CONSUMER WIPED OUT

THE CHEVY Malibu V-8 was in perfect condition when I inherited it from my mother in 1980. She had bought it new in 1975, and when she died five years later, she had put less than 15,000 miles on it. I figured the car would serve me well for at least five more years. I was wrong.

Approximately two years later, just after I had put on $400 worth of new Michelin tires and rolled the odometer up to 33,000 miles, I drove trustingly toward a green light at the intersection of Alma-zan and Marsh Lane. As I reached the intersection, an Ingersoll-Rand company pickup truck loaded with machinery ran the red light and slammed into my Malibu just behind the passenger’s seat. The impact spun the car around and threw it onto a sidewalk. The side and top were badly crushed. I bailed out of the wreckage in a hurry, and the first thing I did was to look up at the traffic light. It was still green.

The police and an ambulance arrived. I didn’t think I had been injured, so the ambulance left. I walked around at the scene of the accident, talked to the accident investigators and overheard the truck driver admit to one officer that he had run the red light just before the collision.

About 30 minutes after the accident I began to feel the first pains. The hurting quickly worsened, and someone drove me to a medical clinic not far from my house. X-rays revealed three broken ribs. I had not been wearing my seat belt, and upon impact I apparently had fallen across the armrest on the front seat.

I have had complete auto coverage with State Farm for more than 16 years. I notified my agent shortly after the accident. But since the wreck was not my fault, 1 felt the other insurance company should have to pay. What I was not prepared for, however, was the dog-eat-dog world of auto insurance and how little the “other” company is legally required to pay you if your car has been totally destroyed.

When I got home from the medical clinic, 1 called Ingersoll-Rand to ask for the phone number of its insurance company. I was referred to a man named Gerald Lyday, who told me: “I don’t have it handy. I’m not trying to put you off, but our insurance company pays and moves slowly. We will notify them if our man hit you like you say he did.”

I asked Lyday if the driver had reported the accident to him. He had, Lyday answered, adding that he was filling out some paper work on it at that moment. Lyday refused, however, to look up the insurance company’s telephone number. He told me that it was listed under the initials NWIG “or something like that in the Irving phone book. You can look it up yourself.”

At that point, I was in too much pain to bother. But the next day, when I felt somewhat better, I checked for the number and found no listing. I called Lyday again, and this time, to make my request a little more emphatic, I added a bit of bluff that a lawyer friend had taught me. “I have been advised to get a number from you, Mr. Lyday,” I said. He produced a phone number immediately, cautioning me to remember that he had not yet called it.

The number connected me with Kemper Insurance in Irving, not Northwestern National, and at first I thought I had been deliberately misled. But Pat Sailors, who would be my adjuster, asked me to describe the accident in detail. I also told her that I needed a car to get back to the doctor and take care of a few errands. Ms. Sailors sent out a rental car, then called me back and asked if I would give her another statement about the accident and let her record it. Wanting to help settle things as soon as possible, I gave her the statement. Later, a lawyer would tell me that this was the wrong thing to do.

Ten days passed and I had heard nothing more from Kemper Insurance so I called Pat Sailors. Had her company, 1 asked, seen the damage to my car? “Oh yes,” she replied. “The appraiser noted on his report that it was in unusually good condition before the accident. According to the blue book, however, it’s worth only $1,800. But we are going to allow you $2,000.”

I was completely taken aback. I knew what had happened lately to the price of new and used cars. “I can’t get another car for $2,000,” I told her.

“That’s too bad,” she said. “I know it sounds callous, but that [the blue book value] is legally all we have to pay you. That is the law. We are also dealing with two other women who don’t know how they are going to get another car with their money, either. So you are not alone. You just had bad luck, and that’s the way it is.”

Then Sailors hit me with another shocker: “We are not going to pay for your wrecked car’s storage after Friday if you don’t settle.” At this point, however, I felt neither like looking for a replacement car nor for a new place to store my wrecked one. My ribs still hurt so bad I could only sleep sitting up. I decided to let the settlement matter wait a little longer.

The next day I called Friendly Chevrolet to find out how much it would cost to store my wrecked car. I was informed that the company had no intention of charging me. I realized then that Pat Sailors was using pressure tactics to try to convince me to settle.

I waited a few days before I called her back. 1 told her that 1 had thought about the offer of $2,000 and 1 could not accept it. 1 insisted that I should get, instead, a car in a condition as good as the one 1 lost when the truck driver insured by her company ran the red light and totaled it.

“Maybe you should talk to your own agent,” she said. “And another thing: We can only furnish you a rental car until next Monday.”

Later that day, 1 called my State Farm agent, Al Mitchell. He advised me that I could file a claim with State Farm if I wished, and that he would subrogate from Kemper. 1 decided against this, however. The problem, I felt, was Kemper’s, not State Farm’s. I wanted no claims against my record with my own insurance company, especially for an accident that was not my fault.

Three weeks after the accident, I visited my banker to take a look at the all-important blue book. I had heard that bankers use it, too, when making car loans. The blue book is a collection of figures compiled by the National Automobile Dealers Association. It gives average prices for all cars, according to age and model, and is based on used-car sales prices in several states. The prices listed are basically wholesale figures, not retail.

