SiliconAngel
1 AYC Bar
I want to relay my recent experience with one of Australia's top insurers. As many of you will know, I had a minor accident at the beginning of last year which put my car off the road for six months while I got it sorted out. At the time I was uninsured because no insurance company in Australia would provide me with cover (I was driving on a concessional 'Extraordinary' license granted for work purposes as I had lost my license for accumulating too many demerit points. I won't go into the specifics of that as it isn't particularly relevant here).
You can see the damage caused in the following two photos. The C180 suffered minor scratching to the bumper and some of the chrome garnish strips and a broken tail lamp. As soon as I had contact details for the insurer of the C180 I got in touch with them to see how / if I could be involved with the repair process, as I am acquainted with the best (probably only) bumper repair specialist in Perth. However the insurer said I couldn't be involved in this process, and I would be contacted in due course to pay the account after repairs had been completed. The total for these repairs turned out to be $5,500, almost $3k of which was a new replacement bumper.
In addition to the new bumper, there was 40 hours in repairs to the chassis which the photographic evidence showed absolutely no damage to, as well as mouldings, fixtures and a grille which were completely untouched in the accident. I spoke to a number of panel shops about this, as well as the bumper repair specialist I already mentioned, to get their thoughts on what had been claimed.
In their opinion the bumper could have been easily repaired for just a few hundred dollars, and even a replacement should have been less than $400. Bear in mind that the 'new' genuine bumper from Mercedes comes as an unpainted blank, so needed to be prepped and sprayed in the same way as a repaired one would have been.
Given this, I offered the insurer around $1,300 to cover bumper repairs, the broken tail lamp, the side bumper garnish and time to remove, refit and paint, calculated using their hourly rate and generous estimates for the time such repairs should have taken based in the opinions of experts.
The insurer's response was (eventually) to offer to reduce the claim to $4,500 if I agreed to pay within seven days (about 14 months since the accident). They said none of the expert opinions I had provided counted for anything more than my own personal 'opinion' as none of them were written by a qualified insurance assessor, and if I wasn't prepared to settle within seven days it would go to court and I'd also have legal fees to cover (which was actually rubbish - the value of the claim meant it had to go to the lowest magistrate's court, so they couldn't claim legal fees). I responded that I would then get a report from an insurance assessor and that at no point in the past had they even mentioned such a requirement. I also requested that they provide this offer in writing (as this conversation was on the phone), which they refused. Their response? They immediately sent the claim to their debt collectors for the full $5,500.
At this point I found and procured the services of an expert legal team which specialises in motor vehicle claims (usually injury compensation and working for insurers, but as they didn't usually represent this particular insurer they were prepared to help in my case). They were able to organise a report from an ex insurance assessor who now operates his own repair business. This report basically concurred with what I had already submitted, with a minor change allowing some additional time for the removal and refit of parts and some painting. It was actually very scathing about the quality of work performed by the insurer's assessor and pointed out a number of areas where this assessor had clearly failed to do his job, both to industry standards and what was required by law. He also pointed out something which I found particularly telling - that this sort of practice is common-place in insurance to insurance claims.
This report was provided to the collection agency (the insurer wouldn't deal with the claim once it had been passed on) with my adjusted offer of around $1,600, who then obtained advice from the insurer. In light of this damning report, they offered to settle with a payment of $4,500. Yep, simply refused to accept any possibility that their claim was anything but totally legitimate. I refused, ensuring I made it very clear to them that by refusing my offer and continuing their action they were effectively reducing the value of my offer by my incurred legal costs.
A week or two passed and I received a call from my legal counsel, basically saying in their opinion this case could go either way if it went to court, there were no guarantees I would win and I should consider the offer tabled by the insurer. My response was if I won I would be paying about $1.5k. If I paid them now, I'd pay $4.5k plus my own legal fees. If I went to court and lost, I'd only be paying $5.5k plus legal fees, so I'd only be out a maximum of an additional $1,000. Given the potential benefit of going to court far outweighed the potential loss, going to court was the most sensible option for me.
Another week or so passed and I got another call from my lawyer - they had spoken with someone relatively senior at the insurer who had asked the question, could they offer an amount that I would settle on? They had floated the idea of $2k to him, who had intimated that might be acceptable. They asked if I would settle the matter paying $2k, and I said that while it was higher than I should be paying, if it would settle the matter I would accept it. They called me back a few minutes later letting me know the insurer would be writing up the agreement to settle on $2k and the matter would be closed.
