The Auto Insurance Scam

Automobile Insurance fraud in California Insurance has existed ever since the beginning of insurance as a commercial enterprise. Fraudulent claims account for a significant portion of all claims received by insurers, and cost billions of dollars annually. Types of insurance fraud are very diverse, and occur in all areas of insurance. The Automobile Property fraud involves dishonest auto body and repair shops and/or insureds who may employ a variety of illegal or questionable techniques including: Reporting parts of vehicles as damaged or lost when in fact they were not damaged or lost prior to the shop receiving the vehicle, billing for repairs that were not authorized, making final cost in excess of the original estimate of damage, charging for genuine parts when after-market or used parts from junkyard were used, pounding out dents or using bondo when charging for brand new auto parts, falsely reporting stolen vehicles or vandalism of vehicles in order to collect insurance monies.

What Could Happen If I Drive Without Insurance?

Driving in California without insurance is a serious offense. California’s compulsory financial responsibility law requires coverage at all times. Failure to show evidence of insurance when asked may result in fines, license suspension or your vehicle may be impounded. The most common way to comply with the financial responsibility is to purchase automobile liability insurance. It is your responsibility to carry proof of insurance at all times. You must show one of the following types of financial responsibility: a $35,000 surety bond; a DMV issued self-insurance certificate; DMV acknowledgement of a $35,000 cash deposit; or a valid liability insurance policy, for damage to someone else’s property or person.

Other Available Insurance Coverage

Insurance companies  offer other coverage with every automobile policy. The Uninsured/Underinsured Motorist provides liability when the party at fault does not have the state required coverage or does not have sufficient to cover the injuries caused in the accident. Similarly, the Uninsured Motorist Property Damage covers possible reimbursement for damages your car sustains. The Medical Payments covers the medical expense incurred without question of legal liability. Collision and Comprehensive Physical Damage pay for the cost of repairs or the fair market value of the vehicle. Collision covers only the damage to your vehicle cause by collision with another vehicle or with any other object, regardless of fault. Comprehensive coverage covers the damage to your car, other than collision, such as theft, vandalism, fire, windstorm, flood, etc. The Endorsements/Riders coverage includes additional special equipment (such as premium stereos, tires, etc.) as well as towing and rental reimbursement.

Choosing the Right Insurance Agent

When you are looking for the right insurance agent, it may be as important as choosing the right doctor. Your best resources are your relatives, neighbors, co-workers, as well as professional agent/broker associations. As of January 1, 1997, all agent/brokers are required to include their license number on their business cards. You may wish to verify the producer’s license status by going on the California Department of Insurance (CDI) Web site at www.insurance.ca.gov, or call the consumer Hotline at 1-800-927-4357. This way you can confirm that your agent/broker and insurer are licensed to conduct business in the state of California. It is critical that you feel comfortable with the agent of your choice. You need to be able to openly discuss the coverage and services that will best suit your needs. Remember that it is not the responsibility of the agent/broker to determine either the type or the amount of coverage you need, so good communication is key. Certain insurance companies specialize in the non-standard auto market for what they consider to be high-risk drivers.  If you can’t find a company that will insure you, you can get liability coverage through the California Automobile Assigned Risk Plan (CAARP). This plan is designed for drivers who do not qualify as good drivers and are unsuccessful in obtaining insurance from non-standard or approved surplus lines insurance companies. However, be aware that the eligibility requirements and rates vary. To apply, find a CAARP certified insurance agent/broker on CAARP’s Web site at www.aipso.com or call CAARP direct at (800) 622-0954. Your application is then assigned to an insurance company. Keep in mind that the rates will be the same no matter what insurance company issues the policy. After three years with a clean driving record, consumers underwritten through CAARP can move from the program to a standard lines insurance company.

I Just Had an Accident! Now What?

Driving is presumably the most dangerous thing most of us will ever do. Even though, we strive to do so responsively and defensively, there’s still a chance you’ll be involved in a traffic accident. So what do you do in case of such event?

Call 911 if there are injuries. Call the police, depending on the severity and location, police authorities may not come to every accident scene. However, you should attempt to notify the police. Be aware that most policies require notification of police within a specified time period if the accident is a hit and run. Obtain name, addresses, telephone numbers, and driver’s license numbers from all drivers. Make sure to get license plate(s) and vehicle identification numbers and ask to see driver’s license(s) and vehicle registration(s) to verify the information. Obtain contact information of other passengers and/ or any witnesses. Do not argue with other drivers and passengers, but rather save your story for the police and your insurance company. Do not sign any statements regarding fault or promises to pay for the damage. If the other driver(s) offers to pay for your deductible, do not sign anything releasing the other party from further responsibility. If you have a camera or a cell phone, take photographs of the damage, the position of the cars, and the accident scene. If the owner of the damaged property/vehicle is absent, leave a note with the names and addresses of the owners and drivers of the involved car. Notify your insurance agent and/or your insurance company immediately. If anyone is injured or the vehicle damage exceeds $750.00, report the accident to the Department of Motor Vehicles within 10 days. Failure to do so may result in the suspension of your driver’s license.

