# Engine Replacement on Leased BMW



## Arcane.Host (Sep 8, 2006)

OP - what is your recourse if Geico and you don't agree on what makes you whole.....is it that an Arbitrator will step in? What does your contract with Geico say? If it does say so and you pursue the Arbitrator route, someone from the exec level at Geico would take notice and then you fight your battle in front of the Arbitrator while the execs at Geico are involved.

As regards getting an attorney involved for merely a letter: I think Geico would have a strong legal team to handle this for them and as a business, they seem to have decided to curtail costs by playing the odds.....I mean how many claims go to the Arbitrator level?

I suggest you don't give in and pursue this to the fullest......Make Geico also pay for the lease cost for the whole time - while the claim is waiting for a resolution and then the actual repair time.

As a next step, I suggest you confirm the recourse from your contract and tell the claim rep about how you want to pursue - get the case to an Arbitrator for a new engine and for lease costs during downtime......send an email summarizing this after informing the claim rep over phone.

Sent from BimmerApp mobile app


----------



## chrischeung (Sep 1, 2002)

shogunman said:


> Make Geico also pay for the lease cost for the whole time - while the claim is waiting for a resolution and then the actual repair time.


How do you do that? Is that standard? I had to pay my lease during repairs even though it wasn't my fault.


----------



## Arcane.Host (Sep 8, 2006)

chrischeung said:


> How do you do that? Is that standard? I had to pay my lease during repairs even though it wasn't my fault.


I don't know how to do that. I know this isn't standard if the insurance company and the OP were to agree to the solution. However, they are not agreeing and it is going to get prolonged. If an Arbitrator decides in favor of the OP, he could possibly also entertain the thought that the insurance company pay for the lease charges.

Whether the Arbitrator agrees or not, in the least, I'm thinking that the OP could use this to increase pressure on the insurance company at this stage. You see, the OP has nothing to lose by adding this to his claim while the risk for the insurance company will continue to rise.

Now that I think more - I'm thinking that the OP go even further and add loss of value to the claim as well. Perhaps once all these things are added, the insurance company may call it a total loss which is the best scenario for the OP assuming he hasn't put money as a cap reduction.

I'm no lawyer by profession but my gut says this is the right approach. Note that the OP needs to respond and share with us what is in his contract (dispute settled through Arbitrator or not).

What would you do Chris? Is my logic flawed somewhere? I feel for the OP and believe that the insurance company is wrong here.

Sent from BimmerApp mobile app


----------



## chrischeung (Sep 1, 2002)

shogunman said:


> What would you do Chris? Is my logic flawed somewhere?


I would call BMWFS and ask them the risk. In some ways get them and or the repairer negotiating with the insurer. I would also look into a claim for diminished value. I don't routinely deal with lawyers personally so I would be unsure of that being resolved to the OPs satisfaction as a course of action.

Is this a clear cut case in the OPs favor? Like a lemon law claim? That is the flaw in your approach that I have concern with. The worst thing would be if the policy is worded in GEICO's favor, and the OP has to legally fight for an alternative.


----------



## namelessman (Dec 23, 2004)

It is hard to imagine BMWFS will accept a lease return with a voided engine warranty and anything other than dealer work(esp. on an engine replacement). One suggestion is to request for discount from the dealer, at times they will work something out to lessen the blow. Also there seems to be an OEM re-manufactured engine part#(with OEM warranty I assume) which can be cheaper than a brand new engine. Good luck on the repair.


----------



## need4speed (May 26, 2006)

shogunman said:


> OP - what is your recourse if Geico and you don't agree on what makes you whole.....is it that an Arbitrator will step in? What does your contract with Geico say? If it does say so and you pursue the Arbitrator route, someone from the exec level at Geico would take notice and then you fight your battle in front of the Arbitrator while the execs at Geico are involved.
> 
> As regards getting an attorney involved for merely a letter: I think* Geico would have a strong legal team to handle this for them and as a busine*ss, they seem to have decided to curtail costs by playing the odds.....I mean how many claims go to the Arbitrator level?
> 
> ...


