Editor's note: Oahu's car-theft problem recently hit home for Star-Bulletin reporter Rob Perez. But the trouble didn't end with the theft. Perez' first-person account shows that negotiating an insurance settlement can have its own set of hassles. Perez did not begin questioning the insurer for this article until after his case was settled.
Two days later our mainland vacation was interrupted again with more bad news. The car was found - stripped and charred. In insurance jargon, it was a total loss. That meant having to deal with our longtime auto insurer, Allstate, to settle a claim.
Having never had a car stolen before, I wasn't sure what to expect. At worst, I figured I would have to do some research and tap my limited negotiating skills to get a fair settlement.
After all, the car - a 1986 Honda Accord LX - was 10 years old. It had 110,000 miles on it, much of that mainland freeway driving.
But the vehicle was in top shape. As the original owners, we took good care of it. The body and interior were in great condition. Mechanically, the car was as reliable as they come, which is one reason Hondas are the most popular targets for Honolulu car thieves.
Settling a theft claim unfortunately is becoming more commonplace on Oahu. More than 500 vehicles are stolen each month, and 20 percent to 24 percent on average are not recovered. Some insurance companies also say they are seeing an increase in claims involving burned vehicles.
For me, the process of trying to get a fair settlement exceeded my worst expectations.
Allstate's original settlement offer was $2,922. A few hours scouring the market was enough to conclude that the offer wouldn't come close to getting us into a comparable car. The offer didn't meet the wholesale value ($3,175) of a 1986 Accord, according to the Kelley Blue Book, a standard industry guide on car prices.
(Once our $250 deductible was subtracted and a 4 percent sales tax and prorated registration fee added, the settlement would have been about $2,856.)
Allstate arrived at its figure through a market survey by the Connectivity Co., a Chicago company used by some insurers to determine replacement values.
The survey was an eye-opener.
Most of the "comparable" vehicles used to calculate market value were comparable on paper only. Connectivity matched the make, model and features of our Honda with similar Hondas advertised privately and by dealers on Oahu. Yet none of the cars were checked to see whether they were indeed comparable.
When I tried to inspect the three main vehicles detailed in the survey, none were available. One already had been sold, another had no owner's phone number listed and the data for the third appeared to be erroneous.
The dealer listed as owner of the third car - a 1986 Honda Accord hatchback - had only a 1985 Accord sedan on the lot. It wasn't a good match.
My question to Allstate: If data for one of the three main cars was wrong, how much faith could I place in the rest of the survey? The claims representative, baffled by the apparent discrepancy, said Connectivity in most cases produced a fair number.
I questioned the survey even more when I noted the dollar adjustment that was made - or not made - because of the condition of our vehicle. Based on questions I answered, Allstate rated the Accord "above average" in seven categories: engine, transmission, tires, paint, body, glass and interior. Those ratings supposedly are used to make adjustments to the car's value. But seven "above average" marks warranted not even a token increase in value. The listed adjustment: $0.
Allstate said "average" ratings would have resulted in deductions.
One problem with a case like this is that the insurer has little to go on. With only the charred shell of a car as a starting point, the company must rely largely on the owner's word about the vehicle's pre-theft condition to determine replacement value.
It's a subjective process - one of the most difficult claims cases an auto insurer can face, according to Tim Dayton, general manager of insurer GEICO in Hawaii.
Cases involving older vehicles are even more difficult. Conditions can vary dramatically from car to car - even the same make and year - depending on how well the owners cared for them.
I offered to show Allstate documents detailing all the maintenance that had been done on the car in recent years. The company wasn't interested. I specifically mentioned receipts for about $1,400 worth of work, including replacement of the clutch, done in 1995. No interest. I was told such maintenance was performed too long ago to add value to the car.
Allstate later told me it asks to see receipts only if the work done would increase the value of a vehicle. But even major jobs (rebuilding the engine, getting a new paint job, etc.) done recently - perhaps more than 90 days ago - would be of no importance to the ability of selling the car, the company said.
Representatives from several other insurance companies, including AIG Hawaii Insurance Co., the second largest auto insurer in the state, say they look at maintenance documents in total-loss cases to help determine values.
Frustrated by Allstate's methods, I threatened to seek recourse elsewhere. The courts, Better Business Bureau, TV news - anywhere a consumer could seek help.
My tirade got some action.
The claims representative, acknowledging that the survey value seemed low, agreed to dump it and make another offer once he found a comparable vehicle to use as a starting point. Within a few days, he found one in Hawaii Kai: a 1986 Accord LXi advertised for $4,000. Allstate's new offer: $3,655.
While that seemed more reasonable than the first, I was skeptical and wanted to check the car before making a decision.
Good thing. While test driving the Honda I learned from the owner that the air conditioner wasn't working - a problem that would lower the car's value by $1,000, one dealer later told Allstate. The insurer, saying it was unaware of the problem, trashed the second offer.
I wasn't a happy camper. Every step of the way I had to question the company's information. The process seems to favor the insurer. Left unchallenged, the consumer can get slighted.
In the end, we agreed to use another car as the comparable. I accepted Allstate's third offer: $3,889 and no deductible. That was about $1,000 more than the original proposal - a 36 percent increase I wouldn't have seen had I not raised a stink.
Most people don't. Roughly 80 percent accept Allstate's initial offers, the claim representative estimated. Most of those cases probably involve newer cars, which would make the settlement process a little less dicey.
Allstate defends the process. "Many times CCC is able to locate numerous comparable vehicles for sale and the customer has many choices," the company said in a written statement. "In your case, (the claim representative) located one at Pflueger Honda."
If nothing else, my experience underscores what consumer advocates and insurance officials say should be automatic when negotiating settlements.
Do your homework.
"That's just part of being a smart consumer," said Patrick Hartnett, AIG Hawaii director. "It's not like anyone is trying to take advantage of you. (But if an offer seems low), it just could be because of lack of information."
When negotiating auto-theft settlements with an insurer, consumer advocates have these tips:
Insist on seeing documentation about how values are calculated.