EXECUTIVE DIRECTOR’S MESSAGE

Time to Wake Up and Open Your Eyes!

by CHARLES BRYANT

When you talk to a collision shop owner about the problems that are going on in the industry – some of which have been occurring for the past 50 years – you always get the same response: “That’s just the way it is, and there is nothing we can do about it.” As a result, not only are insurance companies dictating what they will pay for the repairs, but now they’re going so far as to dictate where the shop must purchase their parts from. If the shop refuses, the insurers limit the amount they will pay for the part to what it could have been purchased for at the vendor(s) they suggested. I am being told that certain insurers are taking this stand regardless of the quality of the parts being sold by the vendor and without any indication of where the parts actually come from or if their manufacturers guarantee them. This is wrong, not to mention a clear violation of the regulations governing the use of certain parts.

What is amazing to me is that from what I’m hearing, shop owners are now trying to work around this situation rather than addressing it headon and saying no. I’ve been told that many shops are turning to dealers and demanding that they price match the parts prices that the insurers are willing to pay. Also, from the reports we are getting, some shop owners are just accepting whatever the insurer does because, as I mentioned earlier, they think there is nothing they can do about it. Actually, nothing could be further from the truth.

It’s about time that the collision industry stops allowing insurance companies to bully them into doing whatever they want them to do and for whatever amount of money they want to pay. I know I’ve said this before, but I’m going to say it again and again until this industry wakes up and gets the message loud and clear: The insurance industry

has no right to tell a collision shop where to buy their

parts from. In fact, unless the insurer chooses the option in the policy to repair the property and become equally liable for negligent repairs, that company has no right to dictate anything. To be more specific, the rules that govern fair claim settlement practices actually state, “If the insurer intends to exercise its right to inspect, or cause to be inspected by an independent appraiser, damages prior to repair, the insurer shall have seven working days following receipt of notice of loss to inspect the insured’s damaged vehicle, which is available for inspection, at a place and time reasonably convenient to the insured; commence negotiations; and make a good faith offer of settlement.”

First of all, many insurers are not even inspecting damaged vehicles lately. Also, the rules clearly say, “IF the insurer intends to exercise its right to inspect” – and I stress the word IF. By placing this word up front, state regulations make it clear that an insurer can waive the right to inspect a damaged vehicle and negotiate a settlement. It appears that an insurer can just accept an estimate prepared by the shop of the insured’s choice and pay the claim. By the way, the regulation does not say to just send some photos of the damage instead of the insurer inspecting the damage or causing it to be inspected.

To stress this point further, New Jersey’s licensing law that governs the practices of collision facilities makes it clear that it is a violation of law for a licensed auto body shop to make an appraisal of the cost of repairing a damaged automobile through the use of photographs, telephone calls or any manner other than personal inspection. Since that is the standard for the professionals actually making the repairs to damaged vehicles, it would appear clear that insurers should at least be held to that same standard. Yet, collision shops around the state are looking the other way (or may not even be aware of this rule) and going along with insurers, taking the photos and sending them in. Shop owners might want to know that the preparation of estimates based on photos rather than personal inspection of the damaged vehicle could lead to revocation or suspension of their shop’s license. Verification of this can be found in the yellow “Notice to Consumers” sign that should be posted in every New Jersey-licensed collision shop. There is a provision in the regulations governing fair claim settlements that does allow an insurer to dictate what it will pay for repairs rather than make all reasonable efforts to negotiate an agreement with the shop of the insured’s choice. However, insurers never or rarely ever choose this option. In fact, I have been in this industry for too many years to mention, and I have never seen or heard of an insurer ever choosing this option. The reason is clear: When the insurer chooses this option, which

gives it the authority to dictate rather than negotiate what it is going to pay for repairs, the insurer must then guarantee that the work meets the generally accepted standards for a safe and proper repair.

Did you read that? Insurers never or rarely ever choose this option because if they do, they must guarantee – in writing – that the work performed meets generally accepted standards for safe and proper repairs. They must also inform the insured in writing that they chose this option and must also provide a reasonable estimate of the time period for the repair. When or if an insurer chooses this option, it could be held liable for negligent repair, which would likely break any limit of liability for which they would otherwise be liable.

Don’t misunderstand; I am not referring to when an insurer recommends a DRP shop or a few of them. That’s different. An insured can reject the recommendation to a DRP shop. However, IF an insurer chooses the option in the policy to repair the vehicle, the insured cannot refuse to have it repaired at the shop chosen by that insurer. If they were to do so, the insurer could refuse to pay the claim. Now, I know this may sound crazy because very few people in the collision industry have figured this out, but it is right there in the regulations and in every standard auto policy that I have ever seen.

Because of the type of vehicles on the roads today, this information is no longer just important – it is crucial to the survival of those in the collision industry. Collision shops can no longer play Let’s Make a Deal with insurers and overlook or not perform scanning, recalibrations and other items. For those collision shops that are paying attention to this message and what is going on in the industry right in front of their eyes, I encourage you to take action and look deeper into what has been revealed. If anyone would like to discuss anything mentioned here, I can be reached on the AASP/NJ Hot Line at (732) 922-8909. Until next time, we will be watching!

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