Crazy Accident

We will have to agree to disagree. I think that the Bike Shop is
engaged in a penny wise, pound foolish approach to business and is
going to risk losing a lot more sales and generate bad will by
essentially obtaining twice the profit on the sale of a single bicycle.
I know that I am more likely to patronize, for example, an Ice Cream
store that will replace my daughter's ice cream cone when she drops it
on the floor in an accident, than one that demands a full price for a
replacement. I understand that the ice cream store is entitled to
argue that it was all her fault, and they would be right, but they
recognize the value of Customer relations. (And, in fact, we tend to
go to one ice cream store over another becuase I have seen one store
replace a child's ice cream cone after a disaster while another didn't
do anything (other than collect the money for the replacement scoop). )
I have told friends that I patronize X over Y (without specifically
stating the reason) and in the long run, X's policy has generated a
heck of a lot more revenue than it has paid out in good will.

What's wrong with the shop profiting twice? Other than the obvious
inconveniences of the customer having to cash the insurance check, make
another purchase and what not, the end result is both buyer and seller
are happy with the transaction.

Having the customer pocket the difference between the discounted price
of the 2nd purchase and the retail price of the 1st purchase to which
the insurance company fully reimbursed him is a bigger problem, moral or
legal or both. In fact, it's not in fact fraud (legal), then in
insurance terminology it's considered a "moral hazard". Even if the
shop is freely willing to sell at cost (or for a nominal loss), the
insurance company is the one getting screwed.

Sir said:

What's wrong with the shop profiting twice? Other than the obvious
inconveniences of the customer having to cash the insurance check, make
another purchase and what not, the end result is both buyer and seller
are happy with the transaction.

Seems like you answer your own question with the comments on
inconvenience. Instead of enjoying rides on his new bicycle, the
customer is spending time talking to lawyers and insurance adjusters.
Meanwhile the bicycle shop is enjoying extra profits as a direct result
of the accident without having many of the usual costs: no extra
marketing to find a buyer, no lengthy interactions discussing alternate
models, components, etc., no extra followup service after the sale.
While both buyer and seller were presumably happy with the initial
transaction, after the accident it seems likely that the buyer is
feeling much less satisfied and the shop is quite a few dollars ahead.

I agree with BB that while the shop's actions are legally justified,
they are ignoring the potential effects on future sales. If the
customer is a member of a bike club I'd guess that the story of this
crash and subsequent shop actions will be retold numerous times when
he's eventually out riding on his new bike. The effect on the image of
the shop will depend on whether the customer feels they dealt with him
in a fair and compassionate manner.

So the cyclists inconvenience becomes the shop's and the insurance
companies (policyholders) burden. And what about the person who drove
his car over the bike? What's his responsibility? If the cyclist is
looking for charity, he should look for it from the driver. The shop is
there to make a profit and earn a living - much like the cyclist does
when he's not busy with a recreational activity like riding a bike.

Broken Bicyclist said:

Because a lot of Customers like to
purchase things from stores that display a degree of humanity and
compassion in their method of operation and do not like to patronize
stores that maximize profits at the expense of the community at large.

Broken,

Even if the bike shop gave the replacement bike for FREE to the
insurance company, the original customer gets NOTHING extra out of the
deal other than having his bike replaced, which is going to happen
anyway.

What kind of good will or community karma is the bike shop generating
by giving time and product away to the insurance company?

Sorry, Broken, but your arguments make absolutely no sense at all.

I'd like to see this infinite supply of bikes, also. As supply
approaches infinity, the price will approach zero. As the price goes
below the producer's cost, producers start leaving the bike business
and the supply goes back to a rational number and the price starts
going back up again.

RFM
http://www.cyclelicio.us/

Broken Bicyclist said:

I think we agree that the shop is not LEGALLY required to do anything.

There's no reason at all except stupidity to give a bike at cost to the
insurance company. There's no reason -- legally, ethically,
karmically(?), businesswise, goodwill -- nothing, nada, kaput, zip. It
won't do anything to to reduce the "burden" of the cyclist -- he won't
get his replacement bike any faster.

The bike shop could arrange a loaner for the cyclist to get him back on
two wheels immediately, but that's a different matter.

RFM

Scott said:

I'm surprised that no one, especially the numerous shop owners who've
contributed to this thread, have mentioned the potentially greater
profit inherent in creating an incredibly loyal customer.

