We’ve all seen the “USAA for Life” TV ads. They speak to customer loyalty, a subject I’ll be covering in a blog post in the near future. For now, the issue is coverage and the value of an independent insurance agent. As best I can tell, USAA seems to be a fine insurance company. I know some of their customers, including some that work within the independent agency system.
But, you can be a fine company with a product or a claims practice or perhaps an individual decision that might not be so fine. As I have written and spoken about for years, insurance is NOT a commodity. There are differences in products and practices among insurers. This blog post is about one such example.
Last week, I was included in an email exchange originating with an independent agent. He has a friend insured with USAA. Her husband recently passed away and she has been driving his 2015 F350 diesel pickup truck. When refueling, she accidentally put gasoline, instead of diesel fuel, in the tank. The resulting damage/cost to repair is estimated to be $11,000. She reported the claim to USAA and they sent a written claim denial [emphasis added]:
[Your claim] has been denied due to negligent servicing:
EXCLUSIONS
We will not pay for:
Mechanical or electrical breakdown or failure, including such damage resulting from negligent servicing or repair of your covered auto or its equipment. We will pay for ensuing damage only to the extent the damage occurs outside of the major component (such as transmission/transaxle, electrical system, engine including cooling and lubrication thereof, air conditioning, computer, suspension, braking, drive assembly, and steering) in which the initial or electrical breakdown or failure occurs.
The primary basis for the denial is that refueling a vehicle constitutes “servicing” it. ISO’s auto policies have no such exclusion. So what does “servicing” mean? Since the term is not defined in the policy, a court would look to its normal and customary usage, typically by citing one or more dictionary definitions. Dictionary.com defines it as “supplying maintenance or repair.” Merriam-Webster has essentially the same definition, adding an example of its use in a sentence in the form of, “I need to get my car serviced.” Vocabulary.com discusses “periodic maintenance on a car or machine…inspection and repair, overhaul…interim overhaul…care, maintenance, upkeep…activity involved in maintaining something in good working order…tune, tune up, adjust for (better) functioning….”
If you’re going to a filling station, do you say, “I’m going to get my car serviced?” Of course not. The “servicing” of an auto usually refers to things like oil changes, tune ups, maybe tire rotation, etc. Simply putting fuel in a vehicle to keep it running is not what any reasonable person would consider “servicing” the vehicle. Google “what constitutes ‘servicing’ a car” and I don’t think you’ll find any mention of the owner putting fuel in it.
So what can this widow do? She has allegedly been told that there is nothing more to do internally but not given any options by the insurer other than to contact the insurance department (while pointing out that the DOI approved the form though, of course, not this interpretation). That pretty much leaves her only recourse to be finding an attorney willing to take the case on a contingency. The latter would likely go only so far as a letter or two from a lawyer since there might not be enough in a lawsuit to justify the time involved.
What’s interesting is, who did she immediately turn to when the carrier denied the claim? Her friend, the local independent insurance agent. You know, the guy whose “15%” she saved by going direct with the insurer. This agent has tried to appeal on her behalf, but he has no connection with the carrier. That would not be the case if he was her agent and she was HIS customer, not the insurer’s customer.
Providing superior product options and advocating at claim time are just two ways that independent agents earn their keep. And, sometimes, how they earn new customers.
Bill Wilson
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Four people appreciate this article: You. Me. (two students of the quagmire). The woman it happened to… and the agent who tried to do the right thing, but is hamstrung.
We are in an age where nobody likes our product, and it never matters until it matters. Only we who deal with this every day want…let alone NEED….to know.
I once had a neighbor say to me “I probably really should put my business with someone willing to talk to me about it, but I might have to sue that person some day!!” I guess I’m okay with that. I might have to ask questions about what he does that neither of us wants discussed. Maybe he’s in the witness protection program for all I know.
