There are two parts of the insurance contract (policy) that are of primary concern:
PAYMENT OF LOSS & LIMIT OF LIABILITY
PAYMENT OF LOSS
"We may pay for the loss in money or repair or replace the damaged or stolen property."
- Since the options are clearly separated by the word OR it means that the insurance company must
choose ONE of the options.
- Choosing any one option necessarily foregoes all other options.
- Generally, the insurance company will not replace an automobile if it can be repaired within the
confines of the law (N.C. specifies that an automobile MUST be considered totaled if the damage
amount represents 75% or more of the actual cash value of the automobile at the time of the loss).
- Generally, insurance companies do not repair automobiles. They don’t take custody and control of
the vehicle and physically repair it themselves.
- In the vast majority of automobile damage claims, the insurer elects their option to pay for the
loss in money. This is apparent in that they issue a check to pay for the damages.
There is no provision within the insurance contract permitting the insurance company to mix the
three options available to them.
- As such, they have no contractual right to dictate or otherwise stipulate the parts, part sources,
repair procedures, or rates charged for the repairs.
LIMIT OF LIABILITY
“Our limit of liability will be the lesser of the:
- Actual cash value of the stolen or damaged property; or
- Amount necessary to repair or replace the property with other property of like kind and quality.”
- Once the decision is made by the insurer to pay for the damage (as opposed to replacing the
property, or repairing it themselves), the insurer becomes obligated to pay the amount reasonable
and necessary to repair the property.
- Estimates and appraisals are speculation and conjecture – they are “Educated Guesses” as to what
it will take to repair the damaged vehicle.
- The true amount required to repair the property cannot be known until the repairs have been
completed.
- The final invoice reflects the true amount necessary to repair the property – claiming that it
could have been repaired for less is, if the repairs have already been completed, irrelevant.
- The amount of the final invoice IS the amount that was necessary to repair the property.
INSURER DICTATION OF PRICING
- The automobile repair market is a free market – businesses are free to set their fees for services
based upon overhead, payroll, equipment investments and other economic factors. Insurers have no
authority to set the prices charged or the amount paid any more than Arby’s has a right to
set the prices charged by MacDonald’s or Burger King.
- Attempting to claim that Direct Repair Program (partner) shops or “preferred” shops (repair
facilities that have a working agreement and in some cases a contract with the insurer) have
lower rates has no bearing. A non-contracting repairer cannot be held to the terms and conditions
of a contract they are not a party to.
|
