The bill supports and reinforces NYS Ins Regulation 2610.

Insurance company influence of network or program-preferred shops has some consumers confused as to their rights following an accident, especially when they find themselves directed to take a vehicle to a drive-in facility that is housed in a repair shop. This bill requires insurers to notify consumers--in writing on the appraisal--that it is up to the consumer to decide which shop repairs their vehicle.

In response, NYSACTA executive director Ed Kizenberger said, “The passage of this bill is the culmination of 4 years of conversations and meetings with the NYS Assembly and Senate members to garner support and understanding of the issues facing consumers when filing and processing a claim with their insurance company for property damage to their vehicle.”

NYSACTA president Mike Orso said, “This bill, now law, goes a long way to protect and inform consumers. They need to know they have the right to take their vehicles to the shop of THEIR choice. Some tactics being used by some insurers direct consumers to drive-in network locations, which may indeed be body shops, where consumers may get the impression they are required to have the vehicle repaired at that shop.

“Insurers will be required to inform consumers in writing they have the ultimate choice. Regulation currently provides that even the inspection is 'at the convenience of the consumer,' meaning they can meet the appraiser at the shop or location of their choice as to avoid further pressure,” Orso said.

A7738 Was sponsored by Syracuse Assemblyman (D) William Magnarelli and Syracuse area Senator (R) John DeFrancisco.

To read the bill in its entirety, click here

By: Mike Lasini

In Nathaniel Hawthorne's 1850 novel, The Scarlett Letter, the main character had to wear a scarlet "A" to let others know of her alleged sin. Fortunately today, people are not subject to public shame over a single circumstance or event. However, if their vehicle has been in an accident, databases worldwide track this information and make potential buyers aware of the vehicle's history. The more things change, the more they stay the same.

There are 25 million accidents in the U.S. each year. Only 15% of those are deemed total losses and paid out by insurance companies. The balance is repaired, driven unrepaired or scrapped. Repairing these vehicles is a multi-billion dollar endeavor and only half of the damaged vehicles are repaired with insurance company funds. That leaves 10 million with no financial assistance due to lack of insurance coverage, being at-fault or some combination thereof.

The emergence of Vehicle History Reports has made the accident the “star of the show,” creating another multi-billion dollar industry. CarFax in particular has dominated the consumer market with its FUD (Fear/Uncertainty/Doubt) marketing tactics. The American public is now convinced that a vehicle is “worthless” after an accident. They are correct-both literally and figuratively because “worth less” is indeed the case. This loss in value due to stigma is called "diminished value."

The psyche of today’s car buyer is dominated by CarFax in the U.S. and 9 out of 10 customers will not even look at a vehicle if it has accident history. This is not opinion, it is absolute and unless the selling dealer can provide proof that the vehicle is accident free, the vehicle is passed over. Most customers at the retail point of sale believe that alternative vehicle history reports like AutoCheck are controlled and manipulated by dealers to trick customers into buying a vehicle with accident history. This forces the dealer to provide multiple vehicle history reports to sell the same vehicle. As a result of this brand strength, virtually every business in the automotive supply chain touching a retail transaction has a significant need for extensive vehicle history reporting.

Below are high-level observations on how vehicle history reports impact industry players:

What is Diminished Value?

Imagine you’re going to BestBuy for the new Samsung 4K HDTV – the pinnacle of flat screens. The retail price is $18,499 and they are completely sold out, but they have a refurbished one they can sell you right now for the full retail price. Would you buy it? Seriously, only a fool pays full retail for a refurbished item so you quickly ask what the discount is and what specifically was wrong with the TV offered for sale. The salesperson tells you that he has no way of knowing what was wrong with the TV, just that it has been refurbished and the great news is that they can save you 10%. Now 10% is a nice gesture but hardly enough to make any consumer want to buy a “refurbished” high-ticket item, especially not knowing the extent to which the unit was repaired. Was it a power button? Was it dropped and the screen shattered, or just an open box used for display at a show?

Now if 10% is obviously not enough of a discount to induce the buyer to consider a “refurbished” high-ticket piece of electronics, why would that suffice for an automobile? Refurbished is a very general term leaving much room for imagination when a very high degree of precision is required for collision repairs. The insurance company has all the details associated with the repair, to the penny, but will not share this information with vehicle history reporting agencies. They will, however, make certain that the claim is reported and specifically what the cause or nature of that claim was in general terms. Here within lies the problem because we don’t know as the buyer or seller of the vehicle downstream what the severity of the repairs were, so we are left to deal with the stigma of “refurbished.” The customer simply does not know the severity of the accident so they look for a vehicle with no accident history because there is no benchmark for exactly how much discount they are entitle to. The vehicle with accident history sits in dealer inventory a long time until discounted heavily to be sold. This discount is diminished value and CrashCalculator.com sets the standard for the calculation.