After you have filed the claim with your insurance company, they will contact you for any additional information, such as a detailed account of the facts, or a written/recorded statement. As part of the investigation, other drivers and witnesses may be contacted. If you have medical payments or an uninsured motorist claim, you must provide documentation of the injuries. Sometimes, the insurance company can take up to 15 days to contact the insured. However, if they are not responsive, or you believe there is an unreasonable delay in settling your claim, contact the Department of Insurance.

If you were in an accident, a qualified insurance adjuster or appraiser usually inspects the vehicle damage. An estimate is written based on the initial inspection. If further damage is found, the shop will contact the insurer to get the additional cost of repairs approved. An adjuster may be sent to re-inspect the additional damages. If there are minor damages, the company may instead ask you to submit competitive repair estimates. It is your responsibility to sign and authorize the shop to repair your vehicle once you are satisfied with the final estimate and repair facility. Under a Standard Auto Policy, the company will pay on a Physical Damage Claim, the lesser amount necessary for the repair or the actual cash value (ACV) of the vehicle. Review your policy to be certain of what’s covered.

Dump Truck Broker Bond (AB 145)

There is much confusion about the new California requirement effective on January 1, 2011 that requires dump truck brokers to carry a $10,000 bond.  It is really quite simple, if you are hiring sub haulers to move dirt, sand and gravel for you, you are considered a broker.  Although they have not started enforcing this bond, I have been told that there are plans to start enforcing it soon.  It is not a big deal, if you have good credit they can be as cheap as $350 per year, if you have poor credit the most expensive one I have seen is $1350 per year.  Here is the actual law that states the requirements.  Let me know if you have any questions, send me an email and I will be happy to help.  Quotes only take a couple of hours.

Assembly Bill No. 145

CHAPTER 429

An act to amend Section 34620 of, and to add Section 34510.5 to, the

Vehicle Code, relating to vehicles.

[Approved by Governor September 29, 2010. Filed with

Secretary of State September 29, 2010.]

legislative counsel’s digest

AB 145, De León. Motor carriers: construction trucking services.

(1) Existing law requires the Department of Motor Vehicles to regulate

the safe operation of specified vehicles, including commercial motor vehicles

and trailer and semitrailer commercial vehicle combinations owned and

operated by motor carriers. Existing law also requires every motor carrier

of property to comply with specified safety, permit, and liability insurance

regulations and to pay the fees required by these provisions.

Existing law also prohibits a motor carrier of property from contracting

or subcontracting with, or otherwise engaging the services of, another motor

carrier of property, until the contracted motor carrier of property provides

certification in the manner prescribed by the above provisions, of compliance

with safety inspection, certificate, permit, and financial responsibility

requirements. A violation of those provisions is a misdemeanor.

This bill would apply this prohibition to a broker of construction trucking

services, as defined, and would prohibit that broker from furnishing

construction transportation services to any construction project unless it has

secured a surety bond of not less than $15,000 that meets specified

requirements. The bill would make a broker of construction trucking services

who violates these provisions guilty of a misdemeanor and subject to a fine

of up to $5,000.

The bill would also create a rebuttable presumption in any civil action

brought against a broker of construction trucking services by a motor carrier

of property in dump truck equipment with whom the broker contracted

during any period of time in which the broker did not have a surety bond

in violation of the above-described provisions, that the broker failed to pay

to the motor carrier the amount due and owing.

By expanding the scope of an existing crime and creating new crimes,

the bill would impose a state-mandated local program.

(2) The California Constitution requires the state to reimburse local

agencies and school districts for certain costs mandated by the state. Statutory

provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for

a specified reason.

93

The people of the State of California do enact as follows:

SECTION 1. Section 34510.5 is added to the Vehicle Code, to read:

34510.5. (a) A broker of construction trucking services, as defined in

Section 3322 of the Civil Code, shall not furnish construction transportation

services to any construction project unless it has secured a surety bond of

not less than fifteen thousand dollars ($15,000) executed by an admitted

surety insurer. The surety bond shall ensure the payment of the claims of a

contracted motor carrier of property in dump truck equipment if the broker

fails to pay the contracted motor carrier within the time period specified in

paragraph (1) of subdivision (a) of Section 3322 of the Civil Code.

(b) A broker of construction trucking services who furnishes construction

transportation services in violation of this section is guilty of a misdemeanor

and subject to a fine of up to five thousand dollars ($5,000).