I'm sure they do. What you want is to be the one that costs them 5k in time on a 3k issue. N4S


----------



## cxp (Dec 10, 2005)

You should contact BMWFS and have them communicate directly with Geico. 

You do not own the car. BMWFS owns the car and should force Geico to repair the car to a satisfactory level. 

Be sure to get everything in writing. 


Sent from BimmerApp mobile app


----------



## TXPearl (Apr 16, 2010)

GEICO will pay what they're obligated to pay per the policy with the lessee. If they don't, they expose themselves to a bad faith suit. I doubt they care what BMWFS thinks. The OP, however, may want to read the fine print on the lease agreement and see what it says with respect to this situation.

I doubt the policy mandates new parts (incl. engine) but you never know. Some states have specific insurance regs about this stuff. And I can almost guarantee that the policy will not cover any type of loss of use (lease payments) while repairs are being made. However, the OP may have rental reimbursement coverage.


----------



## Mylesm01 (Feb 24, 2013)

Thanks for all of the responses! BMW Financial Services confirmed that they may charge me for a second engine replacement upon lease turn-in if Geico insists on using the salvage engine for my repair. I spent the day today researching my rights under Arizona law and just sent Geico a letter explaining why they need to authorize an original replacement engine. (I'm an attorney, so at least I didn't have to pay out-of-pocket to have someone do that.) I'll let you all know how things turn out.


----------



## rmorin49 (Jan 7, 2007)

I am actually surprised that auto insurance would cover damage caused by "operator error". Is this included in your Comprehensive coverage? It is good that you are an attorney as I have a feeling this may not end well. What is the cost difference between a new engine and the used one Geico wants to use? I suspect it could be in excess of $10K. Would this be the amount BMWFS might charge you at the end of your lease? I hope not for your sake. Good luck.


----------



## namelessman (Dec 23, 2004)

The N26 lists for $11k and best online price is $8.8k. Maybe the insurer will go for it if dealer can drop total bill by $2k to $3k.


----------



## TXPearl (Apr 16, 2010)

Mylesm01 said:


> Thanks for all of the responses! BMW Financial Services confirmed that they may charge me for a second engine replacement upon lease turn-in if Geico insists on using the salvage engine for my repair. I spent the day today researching my rights under Arizona law and just sent Geico a letter explaining why they need to authorize an original replacement engine. (I'm an attorney, so at least I didn't have to pay out-of-pocket to have someone do that.) I'll let you all know how things turn out.


What does "may charge" you mean? Are there other factors or considerations that could come into play?

Again , can they point you to anything in the lease agreement that gives them the ability to charge you in this situation?


----------



## ard (Jul 1, 2009)

rmorin49 said:


> I am actually surprised that auto insurance would cover damage caused by "operator error". Is this included in your Comprehensive coverage? It is good that you are an attorney as I have a feeling this may not end well. What is the cost difference between a new engine and the used one Geico wants to use? I suspect it could be in excess of $10K. Would this be the amount BMWFS might charge you at the end of your lease? I hope not for your sake. Good luck.


Collision coverage.. Same operator error as driving into a brick wall.

Water ingestion is a non uncommon claim.


----------



## Mylesm01 (Feb 24, 2013)

namelessman said:


> The N26 lists for $11k and best online price is $8.8k. Maybe the insurer will go for it if dealer can drop total bill by $2k to $3k.


Namelessman: Please let me know where the N26 is available online for $8.8k. That's cheaper than the salvage engine, so I'm sure the insurer would go for it if I could get my dealer close to that price.


----------



## Arcane.Host (Sep 8, 2006)

OP - You can alsl try getbmwparts.com - they don't charge sales tax outside of Florida and their rates are very aggressive.

This is the parts division of Tischer BMW which is an authorized bimmer dealer so is genuine.