So in summary, the repairer for a big insurance company claimed a whole lot of unnecessary work was performed and unnecessary parts were replaced on the car, the assessor backed up their claim, despite the complete lack of evidence for it, the insurer themselves tried to intimidate me into paying their bill, but despite this I was able to obtain expert opinion to back up my refusal to pay without seeing clear evidence of the damage, and my refusal to pay for unnecessary parts. In the end the insurer folded and I paid a nominal amount above what I should have. I'm still considering filing a fraud charge with the AFP.
I wanted to tell you this story because I was told by numerous industry professionals that there was no way I would win against a big insurance company. I heard time and time again that this sort of thing was common practice and insurance companies didn't have to provide any evidence for the claim nor get more than one opinion as long as their qualified assessor had inspected the vehicle and provided a report. Just take a look through my Members Ride thread for an example.
Such claims are simply nonsense - insurance companies and repairers MUST document all repairs fully, including taking adequate photographic evidence. If further damage is found after removing other components, this damage MUST be fully photographed before repairs are commenced. This evidence must be provided upon request. Insurers and repairers cannot claim more than is reasonably necessary to return the vehicle to the previous condition - they may not claim extraordinary or extravagant repairs, such as replacing an expensive component when it could have easily, cheaply and quickly been repaired to essentially the same quality of finish. Whether or not the insured's policy includes a clause to 'replace with new' items, that is irrelevant to what the insurer can claim from the other party.
Finally, I think it's appalling that standard industry practice allows for insurers to charge each other for repairs that were unnecessary or simply didn't even take place. If this is indicative of standard practice, then on average insurance claims are around three times the cost they should be, simply because repairers are milking the system and assessors are allowing it to happen (for whatever reason that may be). While you might think, "so what? I'm insured, what do I care if my car costs twice as much to repair as it should?", you need to think about where that money comes from. Insurance companies make a LOT of money. If people think they're screwing an insurance company, they're a bit naive. If insurance companies are paying three times as much as they should for repairs, that means YOU'RE all paying three times as much as you should for your premiums and excess. Imagine paying $400 a year instead of $1200 for exactly the same level of cover. Starting to see the picture now?
I'd love to see the ACCC or an AFP enquiry into this industry, but I won't hold my breath. Hopefully this has helped at least one person out there to stand up for themselves and not just accept the insurance company's word - you're right, that scratch DIDN'T cost $3k to buff out
You can see the damage caused in the following two photos. The C180 suffered minor scratching to the bumper and some of the chrome garnish strips and a broken tail lamp. As soon as I had contact details for the insurer of the C180 I got in touch with them to see how / if I could be involved with the repair process, as I am acquainted with the best (probably only) bumper repair specialist in Perth. However the insurer said I couldn't be involved in this process, and I would be contacted in due course to pay the account after repairs had been completed. The total for these repairs turned out to be $5,500, almost $3k of which was a new replacement bumper.
In addition to the new bumper, there was 40 hours in repairs to the chassis which the photographic evidence showed absolutely no damage to, as well as mouldings, fixtures and a grille which were completely untouched in the accident. I spoke to a number of panel shops about this, as well as the bumper repair specialist I already mentioned, to get their thoughts on what had been claimed.
In their opinion the bumper could have been easily repaired for just a few hundred dollars, and even a replacement should have been less than $400. Bear in mind that the 'new' genuine bumper from Mercedes comes as an unpainted blank, so needed to be prepped and sprayed in the same way as a repaired one would have been.
Given this, I offered the insurer around $1,300 to cover bumper repairs, the broken tail lamp, the side bumper garnish and time to remove, refit and paint, calculated using their hourly rate and generous estimates for the time such repairs should have taken based in the opinions of experts.
The insurer's response was (eventually) to offer to reduce the claim to $4,500 if I agreed to pay within seven days (about 14 months since the accident). They said none of the expert opinions I had provided counted for anything more than my own personal 'opinion' as none of them were written by a qualified insurance assessor, and if I wasn't prepared to settle within seven days it would go to court and I'd also have legal fees to cover (which was actually rubbish - the value of the claim meant it had to go to the lowest magistrate's court, so they couldn't claim legal fees). I responded that I would then get a report from an insurance assessor and that at no point in the past had they even mentioned such a requirement. I also requested that they provide this offer in writing (as this conversation was on the phone), which they refused. Their response? They immediately sent the claim to their debt collectors for the full $5,500.
