by texas81 » Fri Dec 19, 2008 06:18 pm
Hello, all. I'm in an interesting predicament and am getting varying feedback, so I thought I'd post here to see what you all think. I've got a few different factors at work here, too, so let me know if you need more information. Its going to be a LONG post. Apologies.
A few weeks ago my husband was hit by another driver while driving his motorcycle to work. The other driver's insurance has accepted liability and has ruled the bike a total loss. :(
It should be mentioned that a year ago, we had an expensive, highly-custom paint job done by an artist. When initially questioning my husband about the bike, the adjuster told him to itemize the cost of the paint job as well as any aftermarket upgrades, and that he would be sure to compensate him for that loss. It may be irrelevant, but we never planned on selling the bike. It has great sentimental value and my husband was going to keep it indefinitely.
ETA: I can supply invoices for the paint and all aftermarket parts.
The adjuster came out to our house two weeks ago to discuss the total loss settlement, and did a 180 and now will only reimburse for the NADA value of the bike, on the premise that the custom paint job does not add to the MARKET VALUE of the bike, i.e. that a buyer would not pay a premium for this bike for its paint job.
I should point out that I am an appraiser by profession (personal property, not auto and not insurance) and understand his argument, ASSUMING that the premise of value is indeed fair market value (what the bike would fetch on an open market). I live in Texas, where the premise of value for insurance is ACV (which I must say, isn't an appraisal premise). TDI defines ACV as "the value of your property, based on the current cost to replace it, minus depreciation." NOT market value. We also apparently have something called the "Broad Evidence Rule", which requires the gathering of all possible values as party of the settlement.
My argument would be that under this definition of ACV, the cost to replace just the bike would be his NADA (or +/- a few hundred depending on comps), PLUS the depreciated value of the 1 year old paint job. While paying us only NADA value for the bike, we could purchase a similar make/model/year bike in similar mechanical condition, we would still have to shell out several thousand to replicate the custom paint. Paying just NADA would not restore our situation pre-accident.
So, am I completely off my rocker for expecting some additional compensation for a one year old custom paint job on top of NADA? And if I do have a point here, how should I expect the adjuster to calculate the depreciation on the paint job?
A few weeks ago my husband was hit by another driver while driving his motorcycle to work. The other driver's insurance has accepted liability and has ruled the bike a total loss. :(
It should be mentioned that a year ago, we had an expensive, highly-custom paint job done by an artist. When initially questioning my husband about the bike, the adjuster told him to itemize the cost of the paint job as well as any aftermarket upgrades, and that he would be sure to compensate him for that loss. It may be irrelevant, but we never planned on selling the bike. It has great sentimental value and my husband was going to keep it indefinitely.
ETA: I can supply invoices for the paint and all aftermarket parts.
The adjuster came out to our house two weeks ago to discuss the total loss settlement, and did a 180 and now will only reimburse for the NADA value of the bike, on the premise that the custom paint job does not add to the MARKET VALUE of the bike, i.e. that a buyer would not pay a premium for this bike for its paint job.
I should point out that I am an appraiser by profession (personal property, not auto and not insurance) and understand his argument, ASSUMING that the premise of value is indeed fair market value (what the bike would fetch on an open market). I live in Texas, where the premise of value for insurance is ACV (which I must say, isn't an appraisal premise). TDI defines ACV as "the value of your property, based on the current cost to replace it, minus depreciation." NOT market value. We also apparently have something called the "Broad Evidence Rule", which requires the gathering of all possible values as party of the settlement.
My argument would be that under this definition of ACV, the cost to replace just the bike would be his NADA (or +/- a few hundred depending on comps), PLUS the depreciated value of the 1 year old paint job. While paying us only NADA value for the bike, we could purchase a similar make/model/year bike in similar mechanical condition, we would still have to shell out several thousand to replicate the custom paint. Paying just NADA would not restore our situation pre-accident.
So, am I completely off my rocker for expecting some additional compensation for a one year old custom paint job on top of NADA? And if I do have a point here, how should I expect the adjuster to calculate the depreciation on the paint job?
Posted: Fri Dec 19, 2008 06:57 pm Post Subject:
Without knowing the law specifically in TX, I can almost assure you that your taking the definition out of context. What it would cost to replace the item in question is based on another identical item being available and the cost to buy that item. It's not what it would cost to replace the bike and then paint the bike all over again.
Though, I agree with you... that a replacement bike just like your would be sold at a higher price based on the expense of the custom paint. That is, no one is going to buy the bike, spend $2000 on the paint and then sell it without getting some type of increase in price for the custom paint.
If this were a car and it was a paint job done at Maaco, I'd agree with the adjuster... and I'm betting that the adjuster _does not have a clue_ when it comes to customized motorcycles.
