4 Puerto Rico insurance co’s sued for unlawful depreciation in auto claims
Four class action lawsuits have been filed simultaneously against several automobile insurance carriers in Puerto Rico, including MAPFRE, Triple-S, Universal Insurance and Cooperativa de Seguros Múltiples, challenging their practice of charging consumers a depreciation deduction for replacement auto body parts.
It is estimated that the companies have charged consumers more than $100 million in inappropriate depreciation deductions during this period, said Attorney Francisco Colón-Ramírez, who filed the lawsuits in collaboration with consumer advocacy law firm 1-800-LAW-FIRM.
The lawsuits allege that the carriers unlawfully add an automatic “depreciation deduction” when replacing damaged parts, requiring that policyholders pay additional out of pocket monies even though they may have had full collision coverage in their vehicles.
“While such a practice might be justified when replacing worn tires or windshield wipers, there is no legal justification for this practice when dealing with windshields and bumpers,” said attorney Ari Kresch of 1-800-LAW-FIRM.
The plaintiffs are seeking a court order to audit the books and records of the defendants for the last 15 years to identify the consumers that were affected by the alleged practice.
The defendants are local insurance firms, with most of the Puerto Rico automobile insurance market.
“Our clients are justifiably outraged. After years of paying for insurance policies which they thought would cover their repair costs, they now find out that they are required to pay additional repair costs,” said Attorney Monica Diaz of 1-800-LAW-FIRM.
“Consumer rights should be prioritized, and we will continue to advocate on behalf of all clients that have been wronged by these unlawful actions,” she added.
In a statement, Universal Insurance stated it “does not know the root of the allegations in the lawsuit regarding Universal Insurance.
“We clarify, however, that as part of the auto claims adjustment process, Universal Insurance does not apply percentages of depreciation to replacement or used parts. That is, they are paid net,” the company stated.
“When adjusting a case, a discount is applied in favor of the customer to original parts whose percentage is generally less than what repair shops obtain from auto parts dealers,” it added.
In the adjustment process, the use, exposure, and wear of the vehicle over time are analyzed and depreciation is applied to original parts, since it’s necessary to analyze the actual cost of the part on the date of the accident,” the company further stated.