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Car hail insurance bill hits $70m
New deluge as thousands of hail-damaged cars go for sale in auctions or ‘hail sales’
16 Mar 2010
THE insurance bill for motor vehicles damaged in Melbourne’s ‘white Saturday’ hail storm on March 6 has soared to an estimated $70 million, with thousands of new and used cars starting to flood the Victorian market in dealer hail sales and insurance auctions.
Insurance companies are also wrestling with a further $20 million in claims on storm-damaged cars in NSW and Queensland after recent flooding rains.
Leading automotive auction houses in Victoria are preparing to put at least 4000 damaged vehicles under the hammer on behalf of insurance companies, while a number of dealers have initiated ‘hail sales’ to sell thousands more damaged vehicles.
At least six special motor vehicle assessment centres have been established by insurance companies to handle the massive backlog of private claims, with dozens of extra assessors being flown in from interstate to help.
Despite the efforts, assessment appointments for one insurance company are already booked out for a month, and repairs could take months more, with thousands of vehicles expected to be written off, at least in insurance terms.
One of the state’s biggest automotive insurers – RACV Insurance – has logged 12,000 motor vehicle storm damage claims so far, while another, AAMI, has 10,000 claimants in the assessment queue.
Auction house Pickles has set up a temporary holding yard at Altona where it expects to place more than 2000 vehicles under the hammer on behalf of insurance companies in special ‘storm damage’ auctions, starting within two weeks. Some almost-new cars have just a few hundred kilometers on them.
Rival ManheimFowles is also organising massive storm damage auctions at its Altona site, where it is planning for “several thousand” damaged vehicles to take the trip down its auction lanes. As well, it is putting more than 300 storm-damaged cars up for sale at its Sydney and Brisbane sites next week.
The Insurance Council of Australia has tallied claims totaling $460 million for the Melbourne storm, with about 15 per cent of the total – about $70 million – in automotive damage.
The insurance bill of $120 million from the NSW/Queensland floods includes almost $20 million in claims from vehicle owners.
The Melbourne hail storm damage to dealer new-car stock has opened a can of worms for the motor industry, with dealers and manufacturers scrambling to find workable solutions for warranty and roadworthiness issues.
Under VicRoads rules, severe hail damage can be deemed structural damage, making the car unroadworthy.
However, repairs ordered by dealers to make them roadworthy might potentially compromise body and paint warranties, as manufacturers can’t vouch for the quality of the panel work.
Hurriedly organised meetings of dealers and car companies were held last week to resolve questions surrounding the damage – warranty, engineering assessments, sales strategies and whether to repair or sell as is.
Up to nine Victorian Toyota dealerships were represented at one such meeting, demonstrating the scale of the problem. One of the Toyota dealers alone reported 400 hail-damaged cars at one site, with another reporting 345 vehicles with panel damage.
Seven Nissan dealerships also reported damage, with a total of 450 new Nissan cars hammered in the short but damaging storm that dropped hails stones up to the size of tennis balls in a strip across the centre of the Melbourne metropolitan area.
Some dealers have elected to sell unrepaired damaged stock at discounted prices as long as car companies are willing to sign off on the structural integrity of the vehicle.
Others have elected to repair cars, as long as the hail stone damage has not perforated the paint film, meaning the paint warranty can be protected with paintless repairs.
Yet others are simply sitting tight, awaiting insurance assessment and further advice from car manufacturers on warranty.
The Victorian Automobile Chamber of Commerce (VACC) is advising dealers wanting to sell hail damaged cars to ensure that buyers are fully aware of the damage.
It has sent its members a special form for customers to sign, acknowledging that they are aware of the condition of the vehicle.
It is also urging dealers to get warranty commitments in writing from manufacturers before selling cars.
A snap poll of VACC dealer members at the weekend revealed an average of 80 cars were damaged in car lots in affected areas of Melbourne, ranging from just a handful to hundreds.
Numerous dealers proceeded with hail sales at the weekend, but others held off. Ferntree Gully Honda general manager Paul Fairbairn said he would wait for insurance assessment on his dealership’s 80 damaged vehicles, which were now in storage awaiting a decision on their fate.
While dealers and private motorists in the eastern suburbs seem to have taken the brunt of the storm, several dealers at Melton, on Melbourne’s outer western fringe, suffered collective damage to about 800 cars.
Prestige dealers on the inner-city Kings Way strip also reported severe damage, with Mercedes-Benz Melbourne counting 107 damaged cars and vans.
At Ferntree Gully, some smaller used-car dealers were not insured, putting their entire businesses at risk.
Most new-car dealers have refreshed stocks to continue business as usual, although used-car stocks are more problematic.
Private buyers face long delays to have their cars assessed, even though insurance companies are pulling out all stops.
Both RACV Insurance and AAMI have each set up three temporary assessment centres in areas hardest hit by the storm, and both have also flown in extra insurance assessors to help deal with the overload.
RACV claims manager John Simpson told GoAuto that the claimants – 12,000 so far – would be contacted to arrange an appointment at the most convenient centre, to help them get their car assessed as quickly as possible.
As well, it has set up an assistance centre at the Knox Shopping Centre to help members to lodge claims.
AAMI customers are being booked in for assessment at its temporary centres when they lodge their claim. On Friday, the earliest dates were already out to mid April.
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