Customer loyalty is not dependable. I remember a customer of mine
when I worked in bike shops. We liked him because he was friendly,
rode all the club rides and dependably stopped when riders had flats
and hung back with the discouraged beginners when they couldn't
keep up. He also didn't make a lot of money and had kids so funds
were always tight so we just didn't feel right making a profit on sales
to him since he seemed to do so much good for local cycling. We
sold him everything at cost and when he needed work done we
"let him use our tools" which usually meant us doing the work and
him making pleasent conversation. After one winter ride we were
drinking hot chocolate and warming up at a local restaurant he must
have not realized I was there because he was bad-mouthing our shop
and recommending an out of town shop. Truth be known we helped
him because we wanted to, not because we expected his undivided
loyalty or we expected some kind of return on our investment but we
never expected that he would be so duplicitious. I asked around
and several cyclists told me that he had been bad mouthing our shop
for years.

Quoted message said:

No one's suggesting that the shop sell the bike for their invoice
price.

When I worked in shops after we factored in our costs we averaged
about 10% profit on bikes and high end bikes were a little less.
Asuming the shop sold the $2,000 bike for $1,800 were the really
going to buy that much goodwill?

Broken Bicyclist said:

The cyclist is clearly the innocent party here. Any suggestion that
the insurance company is under a "burden" because one of its
policyholder hit someone is insane. Insurance companies are supposed
to pay out when one of their insureds are in an accident. That's the
legal (and social) contract that they make when they take the bet (the
premium).

Oi vey! The issue as stated before is that the cyclist is reimbursed
100%, in this case $2,000 by the insurance company for his loss and the
cyclist in turn purchases the *same* bike from the *same* shop at a
discount price (for some amount < $2,000).

Fritz M said:

Even if the bike shop gave the replacement bike for FREE to the
insurance company, the original customer gets NOTHING extra out of the
deal other than having his bike replaced, which is going to happen
anyway.

I am guessing that you have never been hit by an insured motorist and
had insurance replace your bicycle. They give you a check (well in my
case my attorney who then gave me a check minus the legal fee... but
then we had to go to arbitration) for everything, the replacement of
the bike, the medical, the pain and suffering, and so forth. Was I
made "whole".... sort of.... it was whole less 33%.

So if the Bike Shop had "cut me a deal" I would have been less
"unwhole".

Quoted message said:

What kind of good will or community karma is the bike shop generating
by giving time and product away to the insurance company?

Of course, you're not. You're giving the time and product away to your
broken Customer.

Quoted message said:

Sorry, Broken, but your arguments make absolutely no sense at all.

It makes sense as long as you are in the real world where the insurance
company gives the victim the check, not in your fantasy world where the
insurance company goes out and buys the new bicycle, the new helmet,
the new gym shorts, etc.

Quoted message said:

I'd like to see this infinite supply of bikes, also.

For purposes of the lost sale, its an infinite supply of bikes, not for
purposes of pricing. If this were, for example, Renoir's, selling a
replacement Renoir to me would be a lost sale becuase the supply of
Renoir's is so finite as to mean that selling it to me means that you
could not sell one to the next person that wanted one. In the case of
Custom Bicycles, in contrast, selling it to the victim at a discount
does not preclude selling it at full mark-up to the next person or the
person thereafter or the person after them.

Broken Bicyclist said:

Was I made "whole".... sort of.... it was whole less 33%.

Okay, I guess I see where you're coming from, a little.

I've had two house fires, three car-bike collisions (including one that
resulted in a total loss of a very nice custom frame), and my share of
fender-benders.

The insurance company won't bother to mention that full replacement
costs includes accessories and whatever taxes you need to pay -- you
have to pay attention and ask for these things.

Anyway, the customer has $2600 burning a hole in his pocket and needs
to replace the damaged bike and accessories. After that, it's just then
normal dealing that occurs when any existing customer comes in to buy a
bike.

Regarding capitalism and corporate ethics and so forth -- some bike
shop owners feel they have an obligation to pay their employees a
living wage.

Quoted message said:

...selling it to the victim at a discount
does not preclude selling it at full mark-up to the next person or the
person thereafter or the person after them.

It's a mid-range Specialized road bike. Maybe the bike shop have five
of these on the floor and two of them are the right size. And maybe the
shop will have to deeply discount one or two next year to make room for
the next year's models.

Or maybe there's a three week waiting list just to get the bike shipped
from Taiwan. Who knows?

RFM
http://www.cyclelicio.us/

On Fri, 18 Nov 2005 22:22:05 GMT, "Sir, It's Just Me" <nospam?@thanks?.?>

Quoted message said:

Broken Bicyclist said:

The cyclist is clearly the innocent party here. Any suggestion that
the insurance company is under a "burden" because one of its
policyholder hit someone is insane. Insurance companies are supposed
to pay out when one of their insureds are in an accident. That's the
legal (and social) contract that they make when they take the bet (the
premium).

