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State Farm Bodily Injury Claim – State Farm last month told the Kansas Department of Insurance that it directs third-party claimants to obtain estimates from a Select Service repairer, but that claimants “are under no obligation to use Use that repairman.
An Illinois attorney general on Wednesday also reported hearing of third-party claimants being asked to seek estimates at State Farm’s network of direct repair programs.
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“It has also been raised in the Chicago area,” said attorney Patrick McGuire, whose practice includes collision repairers. (Note: Nothing in this article is intended as legal advice. Consult with qualified counsel in your state.)
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In addition to clear guidance concerns, such incidents appear to impose obligations on third-party plaintiffs that do not exist under the contract. Unlike first-party drivers who have a contractual relationship with the insurance company, third parties typically do not trade off any rights.
Unwarranted demands for third-party claimants to be inconvenienced by an estimate at an unwanted store is bad enough. But such an initiative could escalate further if insurance company representatives or third-party claimants mistakenly believe that the actual repairs must be performed at a DRP facility. This would certainly violate store choice laws nationwide.
“When discussing a claimant’s desire to secure vehicle repairs, we offer our Selective Service Program as an initial option if we have Selective Service repairers in the claimant’s geographic location,” Jeff Avery, State Farm’s automotive ILR manager, wrote to the Kansas Department of Insurance in an April 15 response to the general complaint. “We direct them to these repairers to secure an initial estimate for the repair. Once we have this estimate, we will proceed with payment. The customer is under no obligation to use such repairman. Customers can use their claim settlement payment as they see fit, including deciding whether and where they have their vehicle repaired. …
“If a customer has delivered their vehicle to their chosen repairer, we will work directly with that repairer to achieve the agreed upon repair amount.”
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“As previously noted, there are no known laws related to your concerns regarding designated repair shops,” Kansas Department of Insurance Consumer Assistance Supervisor Karen Wallace wrote today. April 24 for Tony Adams, vice president of the Kansas Association of Automobile Agencies. Adams submitted a joint inquiry into possible law changes that led to State Farm’s response.
“From the feedback, it appears State Farm wants people to use specific stores for estimates but there is no requirement to use those stores for repairs,” Wallace continued.
We asked State Farm a few questions about reports from Kansas, Illinois and North Carolina of changed third-party claims behavior:
These include State Farm’s official policy toward third-party plaintiffs, possible sources explaining that a new claim has been filed, state filing requirements to change how third-party plaintiffs are treated , why State Farm can impose obligations on third parties, and how claims work when the third-party claimant also holds the first-party State Farm policy.
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“Thank you for reaching out,” State Farm senior public relations specialist Tammi Estes wrote on April 28. “We have nothing to share with RDN.”
Adams said he has encountered questions from KABA members about third-party State Farm’s conduct and has experienced what could happen in a similar situation at his own store.
Adams said a State Farm representative claimed a longtime Weaver customer — a third-party plaintiff — had to take her vehicle to a DRP shop for repairs. Finally, Adams’ store requested a State Farm supervisor, who immediately confirmed that the consumer had the right to have her vehicle repaired anywhere, Adams said. Weaver kept the key.
Adams said he assumed it was a simple error by a subordinate, but now he wonders if the incident was part of something larger.
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In Illinois, “there is no duty to a third-party plaintiff,” McGuire said. According to McGuire, they may even be able to repair the vehicle and have a bill in hand before settling the case with the first-party plaintiff.
According to McGuire, insurance company policyholders filing as third-party claimants also will not be required to use the terms of their first-party policy. Consumers can choose to settle losses as a first-party or third-party claimant.
However, while it may be beneficial for a victim to file a first-party claim in a total loss situation, typically, “it is a rare case where you are in a good situation.” more as a first party,” according to McGuire.
A third-party claimant may not be obligated to have the vehicle estimated at a location the insurer chooses, “even if they share the same insurer,” Eversman said.
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The plaintiff would be an adverse third party, she said, and “that insurer has no right to take any action against the third party” unless the language in the contract with the first party requires the customer must also sacrifice the rights of third parties.
Attorney Erica Eversman of Vehicle Information Services said she was unfamiliar with Kansas law but doubted any insurance commissioner would allow a carrier to make such a requirement in a contract.
Allowing the insurance company to participate in the repair process can avoid a third-party plaintiff having to sue the policyholder for full compensation. But that doesn’t mean the insurer has control over the process, according to Eversman.
“As a general rule,” Eversman said, third parties have no obligations to insurers – “period.” She said it would be “inappropriate” for an insurance company to attempt such control.
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State Farm did not respond to follow-up requests for comment Friday about Illinois’ allegations and the carrier’s training program for adjusters, Select Service Shops and outsourced estimators (e.g. such as A.I., desk reviewer, or independent reviewer) about discrepancies in the third party’s text and the first party’s paper.
APCIA Vice President of Auto and Claims Policy Bob Passmore said in a statement: “Some states have laws that prevent insurers from requiring first- or third-party claimants to go an unreasonable distance or establish other guidelines for vehicle inspection.” “However, in most cases, the claimant and insurer can work together to find the most efficient and effective way to inspect the vehicle, assess the damage and make a claim. indemnify.”
According to Eversman, insurance companies can also commit insurance fraud by undervaluing claims. She suggested that if an insurance company uses a body shop as an agent, the repairer could be “liable for insurance fraud and underestimation of claims.”
Eversman pointed out the problem of using a third party that has a potential interest in writing a claim “favorable to the insurance company” with the understanding that the shop can write a higher estimate after receiving it. compensation is requested. She notes that it is “the whole game” of a DRP repairer to write an estimate.
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She argued that outsourcing claims to an auto body repair shop was an “incredible conflict of interest” when “clearly the intent” was for the DRP shop to capture the repairs.
Eversman said it would be one thing if the DRP shop did a “good initial overall repair analysis without any destructive activity” but was very clear in the estimate that it was done without disassembly. necessary to determine the exact amount of the claim. It should be clear – “in writing, in bold” – that this is “the most accurate estimate that can be made” without disassembly.
“That would be a different story,” Eversman said. But, she said, it might not get the store out of trouble or eliminate the problem of conflicts of interest.
We proposed that if an insurance company-authorized estimator began removing parts, the situation would become a repair and risk violating shop choice laws, and Eversman agreed.
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We asked the Kansas Department of Insurance if they would take any further action or provide any other guidance to State Farm on this matter. We also asked about the apparent lack of obligation on the part of the third-party plaintiff to receive an estimate in a place that State Farm desired.
“While consumers are welcome to share their personal information with anyone they want, we do not comment on specific cases,” the agency’s Lee Modesitt wrote in an April 29 email. . and the insured when we receive a claim to gather all relevant information from the parties involved and ensure everything is handled in accordance with Kansas statutes and regulations.”
Since they were unable to discuss specific claims, we asked about general Kansas laws and regulations pertaining to third-party plaintiffs.
In an action for temporary damages to real property, Kansas courts will consider PIK Civ. 4th 171.21, which states,
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“When damage to real property is temporary and of such a nature that the property cannot be restored to its original condition, the amount of damage is the reasonable cost of repairs necessary to restore the property to its original condition. original condition [plus a reasonable amount as compensation] because
Of the property while repairs are being made with reasonable diligence], but not to exceed its fair and reasonable market value before the injury.”
This is consistent with the purpose of the tort, which is to help the injured party return to normal, while avoiding disadvantage to the injured party. Determining mechanical damage takes into account the depreciation of labor costs at a level equivalent to costs