What is the flipping "angle" here?

[infromsea]

BLUF: Hit a deer while driving a 2013 car, have insurance. Took vehicle to repair shop, they padded the estimate, insurance is calling it a total loss, no way it's totaled, going to "buy it back" and have it repaired, what's the angle of the repair shop and/or insurance company?

Background:
- We bought a gently used 2013 Chevy Equinox a few years ago, low mileage, in good shape etc. We buy used vehicles and drive them until the wheels fall off, I do 90% of the maintenance (thanks you-tube!). This vehicle replaced a 2004 Mini-van that we donated when the header gasket blew (at 157K... boooooo!). Paid cash for replacement (the equinox) and keep liability insurance only.

- Hit a deer coming home from family vacation. Impact was on the front, right hand, side. Did a quick inspection, drove 3 hours to get home post impact. No issues with front end tracking, A/C ran great, headlights worked, put wife in back seat since right side seat belt impact limiter activated and her seat buckle would not lock (normal operation of the system). Although the radiator (which is bent and needs replacement) had a small leak, the temp gauge never moved. Car has 57K on it and we REALLY like the make/model/accessories etc. (and we are not really car people).

- Called USAA and reported, informed local law, got home safe, called them again on Monday, agreed to take vehicle to dealer auto body shop (mistake!?!) for inspection etc.

- Dealer auto body shop padded the estimate to the point that it got close to 70% of the vehicles value, at which point the state of VA mandates that the vehicle must be considered a "total loss". NOTE, the quote WAS $1,000 under the "total loss" value but USAA informed me that when it gets close, they call it a total loss and move on.

- So, USAA offers me a very good deal to take cash and move on. The amount they offered (minus the 1,000 deductible) would provide a vehicle similar in condition/miles etc. and might have upgrades since we'd probably buy a 2015/16 versus a 2013.

- On the other hand, they'll pay the buy out value minus 2 grand (what they'd get to sell it to a junk-yard or at a salvage auction) if we "buy it back" from them, but the title becomes "dirty" and we have to get it "washed"/deal with the state machine to get it re-issued with "salvage" all over it (Not that I care, we'll drive it until the wheels fall off...).

--------

- We can take the buy-out but have to go through the process of finding a good/replacement vehicle which could have issues we are not aware of/pay sales tax/get tags etc...

OR

- Buy it back, we fix many of the issues/ignore the BS that the shop wrote up (like replacing all of the left hand seat belt system that did NOT activate...) and probably end up with about 4K residual after the repairs. One downside, the vehicle is only worth about 1/2 what is was worth before it was called "a total loss" and ready for "salvage".

IMHO, the shop really did us wrong here, now that USAA is calling it a total loss, due to the shop's inflated estimate, no other USAA repair shop will touch the vehicle, they don't want to lose future business from USAA (military community here, they probably ensure 80% of the vehicles). That means I have to go to 2nd/3rd tier repair shops, luckily, I'm a mechanic and speak BS fluently... When I went to get the vehicle back from the shop they had already pulled parts from it (rear lift gate hinge arm) that had NOTHING to do with the impact area (deer hit front right, nothing going on in rear lift gate) and they didn't give me any of the hardware back, I'm going to deal with that today.


Soooooooo, what's the "angle" here? What's the "payoff" for the shop? I'm a rational person, I can "get" that they don't think they are padding the estimate, they'll hide behind "liability requires us to change parts that don't look bad" and other BS like, "once we start tearing it down, we might find hidden problems" but this is pushing things too far.

What's the angle for the insurance company? Is someone just trying to "win a set of steak knives" [I mean this 100%, if you can guess the source of that comment, I'll send you a military challenge coin in the mail, if you want it...].