Oi vey! The issue as stated before is that the cyclist is reimbursed
100%, in this case $2,000 by the insurance company for his loss and the
cyclist in turn purchases the *same* bike from the *same* shop at a
discount price (for some amount < $2,000).

In other words, the cyclist performs insurance fraud. You're supposed to
be reimbursed *replacement* cost, not what you paid for it.

Jasper

Dans le message de news:[email hidden],
Jasper Janssen <[email hidden]> a réfléchi, et puis a déclaré :

Quoted message said:

On Fri, 18 Nov 2005 22:22:05 GMT, "Sir, It's Just Me"

nospam?@thanks?.? said:

Broken Bicyclist said:

The cyclist is clearly the innocent party here. Any suggestion
that the insurance company is under a "burden" because one of its
policyholder hit someone is insane. Insurance companies are
supposed to pay out when one of their insureds are in an accident.
That's the legal (and social) contract that they make when they
take the bet (the premium).

Oi vey! The issue as stated before is that the cyclist is reimbursed
100%, in this case $2,000 by the insurance company for his loss and
the cyclist in turn purchases the *same* bike from the *same* shop
at a discount price (for some amount < $2,000).

In other words, the cyclist performs insurance fraud. You're supposed
to be reimbursed *replacement* cost, not what you paid for it.

No. Wrong. You get money. You can buy jellybeans, if you like. You can
buy at another store. You can take a trip to Las Vegas, win more than you
imagined, and buy an unobtanium bike. Replacement is not obligatory. Proof
of valuation is all needed to disgorge money from the insurer. And the
insurer has NO interest (legal) in making you buy another bike, meaning they
can't say "Hey, we can do you a bike ..." Last, the insurer doesn't owe the
injured party anything. It's the dumb driver who owes. Any shortfall in an
offer from the insurer should be rejected, and then you go after the bad
driver. Finally, when he pays up, you own his litigation rights against the
insurer, which include bad-faith settlement practices, which leads to
attorney fees and exemplary damages, all of which is fun for a lawyer.

Just stop getting this basic stuff wrong.
--
Bonne route !

Sandy
Verneuil-sur-Seine FR

"Sandy" wrote: (clip) Just stop getting this basic stuff wrong.
^^^^^^^^^^^^^^^^^^
But, was it really wrong? The loser is entitled to be made "whole."
Suppose the loss were for a $400,000 Lamborghini. And, let's say the
insurance company, faced with this kind of a loss, searches the market and
finds they can replace the car for "only" $375,000? Since they are allowed
to mitigate their losses, wouldn't they be allowed to settle for the lower
figure? In fact, the loser is also required to mitigate the loss, which
means going for the best price.

Suppose your car is damaged in a collision, and the insurance company asks
for three estimates. You go out and get six or eight estimates, and submit
the HIGHEST three. And, let's say the insurance company finds out that is
what you did. What would be their recourse?

Insurance companies don't tie up their examiners and legal staff on small
settlements like bicycles, and that is why it may be possible to pull off
some kind of slippery deal, like getting a discount and not telling them.
It doesn't make sense for them to spend thousands of dollars policing cases
where only hundreds can be saved.

At least, that's the way I see it.

Sandy said:

Dans le message de news:[email hidden],
Jasper Janssen <[email hidden]> a réfléchi, et puis a déclaré :

Quoted message said:

Quoted message said:

In other words, the cyclist performs insurance fraud. You're supposed
to be reimbursed *replacement* cost, not what you paid for it.

No. Wrong. You get money. You can buy jellybeans, if you like. You can
buy at another store. You can take a trip to Las Vegas, win more than you
imagined, and buy an unobtanium bike. Replacement is not obligatory. Proof

I didn't say it was.

Quoted message said:

of valuation is all needed to disgorge money from the insurer. And the

Exactly. And the valuation in question is *replacement cost*. Nobody says
you actually have to replace it, but what you're entitled to is the amount
of money to replace the item -- not as much as it cost new.

Quoted message said:

insurer has NO interest (legal) in making you buy another bike, meaning they
can't say "Hey, we can do you a bike ..."

They can say it, but they can't require you to take it instead of the
money. There's a few insurers over here that actually have a policy that
you *are* required to take the replacement object, and they only go to
cash settlements if they can't find one. This, of course, applies to
regular insurance you buy for your own stuff, and not third-party
indemnity.

Quoted message said:

Just stop getting this basic stuff wrong.

Stop misreading my statements into the most twisted form you can imagine
in order to make them wrong.

