Replace, Settle in Money, or Repair: Those are the Options!

After an insured is in an accident, their carrier has three options: They can elect to replace the vehicle (typically in the event of a total loss situation), they can settle the claim in money, or they can elect to repair, which gives them complete control over the process. So, in a situation where the vehicle is repairable, which option do you think insurers typically choose?

Most repairers may believe that insurers elect to repair due to the way that they try to control the repair process…but that’s not true! Electing to repair allows them to take the vehicle to their shop to have it repaired, so they can dictate exactly what’s going to be done, how it’s done, what parts are used, where to buy the parts and what they’ll pay for.

But electing to repair also requires insurers to assume liability, and they’re certainly not willing to do that. Instead, they decide to settle in money, yet they try to exert control over the process by acting like they have the ability to elect to repair AND to settle in money – when that’s not the case at all!

They’ll even go as far as pulling a vehicle out of a shop to a shop where they can control everything behind the scenes. Meanwhile, between services provided and billed out plus the cost of their estimate, they wind up paying more than the repair bill would have cost them in the first place. They’re not even trying to negotiate, and it’s costing them more. It makes no sense, and I can’t explain their thought process, other than the beating will continue until the morale will improve. They are punishing and training both shop and customer to get what they want.

Insurance employees don’t care if something goes awry during the repair because they’re not actually electing to repair the vehicle; they’re not accepting liability. But they want to control everything, supposedly to stay competitive and keep shops’ rates stagnant; just follow the money to see who’s on top. But they want to claim they’re doing it to protect the consumer – it’s all smoke and mirrors. Shops need to educate themselves to understand they’re the ones who are liable if something goes wrong, regardless of what the appraisers or adjusters are telling them. “We can’t pay for that.” “You’re the only one.” Listen…Appraisers do what they’re told because they fear for their jobs. They’re being scrutinized and punished just like the shops are, so they simply won’t pay. Half of these guys were flipping burgers a few months ago, so what do they know about repairing today’s cars? Ask the appraiser or insurance manager the last time they repaired a vehicle, researched a procedure or had any formal training through a OEM.

Carriers are hiring a lot of these kids straight out of school. It’s their first job, and the only thing they know about cars is where to insert the key. So, they’re taught to write an estimate and receive an explanation of payment guidelines. At the same time, a lot of these guys and gals actually know right from

by JERRY MCNEE

wrong, so they occasionally pay for a few necessary items, only to be scrutinized on the back end and told that their numbers need to improve. The next quarter rolls around, and they get a sterner lecture; maybe, they’re even warned that their job is in jeopardy. Well, meanwhile, maybe this guy just got married, had a kid, took out a mortgage or a new car payment, and even though he knows right from wrong, he needs to appease the company paying his salary, so he’s going to concede.

Snared. Hook, line and sinker. They may know it’s wrong, but they’re going to learn to become stonefaced. They are going to acclimate to the litany: “No one else charges for that.” “This is the industry standard in the market.”

Right from wrong no longer matters because they know compliance is necessary to continue a career. And although their company refuses to elect to repair and insists on settling in money, too many shops accept the response, “I’m not paying for that,” and that hurts our entire industry.