My take, the shop is simply trying to pad the estimate to the point the insurance tags the vehicle totaled in the hopes that we take the money and walk over to the dealership and purchase a new/replacement vehicle (which would not happen, the dealer has the worst rep in the area and we buy used from CL) AND, 90% of the time, I suspect that is what happens. In addition, collision shops don't make a lot of money (research says they operate on a 4-7% margin) so maybe pushing the "harder jobs" into "total loss" status is easier?

From the insurance side, they are trying to provide good customer service (and they do) and 90% of folks would take the cash, go buy another vehicle, probably with payments included since the payout would not buy a new comparable vehicle, and keep on with life, going through the motions and not examining things (or hell, they might be so busy they can't stop to consider alternatives...).

Am I just being cynical, looking for behavior of ill report where it doesn't exist? Have I simply become jaded, since we don't "operate" in-sync with society when it comes to money/get a job an work till you "retire" at 65 even though you hate it etc.......... that when we operate outside of the normal operant conditioning we "see" the poor decisions most of society is making, and it doesn't set well with us?

Anyone else have similar experiences, both in auto accidents and "seeing the matrix" others are living in (most of us see it I guess, that's why we are here?).

Anyone want to buy a "lightly damaged" SUV? (JUST KIDDING, I'm gonna fix it better than it was before!).

Cheers!

Tim

[Villanelle]

Given that it's auto issues we are discussing, I think they are more likely to win the Cadillac.  (We have far too many challenge coins already in our house, thank you!)

It doesn't sound like USAA is doing anything other than following a sensible policy, but that does seem shady on the part of the body shop, if you are absolutely certain they are over-estimating.  Did you get a detailed estimate?  Are there items on there that you are 100% sure aren't damaged?  Car repairs can be unGodly expensive, even for what seems like fairly minor damage. 

It could also be that they knew USAA's total loss number and intentionally stayed under it, thinking that way they would get to do the repair and get max payment for it.  But now knowing about the "if it's close but under, we still call it" policy, they miscalculated, maybe?

[terran]

I get that you think the dealership is being shady (no surprise there), but why do you feel you're being taken advantage of? From the sounds of it you'll end up with a car that's just as useful to you (albeit with less value if you did sell) and $4k in your pocket compared to if the insurance company paid to repair it.

[infromsea]

Villanelle,

Close on the movie title/guess but not quite (at least not the one I was thinking of, I was thinking about someone closing XXX amount of cases, even if the outcome isn't optimal for all involved). I do have a detailed estimate and, thanks to my personal knowledge and assistance from other mechanics, am well aware of the "padding" that went on here, even though the shop will never admit it, they padded the estimate by at least 1K.

Terran,

Great question, I don't feel taken advantage of, just wondering what the "angle" is here... I'm curious. Granted, there is some A@@ pain associated here due to the body shop padding the estimate, and that pushed it into "total loss" which means no other shop that works USAA claims will touch it.

So, yes, we end up with around 4K in the savings account, for a replacement vehicle (if needed, hopefully not) in ten years BUT, had the shop not padded, we would have kept the vehicle there, got it fixed, don't care about "making money" and wouldn't have to work through the state process to get the vehicle title "cleaned up" after it's deemed a "salvage".

I'm still considering just taking the FULL cash payout since there is pain involved. My mechanical ability, desire to fix something that is fixable instead of sending to junk yard, and amount of free time give me the chance to even play with this as a project for a few months.

[WalkaboutStache]

I'm still considering just taking the FULL cash payout since there is pain involved. My mechanical ability, desire to fix something that is fixable instead of sending to junk yard, and amount of free time give me the chance to even play with this as a project for a few months.

I think you touch on an important intangible here, which is the obscenity of trashing something that can be fixed for the sake of convenience.  Environmentally, it makes absolutely no sense and I would hesitate too.  This is not so much an angle, as a kind of slippery slope where no one really wants to deal with it.  If the dealership only overestimated it by 1K in such an expensive vehicle, I would not call it so shady.  From their perspective, the path of least resistance is to fix/trash things that have a small chance of being broken because that keeps them from the headache of a customer coming back later and complaining the repairs were shoddy.  Since you are not paying for it, I think they just figure that you don’t really care about the estimate.  They lose on this one, but make up in others by reducing their risk.

