of the car. In that situation, you may wind up actually hurting yourself more, because now that you spend $600 to piece the car together, they still may take the full $1800, or possibly even more than that, off of the value of the car because of what it would cost to fix it properly. Same goes with the engine situation. Say they give you $5000 to replace the engine in your 03 cobra, and you replace it with a tbird motor. Well if you total the car, they are now going to deduct from the amount they pay you that same $5000 that it costs to replace the engine. In that situation, you would then be out the $1000 or so that it probably cost you to get that tbird motor in there, plus you are out the motor itself. Also, this would only be foolish on your part, not the insurance company's part, because if you have collision coverage, your rates are based on the potential they could pay out for the car. If you drive a $30K car, you are going to pay more for insurance than if you were driving a $15K car. However, if you tell your insurance company that you are driving a car worth $30K, and they rate you accordingly, they are still only going to pay you the $15K that the car is actually worth if you total it, so in effect you just raised your rates for no payoff.
 

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Don, do you lie awake all night coming up with this stuff?
 

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So if I drive a 95 T-Bird with 165k miles on the odometer that is worth $1,500, at least to any insurance company. This car is insured with liability only.
I have had an x amount of money invested in the car and had it appraised at a much higher value than $1,500.
Would it be considered fraud if I chose not to tell my insurance company about the car's higher value, although I do have a third party appraisal to prove it in case of the car being damaged by another driver who is at fault?
If my car was to sustain more damage than 75% of $1,500 from someone else being at fault, would the other driver's insurance company argue with the appraisal value? How about my insurer finding out about all the go fast parts on the car? Shouldn't that have raised my liability rates had I kept them informed of what I had been doing with the car?

Jim
 

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If my car was to sustain more damage than 75% of $1,500 from someone else being at fault, would the other driver's insurance company argue with the appraisal value? How about my insurer finding out about all the go fast parts on the car? Shouldn't that have raised my liability rates had I kept them informed of what I had been doing with the car?

Jim
Probably. You probably should tell them if you are concerned about this. Technically, you probably should just to CYA.

-Rob
 

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If there is no lienholder I have seen some companies cut a check to the policyholder/owner. I have had check cut to just me, me and the body shop, and last time they strongly encouraged me to get it repaired at a shop on their list and they paid the shop directly - that included a lifetime guarantee on the repairs.
That time my daughter was rearended and pushed ito the car in front. My company paid the repair shop minus the deductable until they settled with the other party. These guys are not dumb. The week before she backed into a brick mail box and swiped the left rear quarter. The adjuster called me up when doing the rear end wreck and said they did not see how that quarter was damaged in the wreck. I was honest and said it was previous damage and they did not repair that.

I have fixed my own car before and used the difference for tools. I don't see anything wrong with getting a cheaper price and pocketing the money. It is your car and you will be the one getting the money when you sell or trade it. If the damage goes on Carfax or the repair is noticed by a trained eye you will get less for the car. The insurance company does not compensate you for the lower resale value you will get. JMHO
 

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So if I drive a 95 T-Bird with 165k miles on the odometer that is worth $1,500, at least to any insurance company. This car is insured with liability only.
I have had an x amount of money invested in the car and had it appraised at a much higher value than $1,500.
Would it be considered fraud if I chose not to tell my insurance company about the car's higher value, although I do have a third party appraisal to prove it in case of the car being damaged by another driver who is at fault?
If my car was to sustain more damage than 75% of $1,500 from someone else being at fault, would the other driver's insurance company argue with the appraisal value? How about my insurer finding out about all the go fast parts on the car? Shouldn't that have raised my liability rates had I kept them informed of what I had been doing with the car?

Jim
No, because you have liability only. If you tried to put collision coverage on your car telling them that it is just a 95tbird, and then when it gets totalled trying to get them to pay you for all the modifications, then that could be considered fraud because your rates were based on a $1500 car, not say a $3500 car. The risk for liability coverage however is the damage you might do to someone else's car. You might get slight discounts for having certain safety items, but the potential damage to someone else doesn't really matter whether your car is worth $1500 or $15000. If someone else hit you, then you would probably find yourself in an argument with their insurance company over the value of the car, and more than likely you would have to either take it to court or settle for less than what your car is actually worth, which sucks for those of us who value our cars more than the market does. Having that appraisal would certainly be helpful to you though if that were to happen. Technically though, that person who hit you could have just as likely hit you as he could have hit an 85 chevy cavalier worth $500, or a 2008 Mercedes worth $100K, so they should owe you to financially put you back to where you were right before the accident.
 

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Discussion Starter #20
Don, do you lie awake all night coming up with this stuff?
LOL!!! No. As I mentioned this subject came up with a coworker that was going to pocket the balance between a correct repair and a MAACO repair.

The insurance company paid for a panel replacement and paint, MAACO is going to pull it, slap some bondo on it and paint it.

I asked him if when he sold the truck, would he volunteer the information that the repair was sub standard and his reply was “Only if the buyer asks”. I asked him if he would mention the repair if the person asked “Is there anything wrong with the truck?” and his reply was, “Not unless he specifically asks if it has been wrecked, then I would say “Yes”, and leave it at that unless he asks where/how it was repaired”. (I should mention that he just traded in a 2002 Dodge truck that had come off a tow dolly and bounced across a field, to the tune of $10,000 worth of damage (including a bent frame). It was repaired at a legitimate body shop, but I could tell it has been repainted (orange peel in the clear coat). I asked him if he said anything about it to the dealership when he traded it in at. "Nope, they didn't ask, caveat emptor"...)

I told him he would make a good used car salesman and he got mad for some reason. :zwall:

I know it isn’t illegal, I just think it is morally wrong to be rewarded with cash for backing the truck into a tree. Which is what this boils down to.

But I'm also the kind of person that calls my insurance when I get a ticket, as I feel it is my obligation to properly represent myself to the insurance company.

The insurance is in good faith paying to have the car repaired, not to have the car halfway repaired and send them on a vacation.
 
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