“The book,” one Irving car dealer told me later, “is so out of line that we don’t use it at all when we buy or sell. It is written for bankers, so they won’t loan too much money on used cars, and for insurance companies, so they can make low settlements on cars. If you want to know the actual price of a car, go to a dealer. The book doesn’t have it. It’s a guide, and that’s all.”

In fact, I learned that there are several “books” in use, and the prices in them do not always agree. In looking at my banker’s blue book, however, I learned that I was due another $500 because of the Mali-bu’s low mileage.

When I called Pat Sailors and confronted her with this information, she claimed the low mileage already had been taken into consideration. I asked her to think it over. “Something’s wrong,” I said.

“Wait a minute,” she replied. “Our appraiser did not add this up right. It comes to $2,350.”

“That’s still not right,” I told her. “It should be $2,500.”

“Well,” she said, “he took off for a long scratch on the side. It looked old.”

By now I was totally irritated. “That’s not true,” I snapped. “There was no old scratch anywhere on that car. And what about my new tires?”

The tires, Ms. Sailors said, made no difference. But she did remember something else. “I’m going to have to take another $55 off to have your car cleaned by a cleaning crew. It’s routine. We have to clean up all wrecked cars before we put them up for auction.”

Astonished, I asked her to repeat what she had just said. She did. Fifty-five dollars to clean out a wrecked car.

“Wait a minute, lady,” I said finally, “Either you are crazy or you think I am. You can forget that $55.”

“Oh, all right,” she replied with seeming nonchalance, and with that the matter was dropped. By now I was wondering what kind of people and business I was having to deal with.

Next, I called the Insurance Information Institute, a Dallas-based public relations branch of the insurance industry. I explained my problem to Barry Walker, the institute’s director. He listened sympathetically, then suggested I call Tom Carlson in Garland, Kemper’s regional director. Carlson also listened sympathetically. He assured me things would be worked out and said, “They will get back with you by 3:30 this afternoon.”

Right on time, Pat Sailors’ supervisor, Nora Douglas, called and told me that they would try to find me another car. She called again the next day and said they had found at Steakley Chevrolet a blue 1977 Malibu with 59,000 miles on it. The price was $3,400 and the tires were not good, but it was the best they could do, she said. “If you will bring your doctor bills by,” she added, “we’ll advance you the difference between that and the price of your wrecked car, and I can have that other car in your hands this afternoon. Also, we are allowing you $2,500 now on your old car.”

If she was expecting me to rejoice at that news, I didn’t. “I can’t do that,” I told her. “It’s not the way I do business. But I’ll take the $2,500 check from you and endorse it back over to you. Then you can go out and buy me a car as good as the one I lost.”

“We’re not in the used-car business,” Ms. Douglas replied, “and we just can’t find a car comparable to yours for that price.”

“I am not in the insurance subsidy business, either,” I said.

“We are not asking you to subsidize us,” she said.

“Anytime you ask me to help pay for a car lesser than the one you destroyed for me,” I said, “you are asking me to subsidize your obligations.” The argument ended there.

I called Barry Walker at the Insurance Information Institute again. He said he had never heard of an insurance company asking someone to use money intended for medical bills to help pay for a car. He suggested I place another call to Carlson, Kemper’s regional director. I did. Carlson seemed very impatient. “Why don’t you call your own agent?” he demanded. “He should be out there fighting your battles for you. That’s what you pay him for. Tell him I said that. Tell him to call my office.”

“He is not responsible,” I said. “You are. Don’t you think I should pay my doctor bills?”

“Well,” Carlson replied, “we don’t care what you do with your money after we give it to you. That’s as far as we are responsible. And yes, I think doctor bills should be paid, but that is up to you.”

I told Carlson that 1 had had my car appraised by two car salesmen -one at Friendly Chevrolet, the other at Miracle Ford -and each had given me written statements that my car would have brought $3,200 to $3,400 on the market at the time of the accident. I also informed Carlson that I had found a car very similar to mine in an adjoining county, and that the owner would sell it for $3,200. “Your Irving office refused to buy it for me.”

Carlson’s patience obviously was running out. He repeated that my car was worth only $2,500. There seemed to be something sacred to him about a blue-book price. “You need to see your own agent and let him counsel with you, Mrs. Korsak,” he said. “You are a very uneducated woman -as far as insurance is concerned, that is. Let your agent help you.”

Now I was furious. I decided it was time to educate myself-and the public -on the business of car insurance. I went out in search of more facts and quirks about car insurance, the manner in which the industry operates in Texas and, most importantly, the rights of the consumer in disputed claims.

A Dallas attorney told me: “Insurance policies are not understandable. They can be interpreted one way on Monday and another on Tuesday, depending on any given situation of the moment.”

