If I am reading correctly, Morgan Moran admits to coming out $22,000 ahead on his vehicle “loss.” In other words, he was enriched by his policy. Insurance is intended to put the insured or claimant back to the financial position they were in before the loss, not provide windfall profits. And Moran works in the industry so he should know that. It is possible the vehicle may have flood-related problems later that don’t show up right now, but why should I feel good about Moran being “enriched?” I don’t pay premiums for that to happen.
I think both you and Morgan misunderstood. The ACV of the “totaled” vehicle was $25,000. He decided to keep the vehicle so the adjuster deducted the salvage value of $3,000 and gave him a check for $22,000. It appears the insurance company paid what the insurance contract allowed.
I read the article the same way as you, Lauren. It’s possible the carrier undervalued the salvage return (which is why he thinks he “came out ahead”), but the owner-retained total-loss claim looks to have been settled correctly.
Doesn’t part of the issue here appear to be that the supposed damage that was paid out on, did not actually occur? The way I read it is that his car was totaled out as a flood loss, but in reality there was only water in the wheel well. If the electric system was not destroyed, then by definition, this was not really a total loss.
I don’t think he did anything wrong. His insurance company totaled his car rather than try to fix it and gave him a check for the value. If he turned around and purchased the salvage for $3,000 or bought it from the junk yard that is his prerogative. He will still NEVER be able to sell it for $25,000 to any other buyer…it’s been totaled in a flood. So the fact that he is still driving the car has nothing to do with the amount he was paid. In this case think of it more as a payment of diminished value. He actually lost $22,000 in value.
The check for $25,000 was the ACV of the car under the pretext that the car had been destroyed by the peril of flood. In actuality, the electric system was working and had no damage to it. If the car was actually flooded, there is no way the electric system would have survived… That would be like me burning my seat with a lighter then making a claim for a total loss due to fire.
The insurance company paid the policyholder $25,000 for the loss to his Land Rover. Then they offered to sell him the salvage vehicle for $3,000. He didn’t enrich himself from the policy. He made money by buying back the car that the insurance company undervalued. Nothing unethical to see here.
You are just restating the fact that the car was salvaged and he purchased the salvage rights. That is not the issue. The point is that his car was not actually destroyed, and subsequently should not have been totaled out. The entire point of the article is that the adjuster totaled it out in a matter of seconds because he “saw water in the spare tire wheel well,” and assumed that the car was totaled by the flood. However, the electric system was not even effected. If an electric system in a car is not damaged, then the cost to repair the vehicle would not likely be greater than the ACV. The insured then states “I ended up coming out way ahead.” This violates the basic principle of indemnification. An insurance policy is meant to restore you to the position you were at prior to the loss, not to enrich you. I am shocked at how many people on this site lack basic reading comprehension skills. It is ever more terrifying that some of you claim to be underwriters with advanced designations…
It appears the carrier made two mistakes. The first one may have been declaring that the vehicle as a total loss when it wasn’t and they then sold the car for $3k when the salvage value, based on it’s condition, should have been much higher. Certainly this claim was settled in haste. Errors happen and the best option for this agent was to keep his mouth shut.
SWFL, are you an insurance agent? If any water gets in the car from a flood it will be totaled 99% of the time. A salvage value is based on what an insurance carrier can get from an auction at a guaranteed price. So either the auction gets it for $3,000 or the consumer. Both yourself and Augustine are making way too many assumptions.
Think many are missing the point of the article. The consumer doesn’t total the car, the insurance carriers adjuster does. Many consumers do not realize that they can buy a car back, fix it up, or take a chance on a flooded vehicle. If an adjuster “totaled” the car they are always going to pay the ACV of the vehicle. He is not gaining anything other than what the insurance contract allows. How are you sure he didn’t still owe a bank $25,000 on the vehicle? It could very possibly be he loses money on this transaction.
He potentially gets ahead in this situation due to the fact he is taking the chance the vehicle doesn’t have any real problems in the future. Most consumers don’t realize you can take that chance.
