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Following up on new technology issuing from manufacturers, I came across some encouraging, some worrisome, but certainly interesting information.

Advent of aluminum

The new Jaguar XJ8 is an “all aluminum” car. Its structure is made of aluminum and is, therefore, substantially lighter than steel body cars or even mixed-material cars. Mercedes-Benz and BMW build vehicles with aluminum body panels joined to steel structures. Other automakers use aluminum for a limited number of body panels, with the hood being the most common.

New types of steel

It has been said that there is nothing new under the sun, but that was before the advent of “ultra-hard” and “quiet” steel. Sounds interesting and it is.
Ultra-hard steel is steel made with boron. It is stronger than ordinary cold-rolled steel and has dramatically increased memory – that is, it remembers how it was shaped and is much more difficult to bend or change. As a result, it will not deform as easily upon impact and will also be less likely to ding or dent.

Then there is quiet steel, and it lives up to its name. Quiet steel consists of two pieces of cold-rolled steel sandwiching a layer of laminate. The result is a thin metal product that absorbs rather than conducts sound.
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NHTSA opened the application process for states to obtain grant funds to underwrite programs promoting seat belt use. This is one of the few programs offered by the U.S. government that can be described as an attempt to improve the safety of people traveling in “used” cars.

So, for all of you states looking for funding for law enforcement to write more tickets, here is your chance.

http://a257.g.akamaitech.net/7/257/2422/06jun20041800/edocket.access.gpo.gov/2004/pdf/04-26351.pdf

A colleague forwarded a link to a Washington Post article describing the economic pain of diminished value suffered by a couple to their new Lincoln LS. The owners were not at-fault, so their claim was not a first party claim against GEICO (which happened to insure both parties) under their own auto policy, but it was as a third party. According to the WP article, the couple was told by GEICO and Virginia regulators that their diminished value was not covered and they wouldn’t be compensated for it.

This answer is wrong. The couple has every right to sue the person who hit their new car for negligence and recovery any and all decrease in value caused to the LS. They don’t have to deal with GEICO as the other party’s insurer at all. They can simply sue for the full value lost, and, once they obtain a judgment, GEICO would end up paying the judgment on behalf of the at-fault driver.

It is extremely irritating to hear that people are even being given incorrect information from their own insurance regulators who, frankly, should know better but apparently don’t. Regulators need to remember that third parties work with the at-fault driver to have their cars repaired as a courtesy to the at-fault drivers’ insurers. Maybe every third party should start suing the at-fault drivers and letting the insurers pick up the expense of defending their negligent insureds in addition to paying any judgment obtained. That might finally get the attention of the insurance industry and the regulators who are supposed to protect consumers from over-reaching behavior.

At least as journalists, communicators, and information providers, let’s start getting it right.

An Accident Can Wreck A Car’s Resale Value (washingtonpost.com)

Insurance Journal reported today that Senator Fitzgerald of Illinois made the statement that: “It might be time to use federal antitrust enforcement to ensure that the insurance brokerage industry remain free, competetive, and healthy for consumers.”

Fitzgerald suggested Congress might reconsider the McCarren-Ferguson Act which currently exempts the insurance industry from most federal antitrust laws for activities that are regulated as the “business of insurance” at the state level. The Senator said that the present broker fee scandal convinced him that there is a role for the federal government to play by disallowing excessive market concentration.

It would certainly be interesting to see how well the insurancy industry could adapt to playing by antitrust rules. Since the enactment of the McCarren-Ferguson Act in 1945, insurers have enjoyed a privilege of doing business in an environment free from federal oversight. Trying to adapt to the rules of the free market society might be daunting to them.

Sen. Fitzgerald Says Broker Fee Scandal May End Antitrust Exemptions

The U.S. Government Accountability Office (GAO)released its report to congressional committees on the National Highway Traffic Safety Administration’s (NHTSA) data collection and sponsorship of state data collection programs. GAO, apparently, found a good deal lacking in NHTSA’s data and its collection methodology.

For instance, the GAO report cited disparities in the type of data collected, requirements for collection, and lack of uniformity in determining when data must be collected. The report noted that some states involved in the investigative study require police reports to be filed when there is automobile property damage over $500, others when the property loss exceeds $1,000, while some states leave the reporting decision to the discretion of the law enforcement officer or only if at least one vehicle must be towed.