I went to Austin to interview William P. Daves, chairman of the State Board of Insurance. Four members of his staff also sat in on the meeting: Don O’Brien, director of auto and miscellaneous casualty lines; Gene Reed, manager of the claims and complaints division; Dixie Evatt, information services officer; and Gaylon Daniel, staff actuary. Texas auto insurance policies, I learned, ultimately are written by three commissioners after input and assistance from others. “The State Board of Insurance,” O’Brien told me, “can promulgate a policy, can say what goes into it, what the insuring agreements and the conditions and provisions are. But because it is a legal contract, the state board cannot officially interpret it. Just as with any legal document or contract, it is subject only to a legal court of common jurisdiction.”

I brought up the issue of insurance policies that can be read – and understood – by those who pay for them. One participant in the meeting assured me that if the state Legislature instructed the State Board of Insurance to write an insurance policy in easily understood language and terms, the board would be obliged to do so.

“I think we have already done that,” O’Brien said. “The new auto policy in effect this year [1981] is [the result of] a four-year effort at simplification. 1 think it is a right step in the right direction.”

They laughed, however, when I replied: “I’d like to read you a passage and let you explain it to me.” 1 did not get to read it to them, but this is the passage I had chosen:

LIMIT OF LIABILITY

The limit of liability shown in the Declarations for “each person” for bodily injury liability is our maximum limit of liability for all damages for bodily injury sustained by any one person in any one auto accident. Subject to this limit for “each person,” the limit of liability shown in the Declarations for “each accident” for bodily injury liability is our maximum limit of liability for all damages for bodily injury resulting from any one auto accident. The limit of liability shown in the Declarations for “each accident” for property damage liability is our maximum limit of liability for all damages to all property resulting from any one auto accident.

“Again,” O’Brien said, “this is a legal document, and you can’t write it like Jack and Jill. There are certain legal terms that have to be in there. This policy is a much-. improved version. But maybe it can be simplified again.”

I asked the executives of the State Insurance Board how and to whom a Texas motorist can complain about problems involving insurance companies and claims settlements. Then 1 told them of my dispute with Kemper.

“I don’t understand this,” said Gene Reed, whose office handles the complaints on all kinds of insurance, including auto, homeowner’s and workmen’s compensation. “Ordinarily, they [Kemper] are one of the better companies to deal with. I don’t have actual statistics,” he said, “but I’d say at least seventy-five percent of the complaints we get against insurance companies are unjustified. Ten to twenty-five percent involve simple mistakes of some kind, and about three to five percent are marginally justifiable.”



Reed said the Bible for his office is Article 21-21-2 of the Texas Insurance Code – the Unfair Claim Settlement Practices Act. The act is designed to protect the insured from unfair claim settlements by insurance companies. It empowers Reed’s office to investigate complaints against insurance companies. And the act provides a solid protection for insurance policy-holders faced with claims settlements they feel are inadequate and unfair. But motorists filing complaints must do so in writing and must have documentation to support their reasons for disputing a claims settlement.

“Your insurance policy states [in the case of a totaled car] that the owner shall be paid the actual value of the car or the car will be replaced with another of like kind and quality,” Reed said. “The actual cash value is the price the vehicle could have been sold for in the open market one minute before the accident. The best way to prove your claim is to go and ask a car dealer or salesperson what your car would have brought [before it was wrecked]. Get it in writing. And more than one appraisal would help. This is what I tell citizens of the state every day on the phone. If there is a dispute, take your written proof of your car appraisal to the proper person at the insurance company, lay it down in front of him, and don’t ask, tell him: ’This is the price of my car, here’s my proof and this is what I demand in payment.’

“He may come back with something like this: ’I’ve got some figures as good as yours, and I don’t intend to pay you any more than that on behalf of my company. I’ll see you at the courthouse.’ And he is going to have to incur the same legal expenses that you will at the courthouse.”

“Yes,” I said, “but he has a whole lot of insurance money behind him to fight me with, and I have to work for every dollar I get, and therein lies the difference. I am the one who loses time on the job. I do without a car or the money for one and I worry. He is on the job and has a car. Court procedures can last for months, and the average working person needs a car immediately.”

It is better, Reed said, to try first to resolve a claim dispute without going to court by taking advantage of the provisions of Article 21-21-2. “Ordinarily,” he said, “we are able to respond to a written complaint in 72 hours and send an investigator to see the person and contact the insurance company. This costs the policy-holder nothing and is part of the protection he gets under Article 21-21-2.”

At this point, I realized how miniscule my complaint must have seemed to the insurance people and to the state board. I wondered why neither my State Farm agent nor someone at Kemper had mentioned the Unfair Claim Settlement Practices Act. Why, I asked, is information about this state law not mailed out to motorists with the copies of their auto policies?

“If this were sent out with policies,” Reed responded, “you would have people calling and asking all kinds of questions, not just with disputed claims. Anyway, most of the questions can and should be answered by agents -especially independent agents. There just wouldn’t be enough people to answer the phones, and the cost to the consumer would outweigh the good it would do. And we are not a judge and jury. We can handle only legitimate complaints.”

In the end, I did not win. Faced with accepting a “book value” settlement for mycar or financing a costly court battle, 1 accepted Kemper’s offer. Tom Carlson wasright. I was uneducated in the ways of carinsurance. But not anymore.