I have lots of customers who appreciate my attention to detail (and I don’t know it all either….that’s why I’m here!!), but if I had to limit myself to those, I would have starved years ago. Our education system has chosen to graduate young people with no concept about something they were going to spend a major portion of their incomes on for the rest of their lives….even vicariously (workers compensation). Less than 10% of those care even a little, and Less than 10% of the 10% want to do anything about it.
It all boils down to are we going to just throw out another quote or help manage a client’s risk?? The latter takes five times the effort and time. Only one prospect in 100 wants to invest in that.
Question- How do you know what carriers write under an ISO form? This is the second post of yours that I’ve read that mentions the lack of exclusions on the auto ISO form. Is there a list somewhere that says what company has an ISO form vs writes it on their own form?
There is no master list that shows this. Carriers that subscribe to ISO forms service are known to insurance departments because when there is an ISO form change, they can elect to accept it on the ISO filing effective date or delay acceptance. I doubt that ISO even knows. They know who their subscribers are but may not know how they are using the forms with regard to effective dates or modifications. You can usually tell if a company’s form is pure ISO by the copyright date. It will typically say Copyright ____ by Insurance Services Office or Copyright ____ by ISO Properties. If it says “Includes copyright…” information from ISO, then the “Includes” wording means the form is a modified ISO form. If you are a Big I member, there is a detailed article on this here:
http://www.independentagent.com/Education/VU/Insurance/Commercial-Lines/Miscellaneous/WilsonISOorMemorex.aspx
Ok thanks – this is good to know. I will have to look specifically for that.
I did the same thing to my 2018 f250. Accidentally put def in fuel tank. The dealership told me it happens occasionally and insurance covers it. USAA sent me a letter after truck was in the shop 2 weeks , denied. .. 15,400.00. After 30 years of paying usaa this is how it went
I wouldn’t rely on an auto dealership for insurance advice. Policies are different. That being said, most mainstream personal auto insurance policies do cover engine damage like this under Comprehensive coverage. If USAA denied the claim, they should have quoted policy language and explained how that language works to deny the claim.
I’m with USAA as well. I fueled my Sprinter Van in NC and received contaminated fuel. USAA told me upfront that I was covered under comprehensive coverage and suggested that I contact the fuel station to see if they will take care of services. First they wouldn’t but when Dept of AG shut them down they decided to pay. I paid up front and they reimbursed me. USAA watched the whole story play out assuring me that they had my back just incase the station didn’t pay. The repair shop flush and replaced line hoping that would do it. $1000.00 later we picked up the van only to get 40 miles down the road and the fuel pump went out. Towed to the shop and the Service station refused to pay (I called USAA who again stated they had my back and would cover it if the station didn’t and they would go after the station) but the next day agreed but stated no more payments after that. Picked up the Van, paid for services and got reimbursed (with USAA contacting me to make sure payment was received). 500 miles later Engine light goes on and we are told 15K to replace everything. Now after a month of jumping through hoops to get estimates USAA refuses to cover. Said it is not covered for negligent servicing. What can a person do? We have been with them 45 years. Who do we escalate this to? Would we be successful bring USAA to court? Would anyone help??
If you filed the claim with USAA and they admitted that their insurance contract covered the claim, but recommended that you take the course of action you took, then it sounds like they have liability under both the insurance contract and for their advice and counsel on how to proceed with the claim.
I’m not sure their handling even conforms to the Unfair Claim Settlement Practices laws of the state. As a matter of equity and good faith, it sounds like they should stand behind their contract and advice.
The proper way to handle this would have been for them to have responded directly to your claim, as your insurance contract provides, and authorized and stood behind the repairs. If the repairs were done negligently, then the insurer could proceed against the other party.
You likely have three courses of action:
1. Appeal higher in the insurance company.
2. File a formal complaint with the state insurance department which, frankly, probably won’t do much.
3. Seek legal counsel and at least begin with a letter to the insurer from an attorney which might be enough to prompt them to action.
I’d be interested in how this works out.