Sent from BimmerApp mobile app


----------



## namelessman (Dec 23, 2004)

Mylesm01 said:


> Namelessman: Please let me know where the N26 is available online for $8.8k. That's cheaper than the salvage engine, so I'm sure the insurer would go for it if I could get my dealer close to that price.


realoem shows 2 PN's for N26:

Short Engine	N26B20A	1	12/2012 11002288217 
only in conjunction with 
01	Rmfd short engine	N26B20A	1	12/2012 11002303911 
only in conjunction with

And check these out:

http://parts.bmwofbridgewater.com/p/Short-Engine-N26B20A/50946934/11002288217.html
http://parts.bmwofbridgewater.com/p/Rmfd-short-engine-N26B20A/43746730/11002303911.html

The re-manufactured OEM part is $8.8k, the brand new one is $11.5k. How much is the salvage engine?


----------



## soupcon (Sep 13, 2008)

i had a similar thing happen to me, except that it was a car i financed. in either case, you stand to lose a lot of value/money with a used or rebuilt engine. i fought really hard to have the car totaled and they finally agreed. the last thing anybody needs is another car with a story. it's a hot potato and somebody's going to get burned.


----------



## dee335i (Sep 19, 2014)

This just happened to me in Phoenix when the storm hit. Engine is toast and Geico wants to replace with a used, engine. Total so far for repairs is ~$20k. I will try to fight for them to total it. Its a 2012 335i. I financed the car. Car has extended maintenance and plantinum extended warranty. Car will never be the same if its fixed.


----------



## ard (Jul 1, 2009)

^^ Sorry to hear.

Will Geico warrant the engine to the end of the platinum warranty period> (BMW certainly wont...) Their decision to install used parts may have significant and continuing losses to you if issues arise.


----------



## dee335i (Sep 19, 2014)

ard said:


> ^^ Sorry to hear.
> 
> Will Geico warrant the engine to the end of the platinum warranty period> (BMW certainly wont...) Their decision to install used parts may have significant and continuing losses to you if issues arise.


Also the diminished value of the car will be a lot if I ever decide to sell the car. I am not sure why they dont total the vehicle. I guess I'll find out what they are valuing my car at tomorrow.


----------



## Mylesm01 (Feb 24, 2013)

dee335i said:


> Also the diminished value of the car will be a lot if I ever decide to sell the car. I am not sure why they dont total the vehicle. I guess I'll find out what they are valuing my car at tomorrow.


Sorry to hear that you're dealing with the same issue. I just sent you a PM. In my case, after I sent Geico a detailed letter explaining why I felt they could not use a salvage engine, they upped their repair estimate to cover an OEM remanufactured BMW engine. I'm not sure if that's because they agreed that the salvage engine they wanted to use wasn't actually of "like kind and quality" or because of the specific requirements of my lease. They're still trying to deduct $700 or so from the new engine cost for 6% "betterment," which I think is ridiculous both because (i) putting in a remanufactured engine definitely doesn't increase my car's value and (ii) their calculation assumes that an engine only has a 100,000 mile life. I'm tempted to fight them on that, but I think I can get my dealer to discount the repair by $700 to make up the difference.

I hope everything works out for the best with your repair!


----------



## bimmerbuff (May 27, 2004)

Good to see Mylesm01 got GEICO to head in the right direction. Let us know how you make out too, dee335i.

Sorry to hear about both of the cars.


----------



## ard (Jul 1, 2009)

Mylesm01 said:


> Sorry to hear that you're dealing with the same issue. I just sent you a PM. In my case, after I sent Geico a detailed letter explaining why I felt they could not use a salvage engine, they upped their repair estimate to cover an OEM remanufactured BMW engine. I'm not sure if that's because they agreed that the salvage engine they wanted to use wasn't actually of "like kind and quality" or because of the specific requirements of my lease. They're still trying to deduct $700 or so from the new engine cost for 6% "betterment," which I think is ridiculous both because (i) putting in a remanufactured engine definitely doesn't increase my car's value and (ii) their calculation assumes that an engine only has a 100,000 mile life. I'm tempted to fight them on that, but I think I can get my dealer to discount the repair by $700 to make up the difference.
> 
> I hope everything works out for the best with your repair!


Great result.

The betterment issue is not a surprise....