What We See

Here are a few statistics from 2015:

• Average diminished value loss was $3,000
• 85% of total diminished value loss was inherent or “stigma” related
• Structural damage occurs to a very high degree (95%) at specific thresholds
• Unitized construction: $3,500
• Full frame: $4,500
• Unitized on frame: $4,000
• Airbag deployment results in structural compromise 98% of the time
• Structural damage can exist and is not disclosed until the vehicle is inspected and processed* by an NAAA auction
• Inherent and structural diminished value is not related to repair quality
• Substandard or poor quality collision work will have a demonstrable effect on vehicle value but are unrelated to diminished value

Other Challenges

In our foreword we mentioned that 10 million accidents each year go unreported.  Not all of these vehicles are repaired; some are scrapped or driven in their damaged state.  Typically repairs are paid out-of-pocket by savvy owners seeking to avoid policy rate hikes plus the loss in value associated with accident history.  The insurance carriers win as claims handling costs go down and everyone else downstream loses as the vehicles get sold or traded with the repairs being later documented through physical inspection.  Auto Auctions most commonly see these repairs and report them as “frame/structural” damage announcements to AutoCheck.

Silos

AutoCheck is the only VHR with physical inspection data from auto auctions but it is limited to frame/structural damage announcements that are not shared with consumers.  The damage associated with these findings at auction fall on the higher end of the severity scale because they occur when damage is greater than the average insurance reimbursed repair. AutoCheck and CarFax do not collaborate and there are hundreds of thousands of vehicles that have frame/structural damage in their history but no documented record of an accident in the vehicle history file.  Experts estimate that there are 70-80 million vehicles on U.S. roads with accident history and 10% have suffered frame/structural damage.

Auto Dealers are required to disclose accident history in most states but if the vehicle was purchased in a “whole and undamaged state” how does the dealer ascertain it was in an accident?  Paintwork does not prove that a vehicle was in a collision and, unless there is glaring evidence of collision damage or vehicle history, it is not easy for the dealer to find or disclose such evidence, which creates liability.

Conclusions

Diminished value is tangible and a very big problem in the U.S. – more than $250 billion!

The monetary damage created by diminished value runs deep and touches almost every vendor in used vehicle supply chain.  Vehicle History Data Providers are working feverishly to add more data, more products and dig deeper to provide more of a picture and create more value.  This information should be available to “all” sources if it is discovered or created and has an impact on the value of the vehicle.  Insurance carriers are the largest collision repairer in the U.S. yet they shield the American public from the details associated with the actual repairs.  The average collision repair performed is $3,500 and with more transparency, diminished value would be far less of a problem.

Data providers, auctions and insurance companies should also share data that has an impact on vehicle value.  This would include but not be limited to:

- Frame/structural damage

• Flood damage
• Fire damage
• Smoke damage
• Previous repairs
• Substandard repairs
• Collision repair work performed
• Mileage discrepancy
• Theft history
• Salvage/total loss

I've been screaming about diminished value for decades. A hit on a history report, correct or not, creates an undeniable diminution in value that only a newly landed Martian would be silly enough to deny. Twenty five years ago when vehicle history reports first started surfacing the average price of a new car was $30,000 or less. Today it's double. Who ever thought an Escalade would be sneaking up on $100,000. A small insurance claim intrinsically creates a desirability issue that crushes the value. The proverbial "shopping cart" accident can make that Escalade's ACV plummet. Who will bid and why they won't changes the “desirability index” dramatically and therefore the value simply is not the same...or close.

Over the decades (holy smokes time flies) we built the tool that universally solves the issue of quantifying the valuation, the dollar amount, on the VIN specific unit. Thank any God we did. Because now that the buzz on the diminished value topic is intensifying we are ready willing and able to bring the Diminished Value Calculator (it will be using dimvalcal.com as the URL) DVC as the acronym, to the general market.
Real time, the DVC takes all the specific VIN explosion details that are obvious like any recognized value guide might, but it also takes into consideration thousands of details and market driven nuance that aren't so obvious. The multitude of things that we've experienced qualifying, quantifying, pricing, actually buying, and actually selling, millions of vehicles over the decades.
The DVC patent pending algorithm fundamentally changes the accident victims view of the heretofore dilemma… how they go about collecting what the law says they have coming to them but nobody has figured out, the diminution in value they experienced when their vehicle had an accident in a clear, empirical, accessible to anyone, market driven guarantee.