Thank you Bill Wilson for your response and direction. Great advice. I will escalate it up the chain and see what happens. If nothing resolved then the State just for a check in the box. Then legal counsel and hoping that USAA can be held responsible for the fees incurred for an attorney. I will let you know what happens.
YEP.
I have a 2020 F-350 Limited DRW with 27,000 miles on it. Day 2, 550 miles from home, while on vacation pulling our 5th wheel, the engine warning light came on and said to reduce engine power, then it throttled me down to 30 mph. As soon as I stopped the engine died and the truck wouldn’t start.
Took it to the Ford dealer in Amarillo and they broke it down and said the high-pressure fuel pump has rust on it and metal shavings are in the casing. There was water in the fuel system somewhere and the entire fuel system must be replaced. They stated it’s going to cost $15,000 and warranty won’t cover and to take it up with my insurance company. No water in fuel warning light ever come on. They even stated that their diagnostics didn’t see the warning sensor come on. I just had the truck serviced and oil changed back home at my dealer a few days before we left out on the trip.
Fast forward to 3 weeks later while the truck is still sitting shop at the dealer waiting on USAA, USAA had a third-party appraisal company go out to the dealer and take a fuel sample. Here’s what the report showed.
NO trace of water found in the fuel; it was gasoline!
1. HT-GC analysis identified the fuel type as a mixture of diesel fuel and gasoline. HT-GC data indicates a mixture of 39% gasoline and 61% diesel fuel.
2. Conductivity testing did not evidence water contamination in the submitted sample.
3. Microscopic examination evidenced the particles to be primarily inorganic matter with soot-like particulates, mold, and pollen.
4. The submitted fuel sample is a mixture of gasoline and diesel fuel with settled particulates containing inorganic
matter, soot, mold, and pollen.
Bottom line is, there is absolutely NO way I accidentally put gasoline in my fuel tank. I’ve driven diesels for the last 6 years. I always double check because of stories I hear like these. Again, at the time this happened, I was pulling a 45-foot 5th wheel and I only stop at reputable stations, most of the time at truck stops.
First OFF, if you are using USAA I would HIGHLY recommend switching and HIGHLY recommend checking with your insurance company to make sure they cover any type of fuel contamination. I was told that state farm will cover this. MAKE SURE THIS IS DOCUMENTED IN YOUR POLICY AND JUST DON’T TAKE A PHONE CONVERSATION WITH THE AGENT AS A YES. There are some that don’t. I am with USAA and totally shocked to find out that they don’t cover it! Unbelievable, I’ve been with them for 21 years. USAA said they would only cover (ensuing damages) that were due from the fuel system that caused damage to other parts of the truck (but not the fuel system). So if I had an accident due from the fuel system, then they possibly would cover it??? I am like WTF? USAA said that the only state they would be required to cover something like this is in California because of their law. I live in Texas. They have not officially denied the claim yet, they passed the fuel report today on to a claims damage specialist and I’ll know for sure on Monday or Tuesday if they are going to cover anything on it but from talking to the claims department it doesn’t sound good base off their policy.
REFUELING STOPS
Day One
Starting Point – Chevron / Fueled up in hometown before leaving. Added about 3/4 of tank to top off then drove 156 miles.
Stop 1 – Buc-ee’s / Added around a 1/4 tank to top off then drove 106 miles.
Stop 2 – Exxon Mobil / Added just under a 1/4 tank to top off. Almost added a half a thank then drove 156 miles and stopped for the night.
Day Two
Drove 55 miles and then engine light failure and truck shut down.
So now I am investigating the fuel stations I stopped at. I am somewhat thinking this happened at stop 2, which was at an Exxon where I stopped and fueled up in the truck lanes since they found 39% gasoline from the test. Or is it possible to have gotten it from another locations? It’s hard to tell because I didn’t really run the fuel tank down enough between fuel ups. How long does it take for this to shut me down with 39% gasoline in the tank?