Jasper

Dans le message de
news:[email hidden],
Leo Lichtman <[email hidden]> a réfléchi, et puis a déclaré :

Quoted message said:

"Sandy" wrote: (clip) Just stop getting this basic stuff wrong.
^^^^^^^^^^^^^^^^^^
But, was it really wrong? The loser is entitled to be made "whole."
Suppose the loss were for a $400,000 Lamborghini. And, let's say the
insurance company, faced with this kind of a loss, searches the
market and finds they can replace the car for "only" $375,000? Since
they are allowed to mitigate their losses, wouldn't they be allowed
to settle for the lower figure?

No. The insurance company has a legal relationship with the insured. It
then is the insured who makes an offer to settle. The insurer has NO RIGHTS
against the injured party.

Quoted message said:

In fact, the loser is also required
to mitigate the loss, which means going for the best price.

No - that's contract law. Good leap of imagination, though.

Quoted message said:

Suppose your car is damaged in a collision, and the insurance company
asks for three estimates. You go out and get six or eight estimates,
and submit the HIGHEST three. And, let's say the insurance company
finds out that is what you did. What would be their recourse?

Remember the relationship remains insured (dumb driver) to insurance
company.
No relationship (direct, except under direct action statutes, which are too
complex to be relevant here).

Quoted message said:

Insurance companies don't tie up their examiners and legal staff on
small settlements like bicycles, and that is why it may be possible
to pull off some kind of slippery deal, like getting a discount and
not telling them. It doesn't make sense for them to spend thousands
of dollars policing cases where only hundreds can be saved.

Actually, in the case that was originally presented, the insurer is
motivated to settle for a top figure and early. The alternative
(technically speaking) is to hold the unpaid money in a reserve fund (where
it can't be earning real money) and push the process to long term
resolution. No one benefits, and the insurer risks significant
embarassment, should the full story make it to the press or to the
regulatory agency.

Sorry, but the naïve impressions of how this all works pollute the thinking
process.
Creation of myth (NOT lore, which means "knowledge"😉 ain't needed.

Quoted message said:

At least, that's the way I see it.

Well, that may comfort you, but don't bet a bar exam on it.
--
Sandy
Verneuil-sur-Seine
*******

La vie, c'est comme une bicyclette,
il faut avancer pour ne pas perdre l'équilibre.
-- Einstein, A.

Dans le message de news:[email hidden],
Jasper Janssen <[email hidden]> a réfléchi, et puis a déclaré :

Quoted message said:

Sandy said:

Dans le message de news:[email hidden],
Jasper Janssen <[email hidden]> a réfléchi, et puis a déclaré :

Quoted message said:

Quoted message said:

In other words, the cyclist performs insurance fraud. You're
supposed to be reimbursed *replacement* cost, not what you paid for
it.

No. Wrong. You get money. You can buy jellybeans, if you like.
You can buy at another store. You can take a trip to Las Vegas, win
more than you imagined, and buy an unobtanium bike. Replacement is
not obligatory. Proof

I didn't say it was.

Quoted message said:

of valuation is all needed to disgorge money from the insurer. And
the

Exactly. And the valuation in question is *replacement cost*.

Actually you fail again. Wrong answer. The valuation is not even limited
to the cost of buying a new identical bike ! Law school won't even get you
close to the answer.

Quoted message said:

Nobody
says you actually have to replace it, but what you're entitled to is
the amount of money to replace the item -- not as much as it cost new.

Not true, again. The argument on replacement cost presumes that the buyer
want the bike. And that he uses average skills to negotiate the purchase.
But, as he is NOT obligated to purchase it, the _measure of damages_ is
different - entirely different.

Quoted message said:

Quoted message said:

insurer has NO interest (legal) in making you buy another bike,
meaning they can't say "Hey, we can do you a bike ..."

They can say it, but they can't require you to take it instead of the
money. There's a few insurers over here that actually have a policy
that you *are* required to take the replacement object, and they only
go to cash settlements if they can't find one. This, of course,
applies to regular insurance you buy for your own stuff, and not
third-party indemnity.

You still are obtuse to this simple idea. The injured party is NOT in
contract with the insurance company. Your dumb idea is the same as saying
that the dumb driver can dictate the price at which he pays damages. Sure
you haven't been celebrating too much before the holidays ???

Quoted message said:

Quoted message said:

Just stop getting this basic stuff wrong.

Stop misreading my statements into the most twisted form you can
imagine in order to make them wrong.

Try reading what you write before you post. Apply elementary logic, and you
could make a couple of steps toward enlightenment.

--
Sandy
Verneuil-sur-Seine
*******

La vie, c'est comme une bicyclette,
il faut avancer pour ne pas perdre l'équilibre.
-- Einstein, A.