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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 makes 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 as to 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 preloss property value had not decreased significantly, 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 now claims that their liability is 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.

-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 unrealistically low bids from contractors, stating to claimants that the insurer will not pay more than that bid, and then claiming that the claimant selected the insurer’s repairer when they used the only repairer they could afford due to the insurer’s refusal to pay more, even if the next lowest bid is still below the prevailing rate. (Note: One recent court opinion concluded that the insurer had not forced the insured to choose the insurer’s repairer by refusing to pay more than the absolute lowest bid, who subsequently failed to properly repair the property, because the insurer had stated in their policy that it was their goal to make sure the insured was satisfied.)

-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.  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.