The adjuster tried to steer me to another body shop. He said [the shop I chose] was always more expensive – and that I’d be responsible for any cost that Nationwide didn’t pay,” says Jill Leite, a North Carolina consumer who, despite Nationwide nudging her to go to a Blue Ribbon shop, stood her ground – and got penalized for it.
The repair costs to her Infiniti QX-4 came to just under $22,000; Nationwide is willing to pay $16,000. And after making every attempt to get Nationwide to pay up, she’s now suing them. Something she didn’t want to do.
And something she shouldn’t have had to do.
According to attorney Patrick McGuire, author of this month’s cover story, “Keep This Job,” an insurer can’t penalize consumers when they don’t have their car repaired at an insurer’s preferred shop when that insurer has decided to pay for the repair in money.
McGuire says that an insurer has three Payment of Loss (POL) options in a physical damage insurance policy: 1) Pay the loss in money so the policyholder can have the car repaired by an independent contractor; OR 2) Repair the vehicle itself (i.e. exercise its “direct-repair” option); OR 3) Deem the vehicle a total loss.
And the insurer can choose only one.
Because the courts have had experience with insurers trying to “play both sides of the fence”
– i.e. choosing the “Pay in money” option yet trying to control the repair as if they chose the “Repair the vehicle” option – McGuire says the courts have developed three rules regarding POL provisions:
The insurer must clearly and unambiguously notify the insured at the outset of the claim as to which payment option it’s exercising.
The two repair options are mutually exclusive so an insurer generally can’t limit its payment of a claim based on a contention that some shop might be able to perform the necessary repairs for the amount specified in the insurer’s estimate. (Do you realize what that means? Sure, adjusters tell consumers, “You can take your car anywhere you want, but the most we’re going to pay is the amount of our estimate.” But the fact is, these are just words; they’re not supported by law.)
If the insurer exercises its option to repair, it must accept direct responsibility for the quality and safety of the repairs performed by the contractors it hired.
It’s no secret that insurers try to control repair costs (through steering), while at the same time, distance themselves from any liability associated with crappy repairs. The courts know this and have set up the laws to protect consumers. Thing is, the laws don’t do consumers – or you – a bit of good if you don’t know about them.
“All this has been a nightmare, and we’re coming out with a loss – all from an accident that wasn’t even our fault,” says Leite.
The courts never intended for consumers to be put in this position. According to McGuire, you can help consumers – and yourself – by having them ask their insurer to specify – in writing – which repair option it’s exercising.
Because most insurers don’t want a paper trail proving they picked the shop, you just might find that it’s your lucky day – that the insurer suddenly becomes much more reasonable … and hands-off.
Georgina K. Carson