© 2012, Property Casualty Insurers Association of America Page 3
accident condition is more than 75% of the “fair market value” of the vehicle based on anationally recognized source of such values.This measure would severely limit the ability of an insurer to declare any vehicle a total loss.Just because a vehicle can be repaired doesn’t mean that it should be or that it’s in the bestinterest of the owner that the car be repaired.
Why we oppose this provision:
This provision is focused only on the initial estimate of the cost to repair the vehicleand does not consider other factors that drive both the decision and overall loss costs:
In most cases, the initial estimate prepared by a shop or insurer does not reflectthe ultimate cost to repair the vehicle. It is often the second estimate or“supplement” that is prepared after the car has been partially disassembled(and damage that is not visible at the initial inspection can be seen) that leadsto a vehicle being declared a total loss.
The decision to “total” a vehicle is based on other factors than just the cost ofthe repairs, for example:
When it is likely that additional damage will be found when thevehicle is disassembled.
When the nature of the damage indicates that the vehicle shouldnot be repaired, even though it may be “possible” to repair, forsafety reasons, the likelihood of future problems or serving thebest interest of the customer.
The more severe the damage, the longer the repairs will take, sorental costs (paid by insurance or the owner out of pocket) are akey consideration. The longer the repair takes, the less likely theconsumer is going to be satisfied with the experience and themore likely that there could be problems after the repair.
The vehicle may have significant salvage value that could lowerthe overall cost of the claim and contribute to lower loss costs inthe long run.
Both insurers and body shops accurately claim that they have the right or obligation toprotect their customers’ interests. The relationship between repair shops and autoinsurer provides “checks and balances” that benefit consumers; this bill wouldsignificantly impair that function.
This bill and others that have preceded it seek to remove those checks andbalances, and push the insurer further out of the repair process.