In addition to being 100% transparent, DVC enables the user to transact. The fact that a pre and post-incident guarantee to purchase the specific unit in question sets it apart from the “opine” of any other entity/system/book/company. While capturing the granular detail necessary to make a purchase offer DVC inherently creates a desirability index that considers how a unit is viewed by traders in the liquid wholesale market from coast to coast in the US and Canada. How an accident impacts a white 2014 Mercedes S550 compared to a blue one with the exact same characteristics is dramatic in reality. You ask how or why? I say a lot and because.
The because is in the market driven nuance which makes up the science baked into the algorithm. Separate from geographic variance, supply, exportability, depth/of the hit, location of the hit, contiguous panel effected in the hit, miles, color, smell, DVC includes a very unique way it looks at the depth of the predictive buyer base on the specific unit. The DVC process also captures granular detail that produces a “pedigree “of the VIN and the case. All vehicle valuation and case documentation are housed on Headstart DVMS, a robust cloud based workflow brain, a management process, where permanent record of each case that can be accessed by subscribing lawyers, dealers or individuals. Headstart DVMS (Diminished Value Management System).

Our goal is to make collecting the diminished value an open and shut process. The impact on the specific 17 digit VIN is one that falls outside a layman's capacity. The DimValCal, our diminished value calculator, creates a guaranteed value, a wreck report, to be used in getting your wreck check. Individuals, dealers, dealer loaners that always end up with a hit on FAX, lease companies, captives, rental car companies all have a clear path to getting paid.

The analogous line: Books, market reports, are maps. Accutrade is VIN specific navigation. That's the elevator speech, the following is some detail.

A map costs little and could get you to the neighborhood, anybody can make one

Navigation costs a bit more to create and maintain, but delivers you to the front door.

Accu-trade is the transparent ignition switch to any marketplace...wholesale, retail, auction, online or in lane, diminished value calculation (guarantee), which is agnostic and actionable.

If you put the wrong address in navigation it will take you to the wrong place, similarly, Accu-trade is sensitive to accurate input of a few well defined VIN specific details:, color, smell, value impact options/physical characteristics (clearly defined on the site), previous paint, which combined create a VIN specific “pedigree”. This pedigree remains as the DNA(details never asked) of the VIN.

Accu-trade’s pedigree report (Universal Condition Report/UCR)can be accessed and modified by any authorized subscriber throughout the trade-in, transport, re-marketing, auction, arbitration process, future Diminished Value calculation and archiving.  Like a “one write” checkbook, transparency is absolute, fundamental, and unique.  By default, the product quantifies all information required by OMVIC and lending regulators.  There is little “wiggle room” left for interpretation.

Accu-trade’s transparent value impact price adjustments, each showing the associated value add or deduct, remain logical/irrefutable which enable logical conversation with your customer.

Accu-trade enables/determines a transparent Diminished Value Calculation Report resulting from accidents for insurance claims.  The report gives a guaranteed pre and post incident purchase offer that determines the exact diminished value. This is available to law firms as well as dealers, lease companies, and OEMs.

The Accu-trade process insures full compliance with OMVIC and any other compliance request when the user takes a few seconds to input vin specific disclosures that can be used in audit and can be accessed remotely.  By having your customer sign our time, date, location stamped report, we archive each transaction that can be accessed by an inspector in office…or remotely.  This will save every dealer from associated aggravation and panic attacks when the inspection is scheduled.

The Accu-trade lead generation widget for the user's website is unique to the industry.  Among the items that differentiate Accu-trade it can be set to be a guaranteed value directly to any consumer.  Obviously this has never been done in Canada.  It is instant and totally transparent.  To insure transparency, the product enables modifications for instances where the description from the retail customer has, by intent or oversight, entered inaccurate or incomplete information.  Using any mobile device, the dealer modified information co-validates the inspected, current condition.

The dealer website lead generator/ trade valuation product is built to recognize and enable modification to the subscriber's needs. It can create a trade-in range that matches the dealer's profile.  The rooftop can increase or decrease the consumer facing “offer”.  Depending on a dealer’s profile, business acumen/inclination, which obviously varies based on location, brand, the dealer can “white label” and modify what they want to offer their customer.  *this can only be done if Accu-trade is not referenced on line or at the dealership. 

Accu-trade builds a dealer/user profile that determines predictive activity based on their use. Part of the “one write” analogy it requires no second action from the user. It proactively adjusts as the user changes inventory needs, buying or selling. This process is patent pending that we believe will permanently disrupt the re-marketing process as we know it.

The founders and  Accu-trade team and re-marketing support have been in the wholesale valuation/re-marketing industry  cumulatively over 1,200 years (seems ridiculous but it is true, my name is Robert Hollenshead, not Methuselah).