I think most are missing the entire point of the article. Did you all only read the first couple of paragraphs? Did you read the entire article? The main point is not about if Moran was enriched, rather that consumers should know they have the option to buy back their salvaged vehicle. If you read further, “we just started selling cars last week, and buyers have already figured out there’s a good portion of opportunities here,” he explained. Consumers should realize that maybe getting a second opinion on a totaled vehicle and keeping it is better than letting the insurance company take it away. He could have lost on this deal anyway… What if he still had a car loan for $25,000? How would he be enriched at that point?
I’m reading a lot of conflicting opinions re: Did Moran act ethically by buying back a valuable asset that a hasty adjuster totaled without actually “adjusting” the loss? However, my big issue is this: The next time Moran deals with a client that complains about rate increases, will he disclose his own experience and how that one function ultimately plays a part in his client’s rate increase?
I think Moran is lucky that this publication is read primarily by insurance industry participants. I don’t know Moran, his agency, or his clients, but if I were Moran, I’d be thanking my lucky stars that my clients didn’t read this.
A couple of points here. The article mentions salt water. I’m pretty sure the majority of the Houston flooding was fresh water from rain. It makes a difference due to corrosive effects of salt water. They should note the difference between an “actual total loss” versus a “constructive total loss.” Finally, the company usually has the right to take the salvage under the policy. It looks like they grossly underestimated the salvage value and overpaid this claim. Nobody was holding a gun to their head. They made what we believe was a poor business decision and they will absorb it.
Just wondering how many insurance companies will be willing to put physical damage back on this Range Rover? We’ve been advised that several will not but is up to us to ask at the point of sale or endorsement.
If I am reading correctly, Morgan Moran admits to coming out $22,000 ahead on his vehicle “loss.” In other words, he was enriched by his policy. Insurance is intended to put the insured or claimant back to the financial position they were in before the loss, not provide windfall profits. And Moran works in the industry so he should know that. It is possible the vehicle may have flood-related problems later that don’t show up right now, but why should I feel good about Moran being “enriched?” I don’t pay premiums for that to happen.
I think both you and Morgan misunderstood. The ACV of the “totaled” vehicle was $25,000. He decided to keep the vehicle so the adjuster deducted the salvage value of $3,000 and gave him a check for $22,000. It appears the insurance company paid what the insurance contract allowed.
I read the article the same way as you, Lauren. It’s possible the carrier undervalued the salvage return (which is why he thinks he “came out ahead”), but the owner-retained total-loss claim looks to have been settled correctly.
Let the buyer beware if the car came from Houston. Purchase as is and no complaining or suing later.
Lauren,
Doesn’t part of the issue here appear to be that the supposed damage that was paid out on, did not actually occur? The way I read it is that his car was totaled out as a flood loss, but in reality there was only water in the wheel well. If the electric system was not destroyed, then by definition, this was not really a total loss.
I read the article that the claim got settled fairly accordingly to the policy terms for $22,000.
Morgan however, retains a perfectly functional car that is worth well more than the $3,000 salvage value despite the title stating it’s totaled.
He is gaining in that regard, but still retains ownership of the totaled car and would have a harder time selling it than if it had a clean title.
Exactly what I was thinking. He violated the principle of indemnification and he is bragging about it–as an insurance professional!
I don’t think he did anything wrong. His insurance company totaled his car rather than try to fix it and gave him a check for the value. If he turned around and purchased the salvage for $3,000 or bought it from the junk yard that is his prerogative. He will still NEVER be able to sell it for $25,000 to any other buyer…it’s been totaled in a flood. So the fact that he is still driving the car has nothing to do with the amount he was paid. In this case think of it more as a payment of diminished value. He actually lost $22,000 in value.
The check for $25,000 was the ACV of the car under the pretext that the car had been destroyed by the peril of flood. In actuality, the electric system was working and had no damage to it. If the car was actually flooded, there is no way the electric system would have survived… That would be like me burning my seat with a lighter then making a claim for a total loss due to fire.