(c) In any civil action brought against a broker of construction trucking

services by a motor carrier of property in dump truck equipment with whom

the broker contracted during any period of time in which the broker did not

have a surety bond in violation of this section, the failure to have the bond

shall create a rebuttable presumption that the broker failed to pay to the

motor carrier the amount due and owing.

(d) For purposes of this section, “a broker of construction trucking

services” does not include a facility that meets all the following requirements:

(1) Arranges for transportation services of its product.

(2) Primarily handles raw materials to produce a new product.

(3) Is a rock product operation (such as an “aggregate” operation), a hot

mixing asphalt plant, or a concrete, concrete product, or Portland cement

product manufacturing facility.

(4) Does not accept a fee for the arrangement.

SEC. 2. Section 34620 of the Vehicle Code is amended to read:

34620. (a) Except as provided in subdivision (b) and Section 34622, a

motor carrier of property shall not operate a commercial motor vehicle on

any public highway in this state, unless it has complied with Section 34507.5

and has registered with the department its carrier identification number

authorized or assigned thereunder, and holds a valid motor carrier permit

issued to that motor carrier by the department. The department shall issue

a motor carrier permit upon the carrier’s written request, compliance with

Sections 34507.5, 34630, and 34640, and subdivisions (e) and (h) of Section

34501.12 for motor carriers listed in that section, and the payment of the

fee required by this chapter.

(b) A person shall not contract with, or otherwise engage the services of,

a motor carrier of property, unless that motor carrier holds a valid motor

carrier of property permit issued by the department. A motor carrier of

property or broker of construction trucking services, as defined in Section

3322 of the Civil Code, shall not contract or subcontract with, or otherwise

engage the services of, a motor carrier of property, until the contracted motor

carrier of property provides certification in the manner prescribed by this

section, of compliance with subdivision (a). This certification shall be

93

Ch. 429 — 2 —

completed by the contracted motor carrier of property and shall include a

provision requiring the contracted motor carrier of property to immediately

notify the person to whom they are contracted if the contracted motor carrier

of property’s permit is suspended or revoked. A copy of the contracted

motor carrier of property’s permit shall accompany the required certificate.

The Department of the California Highway Patrol shall, by regulation,

prescribe the format for the certificate and may make available an optional

specific form for that purpose. The certificate, or a copy thereof, shall be

maintained by each involved party for the duration of the contract or period

of service plus two years, and shall be presented for inspection at the location

designated by each carrier under Section 34501.10, immediately upon the

request of an authorized employee of the Department of the California

Highway Patrol.

SEC. 3. No reimbursement is required by this act pursuant to Section 6

of Article XIII B of the California Constitution because the only costs that

may be incurred by a local agency or school district will be incurred because

this act creates a new crime or infraction, eliminates a crime or infraction,

Combined Deductibles and Liability Deductibles

Next time you take a look at your commercial truck insurance policy find out if your insurance carrier will offer you a combined deductible.  It usually doesn’t cost much to add, but it can save you a lot of many in the event of an accident. 

A combined deductible is for insured’s that operate more than one piece of equipment at a time, or insured’s that have exposure to losses from multiple lines of coverage.  For example, if you have a truck and a trailer, most policies will make you pay a separate deductible for each unit, one for the truck and one a separate deductible for the trailer.  For the second example regarding the multiple lines of coverage another possible scenario could be if you drove a box truck, or bobtail dry van, you would be insuring the truck itself and also insuring the cargo inside the truck.  You have multiple lines of coverage, physical damage coverage, and cargo insurance coverage.  In most cases you would have a separate deductible for each line. 

With a combined deductible you only pay one deductible for all lines of coverage, or for all vehicles in each occurrence.   If you have a $1,000 deductible you would only pay one deductible instead of two in both the examples listed above.  This may not seem like a big deal, but in many cases you can get the combined deductible coverage for as little as $20 per year.  You can see the advantage, especially if you are a commercial truck driver that is pulling two trailers with cargo insurance.  In this particular instance you could be out a deductible for the truck, for each trailer, and for the cargo, if you didn’t have a combined deductible and had the most common $1,000 ded.  you would be out $4,000 in the event of an accident! 

Something you might want to ask your insurance agent about.  Most carriers will offer this coverage now as it is becoming more and more popular.  Another thing to look out for is a liability deductible or a PD deductible (Property DamageDeductible).  Many newer policies have added this deductible in the fine print of the policy.  I have had clients switch over to companies they believed were cheaper than the coverage I was offering, unbeknownst to them they were quoted lesser coverage!  A liability deductible requires that you pay a separate or additional deductible if you do damage to another person, a PD deductible requires that you pay a separate deductible if you do damage to someone else’s property.  You can see how this all adds up…lots of money out of your pocket in the event of an accident, which is fine if you understand what you are getting into.  Several of my larger clients opted for a PD deductible this year to save some money, but for the average independent owner operator, it usually is not worth the risk.