Here is where I would start... go to a local bike dealership and see if they will write a short note if they feel the paint would increase the value of the bike. Fax that to the adjuster along with a note asking them to have their property damage/appraiser manager review the information in order to get a second opinion.
The difference between me (as an adjuster) and the adjuster that looked at your motorcycle... we both know next to nothing about motorcycles but I'm willing to admit it. :) What I do know is that a motorcycle is not like a car... a custom paint job on a motor cycle means a lot to people. In this case not the full cost of the paint but from what I read, you understand that.
Posted: Fri Dec 19, 2008 07:18 pm Post Subject:
My husband would say that the adjuster thinks he knows more than he actually does about motorcycles (based on general conversations about what parts were damaged, etc.)
And I hear you on it being not what it would cost to replace the bike plus the entire cost of a new paint job. Rather, a depreciated value (according to ACV) of a 1 year old, custom paint job. What complicates things is that with most things custom, there is probably a very limited market for such a bike. I know as an appraiser I would have a hard time doing a "market approach" and assigning value based on comps, because really, there aren't any comparable vehicles out there. Hence my tendency to lean towards a cost approach (depreciated replacement cost) or a blend of the two (market on bare bike, plus depreciated RCN on custom parts). I admit this ACV concept isn't one we use in my line of work and am absolutely getting hung up on the definition, because no where in TDI's definition of ACV do I see anything about what the vehicle would sell for on the market as the ONLY indicator of value.
I can provide the invoice and have gotten quotes from other motorcycle painters/airbrushers to whom I provided photos and gave me quotes that meet and sometimes far exceed what we paid for the work. How should I expect the adjuster to calculate depreciation? % good? Age/life? Thin air?
Posted: Fri Dec 19, 2008 07:50 pm Post Subject:
I agree, I think I'd take the cost of the paint and deduct some amount and see if an agreement could be reached. As far as applying depreciation, personally I'd expect the life of the paint to be around 10-15 years, so that aspect would be very minor. But a $1000 paint job is not going to increase the value of the bike $1000 the moment it's painted. Off the top of my head if the paint cost $1000, I think I might offer something like $500-$700 and go from there. To be honest, I as an adjuster would just want to pay on the claim to get it settled. While an adjuster does not want to pay too much on a claim, there are times when it's better to just pay "too much" in order to get it settled (not saying that you are wanting "too much'... just point out the situation from the insurance companies point of view).
I think we both agree that it seems part of the problem is the adjuster does not want to look like an idiot but he does not know much about motorcycles. as I said, I don't either but I would not mind admitting to it (not a day passes that I don't do something stupid :) ) That is why I think trying to get a second opinion even from within the insurance company might be helpful. A property damage manager is the best bet as this person will have usually worked in a body shop of some type and would probably understand the paint on a bike a little more then other people.
Posted: Sat Dec 20, 2008 02:05 pm Post Subject:
texas81, If I were you I would get my own carrier involved.
They insure bikes and should be more knowledgable.
The other person's carrier is obligated only to their insured, not you.
They are most likely "defending" instead of "making whole".
Posted: Sun Dec 21, 2008 02:58 pm Post Subject:
I've handled a ton of custom motorcyle totals and repairs over the years...and agree these bikes are always of greater value to the owner than the open market, that being said they still do without question add value in the open market...most true bike enthusists take great pride in 'their' customization, and while stating the custom work does add value, again not at much as to the originater of the custom work...
Were it me as an adjuster on the claim, if it cost you 2k I'd probably insist that no more than 50% be added to the value, i doubt in truth it would boost re-sale more than that...another thing to look at (before I forget it) if you do this again with the bike you're replacing it with...be sure and contact your carrier and discuss a custom parts endorcment or stated amount value..
Ok, now as the owner of said bike, what it cost really won't help too much what you need to do is that the five hundred pictures of your bike (i know you have them :wink: ) to about three new/used bike dealers have them write something up on what they would sell this bike for with and without the custom paint work...(this is what we call a market survey in our industry)...that 'should' move the adjuster...as tcope said, contact the pd manager or supervisor/motorcycle trainer, whomever you can climb up the ladder to reach...unfortunately there are plenty of company that allow adjusters to work m/c claims without the proper training...i would get all this info from the dealers 'prior' to contacting this adjuster/manager back, so i was 'loaded for bear' when i approached them again...should they call again prior i would tell them i am completing a market survey (which they should've done) and would like the number of their MOTORCYLE PD manger and that is who i would discuss this with once i had all my information ready...
Please do let us know how this plays out and if we can be of further assistance.
Fred, does have a fine point as well have you filed this with your carrier?
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