Additionally, GAO found NHTSA’s oversight of the state programs it funded was lacking. Of the states involved in the analysis, only one had complete data integration across all of its traffic-related databases. In the other words, some states might be able to tell you that a person caused an alcohal-related traffic accident but not whether there was a conviction for drunk driving.

So, despite NHTSA’s congressional mandate to collect information on traffic safety, the quality of that information is up for grabs.

You can access the full November 2004 GAO report titled “Highway Safety: Improved Monitoring and Oversight of Traffic Safety Data Program Are Needed”, document GAO-05-24, at http://trb.org/news/blurb_detail.asp?id=4379 or by clicking download file. Download file

You might not be aware that there are no federally mandated safety standards for vehicle repair. Likewise, the vast majority of U.S. states do not even register or license collision repairers. So, the person repairing you car might use a repair technique known as “clipping” to get your car back on the road and to satisfy a cost-conscious insurer.

Clipping, or full body sectioning, typically entails cutting off the entire front or rear of a damaged vehicle and welding the undamaged salvage half of a different car onto yours. Sounds ridiculous, as well as unsafe, but cars are clipped every day — and you just might be driving one.

Because there are no mandated repair standards which have been determined to be safe, someone you love might be riding in a vehicle repaired like this Mazda. When it was in a subsequent accident, the car ripped apart, leaving the occupants to the mercy of providence.

My question is always: Which one of your loved ones would you want to be in the back seat of a car repaired like this?

In August 2004, when the comments for the National Highway Traffic Safety Administration’s Notice 17794 on NHTSA’s long range strategic plan were submitted, my comment was the only one suggesting that the agency investigate creating repair standards and collect information on damaged motor vehicles. Amazingly, no one at NHTSA is interested in the fact that absolutely anyone, qualified or not, might be repairing cars — in any way that person sees fit.

Comments can be accessed through the docket management system with the entry of 17794 for the docket search. My comment can be accessed in that location as number 35 or click download file.

Download file

In a decision rendered September 10, 2004, the Kentucky Court of Appeals vacated, in part, the decision of the trial court granting summary judgment in favor of Defendant, State Farm Mutual Automobile Insurance Company, on all remaining counts of Plaintiff, Linda Cook’s, Complaint. The Court of Appeals vacated and remanded Cook’s claims for breach of contract and for statutory misrepresentation.

Cook is a first party claimant under her State Farm automobile insurance policy. After being involved in an accident in 1996, she took her 1994 Saturn to Performance Body Repair, Inc. for repair. State Farm paid for the repairs to Cook’s vehicle less her deductible.

After experiencing problems with her car, Cook eventually sued State Farm for understating the necessary repairs on her estimate and for failing to pay for a proper repair to her vehicle. Of particular note in the decision granting summary judgment to State Farm, the trial judge wrote: “Plaintiff’s breach of contract claim, Count III, fails since all of the repair procedures identified by Plaintiff, for the first time two years after her car was repaired: (a) were in fact performed by the body shop that repaired her car and were paid for by Defendant; (b) would have been authorized by Defendant, if necessary and a result of her covered claim; or (c) were the result of omissions by or actions of the body shop.”

The Court of Appeals, however, found the trial judge’s statements on this issue presumptious, noting that there were issues of fact relating to procedures and repairs that Cook alleged were not included in the estimate and that, “State Farm had the final word on those repairs that it would and would not pay for, not Perfomance or any other body shop.”

The appellate court also found that State Farm never presented any facts or evidence entitling it to summary judgment on the statutory misrepresentation claim. Instead, the court found that State Farm misinterpreted Cook’s cause of action and, therefore, failed to present necessary evidence on the right claim.

I find it disturbing that the trial judge so willingly grafted non-existent facts into the materials submitted. There apparently is little appreciation within the legal community that insurers have cost-saving goals and might arbitrarily refuse to authorize certain necessary repair procedures in an attempt to achieve those goals. Equally perplexing is the willingness to assign all blame for problems with the repaired car on the body shop. Anyone who knows anything about the collision repair business understands that body shops work under enormous pressure from insurers to make repairs according to the insurers’ terms and estimates, not their own.

Thus, I make my own legal slogan: Caveat body shop

Access opinion at the Kentucy Courts website or Cook v. State Farm Mutual Automobile Ins. Co., C.A. No. 2002-CA-000801-MR Download file