At this point I found and procured the services of an expert legal team which specialises in motor vehicle claims (usually injury compensation and working for insurers, but as they didn't usually represent this particular insurer they were prepared to help in my case). They were able to organise a report from an ex insurance assessor who now operates his own repair business. This report basically concurred with what I had already submitted, with a minor change allowing some additional time for the removal and refit of parts and some painting. It was actually very scathing about the quality of work performed by the insurer's assessor and pointed out a number of areas where this assessor had clearly failed to do his job, both to industry standards and what was required by law. He also pointed out something which I found particularly telling - that this sort of practice is common-place in insurance to insurance claims.
This report was provided to the collection agency (the insurer wouldn't deal with the claim once it had been passed on) with my adjusted offer of around $1,600, who then obtained advice from the insurer. In light of this damning report, they offered to settle with a payment of $4,500. Yep, simply refused to accept any possibility that their claim was anything but totally legitimate. I refused, ensuring I made it very clear to them that by refusing my offer and continuing their action they were effectively reducing the value of my offer by my incurred legal costs.
A week or two passed and I received a call from my legal counsel, basically saying in their opinion this case could go either way if it went to court, there were no guarantees I would win and I should consider the offer tabled by the insurer. My response was if I won I would be paying about $1.5k. If I paid them now, I'd pay $4.5k plus my own legal fees. If I went to court and lost, I'd only be paying $5.5k plus legal fees, so I'd only be out a maximum of an additional $1,000. Given the potential benefit of going to court far outweighed the potential loss, going to court was the most sensible option for me.
Another week or so passed and I got another call from my lawyer - they had spoken with someone relatively senior at the insurer who had asked the question, could they offer an amount that I would settle on? They had floated the idea of $2k to him, who had intimated that might be acceptable. They asked if I would settle the matter paying $2k, and I said that while it was higher than I should be paying, if it would settle the matter I would accept it. They called me back a few minutes later letting me know the insurer would be writing up the agreement to settle on $2k and the matter would be closed.
So in summary, the repairer for a big insurance company claimed a whole lot of unnecessary work was performed and unnecessary parts were replaced on the car, the assessor backed up their claim, despite the complete lack of evidence for it, the insurer themselves tried to intimidate me into paying their bill, but despite this I was able to obtain expert opinion to back up my refusal to pay without seeing clear evidence of the damage, and my refusal to pay for unnecessary parts. In the end the insurer folded and I paid a nominal amount above what I should have. I'm still considering filing a fraud charge with the AFP.
I wanted to tell you this story because I was told by numerous industry professionals that there was no way I would win against a big insurance company. I heard time and time again that this sort of thing was common practice and insurance companies didn't have to provide any evidence for the claim nor get more than one opinion as long as their qualified assessor had inspected the vehicle and provided a report. Just take a look through my Members Ride thread for an example.
Such claims are simply nonsense - insurance companies and repairers MUST document all repairs fully, including taking adequate photographic evidence. If further damage is found after removing other components, this damage MUST be fully photographed before repairs are commenced. This evidence must be provided upon request. Insurers and repairers cannot claim more than is reasonably necessary to return the vehicle to the previous condition - they may not claim extraordinary or extravagant repairs, such as replacing an expensive component when it could have easily, cheaply and quickly been repaired to essentially the same quality of finish. Whether or not the insured's policy includes a clause to 'replace with new' items, that is irrelevant to what the insurer can claim from the other party.
Finally, I think it's appalling that standard industry practice allows for insurers to charge each other for repairs that were unnecessary or simply didn't even take place. If this is indicative of standard practice, then on average insurance claims are around three times the cost they should be, simply because repairers are milking the system and assessors are allowing it to happen (for whatever reason that may be). While you might think, "so what? I'm insured, what do I care if my car costs twice as much to repair as it should?", you need to think about where that money comes from. Insurance companies make a LOT of money. If people think they're screwing an insurance company, they're a bit naive. If insurance companies are paying three times as much as they should for repairs, that means YOU'RE all paying three times as much as you should for your premiums and excess. Imagine paying $400 a year instead of $1200 for exactly the same level of cover. Starting to see the picture now?
I'd love to see the ACCC or an AFP enquiry into this industry, but I won't hold my breath. Hopefully this has helped at least one person out there to stand up for themselves and not just accept the insurance company's word - you're right, that scratch DIDN'T cost $3k to buff out