The insurance company paid the policyholder $25,000 for the loss to his Land Rover. Then they offered to sell him the salvage vehicle for $3,000. He didn’t enrich himself from the policy. He made money by buying back the car that the insurance company undervalued. Nothing unethical to see here.
You are just restating the fact that the car was salvaged and he purchased the salvage rights. That is not the issue. The point is that his car was not actually destroyed, and subsequently should not have been totaled out. The entire point of the article is that the adjuster totaled it out in a matter of seconds because he “saw water in the spare tire wheel well,” and assumed that the car was totaled by the flood. However, the electric system was not even effected. If an electric system in a car is not damaged, then the cost to repair the vehicle would not likely be greater than the ACV. The insured then states “I ended up coming out way ahead.” This violates the basic principle of indemnification. An insurance policy is meant to restore you to the position you were at prior to the loss, not to enrich you. I am shocked at how many people on this site lack basic reading comprehension skills. It is ever more terrifying that some of you claim to be underwriters with advanced designations…
It appears the carrier made two mistakes. The first one may have been declaring that the vehicle as a total loss when it wasn’t and they then sold the car for $3k when the salvage value, based on it’s condition, should have been much higher. Certainly this claim was settled in haste. Errors happen and the best option for this agent was to keep his mouth shut.
SWFL, are you an insurance agent? If any water gets in the car from a flood it will be totaled 99% of the time. A salvage value is based on what an insurance carrier can get from an auction at a guaranteed price. So either the auction gets it for $3,000 or the consumer. Both yourself and Augustine are making way too many assumptions.
Think many are missing the point of the article. The consumer doesn’t total the car, the insurance carriers adjuster does. Many consumers do not realize that they can buy a car back, fix it up, or take a chance on a flooded vehicle. If an adjuster “totaled” the car they are always going to pay the ACV of the vehicle. He is not gaining anything other than what the insurance contract allows. How are you sure he didn’t still owe a bank $25,000 on the vehicle? It could very possibly be he loses money on this transaction.
He potentially gets ahead in this situation due to the fact he is taking the chance the vehicle doesn’t have any real problems in the future. Most consumers don’t realize you can take that chance.
I think most are missing the entire point of the article. Did you all only read the first couple of paragraphs? Did you read the entire article? The main point is not about if Moran was enriched, rather that consumers should know they have the option to buy back their salvaged vehicle. If you read further, “we just started selling cars last week, and buyers have already figured out there’s a good portion of opportunities here,” he explained. Consumers should realize that maybe getting a second opinion on a totaled vehicle and keeping it is better than letting the insurance company take it away. He could have lost on this deal anyway… What if he still had a car loan for $25,000? How would he be enriched at that point?
I’m reading a lot of conflicting opinions re: Did Moran act ethically by buying back a valuable asset that a hasty adjuster totaled without actually “adjusting” the loss? However, my big issue is this: The next time Moran deals with a client that complains about rate increases, will he disclose his own experience and how that one function ultimately plays a part in his client’s rate increase?
I think Moran is lucky that this publication is read primarily by insurance industry participants. I don’t know Moran, his agency, or his clients, but if I were Moran, I’d be thanking my lucky stars that my clients didn’t read this.
A couple of points here. The article mentions salt water. I’m pretty sure the majority of the Houston flooding was fresh water from rain. It makes a difference due to corrosive effects of salt water. They should note the difference between an “actual total loss” versus a “constructive total loss.” Finally, the company usually has the right to take the salvage under the policy. It looks like they grossly underestimated the salvage value and overpaid this claim. Nobody was holding a gun to their head. They made what we believe was a poor business decision and they will absorb it.
Just wondering how many insurance companies will be willing to put physical damage back on this Range Rover? We’ve been advised that several will not but is up to us to ask at the point of sale or endorsement.