Having said that, you can’t really make a bad decision here.  If the car goes to a junk yard, its parts may be sold off over time, reducing the environmental impact. You can also have it fixed for less and walk out with some free cash if you can deal with not having the car for a while.

Now, the really smart thing to do would be to buy something smaller, more fuel efficient and walk out with more cash in your pocket and lower fuel costs for the future.  That, my mustachian friend, would be the real win.  That’s your angle.

[soccerluvof4]

Unless i miss read something here i am surprised they did not make you get 3 estimates. When my car was damaged that was the criteria and the insurance company did not go with the cheapest but the one that made the most sense.

[infromsea]

Walk about -

Good points! I think you put into words part of what's been bothering me, the idea of "it's kind of broken so throw it away and get a new SHINY! one" doesn't appeal to me.

In all reality, I should take the cash and pocket it/invest it, that would probably be the MOST mustachian thing to do since we have other means of transportation (excessively so to be honest, it's a long story...). I think I'm going the "middle path" and have a "lower tier" body shop do most of the repairs, I fix some of it myself and still walk away with about 6k to put in VTSAX.

soccerluv-

That was how things used to work "back in the day" in my experience BUT, since the first place called it "UN drive able" (I drove it three hours after hitting the deer, drove it to repair shop, drove it AWAY from that repair shop... maybe I'm just reckless...) I guess that's why there isn't a need for another quote.

Funny story from the "2nd tier repair shop" this AM.

Shop owner told me he's seen cars be declared a "total loss" then the shop donates time/parts to repair/fix and the insurance company donates vehicle to a family in need and they both get tax write-offs... hmmmmm.... maybe wasn't the motivation here BUT, this vehicle probably would have been PRIME consideration for that, 57K miles, brand new tires, interior in near new condition... I guess that's one possible angle.

Oh well, I'm sure I'm being to cynical about this BUT, I always wonder what motivates peoples behavior, both consciously and unconsciously...

Thanks for adding to the conversation everyone!

[Sibley]

Realistically, the vehicle wouldn't be sent to the junkyard. Either they fix it up and sell it, making a bit of money, or someone at the shop wants the vehicle for themselves and this is the easy way to get it.

[merula]

I work for an insurance company. Not in claims, but here's my two cents anyways:

USAA wants to close the claim as quickly as possible for as little payout as possible. The former is marginally more important than the latter, and generally speaking, the needs of the insurance company and the customer align on this point. It doesn't make sense for them to sink an additional 20 hours of adjuster work into your claim to save $500, and most people would rather have an immediate payout now than a payout that's $500 higher in two weeks. Because most people have one car per driver and need that car to get around, and don't have the cash to cover the short-term expense.

Estimating car repairs on any individual claim is not an exact science, which the insurance company knows, but from their perspective, having an initial repair under the write-off limit that then develops up higher based on unforeseen circumstances is the worst possible scenario. They could've gotten out both earlier and cheaper if they had done it as a write-off, but after the repairs are started, it's a sunk cost and they're stuck with seeing it through.

However, that is the scenario that potentially maximizes the repair shop's profit, and being an approved repair shop for a major insurer is big money. Not only that, it's big DEPENDABLE money, because the insurance company is much less likely to bounce a check than your average Jo/e. So, insurers are on the lookout for shops that are potentially abusing their estimates to revoke their approval. Everyone knows it happens sometimes, but if it happens too much, you're out. This is why this repair shop won't budge and why no other shops will challenge them. No one wants to get caught on the wrong side of USAA.

[ChpBstrd]

According to kbb.com your vehicle was worth about $10,400. After a high quality repair, you can expect the value with salvage title to be about 20% less, or $8,320.