You might point out that if they were approving a NEW engine the betterment might be appropriate, but they are not- a 'remanufactured' engine which is cheaper than new. The cheaper pricing of the remanufactured engine is proof that it is worth less. You car. when new, did not come with a remanufactured engine. Indeed if one looks at the relative value of new versus remanned, it would appear that you are suffering a diminution of value. Tell them "Ill give you the $700 off new, OK?"

well done


----------



## TXPearl (Apr 16, 2010)

TXPearl said:


> What does "may charge" you mean? Are there other factors or considerations that could come into play?
> 
> *Again , can they point you to anything in the lease agreement that gives them the ability to charge you in this situation?*


Out of curiosity, I looked in my lease agreement to see if this is addressed. It is....

_I agree to maintain, service, repair, and recondition the Vehicle during the Lease Term with new and genuine manufacturer's original equipment replacement parts as recommended in the Vehicle owner's manual. I will keep complete maintenance records and return them with the Vehicle.

I am responsible for repairs of all collision, accident, and other physical damage that is not a result of normal wear and use. ......... All repairs mist be made with new and genuine manufacturer's original equipment replacement parts. Discuss these requirements with your insurance company prior to signing your insurance agreement, damage repair estimate, or before authorizing any damage repair work....._

So BMWFS is shooting straight with you. As for GEICO, it's very unlikely that your policy specifies new, OEM parts, so it sounds like they're trying to work with you. BMWFS's lease terms mean nothing to them however.


----------



## namelessman (Dec 23, 2004)

TXPearl said:


> Out of curiosity, I looked in my lease agreement to see if this is addressed. It is....
> 
> _I agree to maintain, service, repair, and recondition the Vehicle during the Lease Term with new and genuine manufacturer's original equipment replacement parts as recommended in the Vehicle owner's manual. I will keep complete maintenance records and return them with the Vehicle.
> 
> ...


Does this mean BMWFS won't accept remanufactured OEM engine for lease return?


----------



## Mylesm01 (Feb 24, 2013)

namelessman said:


> Does this mean BMWFS won't accept remanufactured OEM engine for lease return?


No. The remanufactured engine is an OEM replacement part, so BMWFS told me it would be fine. My service advisor confirmed in writing that the remanufactured engine is acceptable to BMWFS. He says it's the same engine they'd use for a warranty engine replacement.


----------



## ard (Jul 1, 2009)

namelessman said:


> Does this mean BMWFS won't accept remanufactured OEM engine for lease return?


If the lease says "genuine manufacturer's original equipment replacement parts", a engine remanufactured by BMW is, in fact, such a part.

The key is the language of the insurance policy. A policy will insure you for a "loss"- which is 'the cost to make you whole', but then they limit the definition of how they will calculate a loss. Depending on your state, folks may have statutory rights that are not stated in the policy- such that an insurers 'interpretation' could actually be at odds with the law in some cases, and it takes a letter or two to make this obvious.

And for nerds:


> Great Texas County Mutual Insurance Co. v. Lewis, 979 S.W.2d 72 (Tex.App. Dist.3 11/05/1998)
> 
> [1] Texas Court of Appeals
> 
> ...


----------



## TXPearl (Apr 16, 2010)

Good find, ard. Seems to shoot down the betterment theory (although that is a TX case, not AZ).

Either way, the betterment calculation is less clear cut when talking a remanufactured engine instead of brand new and considering the age/mileage of the original damaged engine. I would rather have my original undamaged engine with just 7K miles from factory new (miles that I drove) vs. a remanufactured engine with zero miles. Some part of the remanu'd engine must be a recycled part, correct? (I'm assuming the block at least)


----------



## namelessman (Dec 23, 2004)

Mylesm01 said:


> No. The remanufactured engine is an OEM replacement part, so BMWFS told me it would be fine. My service advisor confirmed in writing that the remanufactured engine is acceptable to BMWFS. He says it's the same engine they'd use for a warranty engine replacement.


That's great news. So did the dealer match/beat the $8.8k online price on the re-manufactured OEM engine?


----------