Option A: Take the payout
     +$10,400 previous value payment from ins
     -$1,000 deductible
     —————-
     +$9,400 value of option

Option B: Fix yourself
     +$10,400 previous value payment from ins
     -$1,000 deductible
     -$2,000 buy back
     -$???? repair costs
     +$8,320 value of vehicle with salvage title
     —————-
     $15,720 minus repair costs is the value of the option

So if you can fix the car (to kbb.com’s definition of “good” condition) for less than 15720-9400= $6,320 you should do so.

Note however, that the insurance company has been at this for a while and learned many lessons, so be cautious trying to get it done more cheaply. E.g. If the wiring harness is nicked, expect to spend a couple thousand rewiring the whole car. Did the mirror get nicked? Underside damage? Both heat and AC work? Transmission fluid cooler unharmed? Etc.

When my wife had a wreck, it was estimated as not enough damage to total the car. But then they found the computer was damaged by the voltage surge from airbag deployment. Also, the windshield washer fluid reservoir had a tiny leak that was only detected when it was full. These items and the rework involved added a couple grand to the repair bill.

[SwordGuy]

The car shop is quoting to repair all damage to the car.

If you own the car free and clear you can choose not to repair all damage to the car if that damage is merely cosmetic.

That's what we did when we had both our cars totaled by the same hailstorm.  Both only had cosmetic damage.  We bought the totaled cars back from USAA and didn't do the repairs, so we put $10,000 in our pocket. 

Great day!

Those title say "salvage" and since I only trade in a car when it's worth less than $500, it simply doesn't matter to me.

[infromsea]

Some great additions to the conversation here in the last few posts! Thanks to everyone for adding.

SwordGuy - good points, we follow a similar mentality in that we keep cars until it's time to donate to local PBS station.

Cheap - your logic makes sense to me and I get that there is risk in moving forward, in this case, having a FI mentality means we can assume the risk and reduce the downside impact should things get hairy (I have mech skills, we have savings and cash flow and don't rely on the vehicle to earn a living).

merula - thanks for the "look behind the curtain". I knew this wasn't a situation where folks were acting in an irrational manner and I have a lot of respect for USAA, I think I've moved far enough "outside the box" of "usual/normal consumer behavior" that I am often amused/irritated/confused by the actions/behaviors of a large portion of society. I suspect this "I just don't understand these kids these days (although I often do, I don't think THEY understand) will only increase with time/age.

Thanks again everyone!

[BicycleB]

You're probably ready for this thread to end, just chiming in one thought. If the car's $1000 short of being totaled, but USAA has to pay for you to rent another car during the repairs, the difference to them is less than $1000. Maybe that type of calculation affects their standard procedure, even if the rental thing didn't pertain to your case.

[SugarMountain]

Paid cash for replacement (the equinox) and keep liability insurance only.

Cheers!

Tim

I'm confused.  If you have liability insurance only, the insurance company wouldn't pay you anything.  You sure you don't have comp & collision?

As for whether to keep it or not, I'd suggest taking it to another shop and tell them you only have liability and will be paying cash for the repair and see what they can do for you.  When my old Audi got hit, State Farm gave me two options, take it to one of their "certified dealers" where all repairs just get done or they would do an appraisal and just cut me a check.  I went with option b) and then only fixed the functional issues. The side mirror got knocked off, so I bought a used one online for $300 and put it on myself (thanks youtube, as you say) and pocketed the rest of the money.  Ultimately I sold it a few years later for a couple grand less than an undamaged vehicle would have been but the sale price + state farm check were much bigger than the sale price of a clean one would have been.

We had some hail damage to the house recently so I am working out what we're going to do as far as the repairs. The appraiser had things like the garage door was damaged.  While there may be some dings on a 30 year old garage door that faces the alley, I'd rather pocket the money than fix it.  I can't quite do that, however, and I'm still sorting out my options.

[ChpBstrd]

I think you touch on an important intangible here, which is the obscenity of trashing something that can be fixed for the sake of convenience.  Environmentally, it makes absolutely no sense and I would hesitate too.  .....

Having said that, you can’t really make a bad decision here.  If the car goes to a junk yard, its parts may be sold off over time, reducing the environmental impact.

There exists a brutally efficient auto salvage marketplace, where "totaled" vehicles are sold at competitive auctions to body shops that rebuild them from parts taken from other wrecks and sell them. Sometimes they'll weld together two undamaged ends of the same car model! Anything usable goes on eBay, to used part dealers, or is placed on online salvage part networks. Whatever can't be reused is recycled to generate extra money. A car smashed to bits by a train or sunk in a lake for a decade is still worth $200 in steel, aluminum, and copper and there are people who break them down to that level. It's a multi-billion dollar industry that supports hundreds of thousands of jobs and supplies as its output cars that poor people can afford.

Almost all cars are recycled. There's too much money to be made not to.

[infromsea]

Paid cash for replacement (the equinox) and keep liability insurance only.

Cheers!

Tim

I'm confused.  If you have liability insurance only, the insurance company wouldn't pay you anything.  You sure you don't have comp & collision?at faces the alley, I'd rather pocket the money than fix it.  I can't quite do that, however, and I'm still sorting out my options.

Good question, we have liability which includes "other than collision" (USAA is a great company with good products!).

Since we hit a deer, the damage was covered since it was a random event etc.

If, I had swerved to miss the deer and hit another vehicle or ran off the road and hit something else, the damage to my vehicle would NOT have been covered (good lesson for me, hit the deer, I made sure my kids learned this with me!).

ChpBstrd -

Having done a little research on parts etc. I can see the marketplace you speak of and I agree, it's deep and well established, reducing the impact of vehicle "recycling", good points.

- At this point, the vehicle is at a local "2nd tier" repair shop. The owner was willing to work with me on some of the work I want to do, not to save money per-se but simply because I'm a mechanic at heart and enjoy working on vehicles/using my hands. I even relented and agreed to let him do some of the work I wanted to do since it would make his life easier to align new parts etc.

We'll end up with at least 6K in our pockets and a repaired vehicle, which makes me shake my head, how much extra are we paying in premiums due to this kind of inefficient market? I'm not trying to start another discussion as I realize that large markets like auto insurance have inherent inefficiencies in them, they almost HAVE to have them, it's just jarring when a frugalhead sees HOW inefficient they can be and how much money can be lost/wasted/used inefficiently as a result of those inefficiencies and how most of society (in the US) is walking around blind to it. It's been said before and I guess it is true - ignorance is bliss!

[ChpBstrd]

$6k in pocket means that was a very profitable deer! Congratulations.

I’m sure the cost of providing “other than collision” coverage was baked into your premiums, with a profit margin on top of that. It was a good thing you had that coverage!

Regarding economic inefficiencies, they are everywhere when it comes to cars:

-Gleaming dealerships where people pay over 25% above private party values for the “shopping experience” or more concentrated new car smell which is toxic outgassing anyway or the “opportunity” to finance a depreciating asset.
-Add-one and “packages” with $250 pinstripes, $200 floor mats, and “appliqué” on the bumper.
-Cosmetic “spoilers” that only create aerodynamic drag but make the car “a sport” and raise its price.
-“Premium” gasoline, when 99% of people have no idea they don’t need it and get no benefit from it.
Octane creates resistance to detonation, not more power!
-Vanity trucks and “mall crawler” jeeps for those who need to buy their “image”.
-Being told you need at least a V8 engine to tow a lawnmower on a 4x8 trailer.
-Vanity plates
-Extended warranties

[merula]

We'll end up with at least 6K in our pockets and a repaired vehicle, which makes me shake my head, how much extra are we paying in premiums due to this kind of inefficient market?

The insurance industry hasn't made money on Auto since 2007, so overall consumers are coming out ahead. And lawyers.

[Gerard]

But did you eat the deer?