The official publication of the Auto Body Association of Texas (ABAT)
May 2021 $5.95
Proper parts,
protected consumers: ABAT BILLS MAKE WAVES in austin
PLUS: • An OEM Repair Victory • Weathering the Storms • Back to Busy
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Contents
MAY 2021
on the
cover
Official publication of the Auto Body Association of Texas
PROPER PARTS, PROTECTED CONSUMERS: 14 Safe Parts, Safe Procedures:
ABAT BOARD OF DIRECTORS
HB 1131 Gets Heard in Austin
16 House Hears ABAT-Endorsed Appraisal Clause Bill by Joel Gausten
President Burl Richards Burl's Collision Center burl@burlscollision.com (903) 657-8082
Vice President Eric McKenzie Park Place Dealerships emckenzie@parkplace.com (214) 443-8250
Chairman of the Board Corey Pigg S&W Expert Collision Repair coreyp@swcollision.com (936) 634-8361
Treasurer David Osburn Paint Works davidosburn@paintworkstyler.com (817) 648-5797
Executive Director Jill Tuggle jill@abat.us (817) 899-0554
ABAT BOARD MEMBERS Bobby Beason DeMontrond Collision Center bobby.beason@demontrond.com (936) 577-2747
Robert McDorman Auto Claim Specialists rmcdorman@autoclaimspecialists.com (817) 756-5482
Larry Cernosek Deer Park Paint & Body lcwrecker@comcast.net (281) 930-1539
Chad Neal Innovative Collision Equipment Chadwneal@yahoo.com (817) 527-2143
Kevin Ellison Westway Ford kellison@vtaig.com (972) 584-9033
Logan Payne Payne & Sons Paint & Body logan@paynescollision.com (214) 321-4362
Chad Kiffe Berli's Body & Fine Finishes chadk@berlisbody.com (512) 251-6136
Manuel Rubio Miracle Body & Paint manuelr@miraclebp.com (210) 843-9564
EXECUTIVE DIRECTOR’S MESSAGE by Jill Tuggle The 2021 Texas Auto Body Trade Show: All about the Location
John Kopriva Kopriva Body Works jtkopriva@gmail.com (713) 923-4412
Darrell Smith McDaniel’s Quality Body Works Inc darrell-mcdaniels@sbcglobal.net (903) 753-5391
2021 TEXAS AUTO BODY TRADE SHOW: SAVE THE DATE!
Greg Luther Helfman Collision gluther@helfman.com (713) 574-5060
Mike Williams All Star Collision Center sales@allstarcollision.us (903) 589-3160
DEPARTMENTS
4 5 6 7 8
PRESIDENT’S MESSAGE by Burl Richards An OEM Repair Victory - Thanks to SCRS!
10
ABAT FEATURE by Alana Bonillo Weathering the Storms: How Body Shops Survived a Challenging Winter (and More)
PUBLISHER Thomas Greco / thomas@grecopublishing.com
18
ASK THE EXPERT by Robert L. McDorman What is the Prevailing Practice and How Is It Determined?
EDITORIAL/CREATIVE COORDINATOR Alana Bonillo / alana@grecopublishing.com
20
THE CONSUMER’S VOICE by Joel Gausten A Nightmare Made Worse: A Former State Farm Insured Tells All
PRODUCTION COORDINATOR Joe Greco / joe@grecopublishing.com
ABAT MEMBER APPLICATION
EDITOR’S MESSAGE by Joel Gausten Back to Busy
Published by: Thomas Greco Publishing, Inc. 244 Chestnut Street, Suite 202, Nutley, NJ 07110 Corporate: (973) 667-6922 / FAX: (973) 235-1963
SALES DIRECTOR Alicia Figurelli / alicia@grecopublishing.com EDITORIAL DIRECTOR Joel Gausten / joel@grecopublishing.com
OFFICE MANAGER Donna Greco / donna@grecopublishing.com
ADVERTISERS’ INDEX 300 Advantage..................................................... 21
Innovative Collision Equipment........................ 22
Auto Claim Specialists........................................ 17
Paint Works Dallas............................................... IFC
Beacon Equipment Resources......................... 21
Reliable Automotive Equipment....................... 12-13
CAR-O-LINER Southwest................................... 11
Sherwin-Williams.................................................. OBC
English Color & Supply....................................... 19
Tasco Auto Color................................................. 8
Ecotech................................................................... IBC
USI North America............................................... 9
FindPigtails.com.................................................... 21
Wheel Technologies........................................... 4 3 MAY 2021 Texas Automotive
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TEXAS AUTOMOTIVE is published monthly and is sent to ABAT members free of charge. Subscriptions are $24 per year. TEXAS AUTOMOTIVE is published by Thomas Greco Publishing Inc., 244 Chestnut St., Nutley, NJ 07110. The editorial contents of TEXAS AUTOMOTIVE are copyright © 2021 by Thomas Greco Publishing Inc. and may not be reproduced in any manner, either in whole or in part, without written permission from the publisher and/or editor. Articles in this publication do not necessarily reflect the opinions of Thomas Greco Publishing Inc. Stock Images courtesy of www. istockphoto.com.
President’s Message
AN oem repair victory Thanks to scrs! Burl Richards ABAT President
T
Texas is a huge state with a lot going on, but ABAT makes it a point to look beyond what’s happening here and maintain relationships with national groups that are working on behalf of auto body professionals across the country. The Society of Collision Repair Specialists (SCRS) is one such vital entity, and ABAT is proud to be one of its state affiliates. Like ABAT, SCRS stands in full support of OEM-recommended/required procedures as the true standard of repair. Not too long ago, ABAT’s connection with SCRS made our mission to promote such procedures a much greater reality here and everywhere. As a shop owner, I’ve always believed that if insurers and repair facilities are expected to use the industry’s major estimating systems, then these products should be based on OEM guidelines. I also know that SCRS is in regular contact with Information Providers (IPs) in regard to potential changes and inquiries from industry members. A few months back, I reached out to SCRS Executive Director Aaron Schulenburg to share my thoughts and concerns and inquire about the possibility of SCRS driving this point home to those IPs. My objective was to help stress the importance of OEM-centric repairs that follow the manufacturers’ repair procedures. I’m so glad I made that call to Aaron, as SCRS worked with the Alliance of Automotive Service Providers (AASP) and other members of the Database Enhancement Gateway (DEG) Joint Operating Committee to develop and circulate language to the IPs based on my concerns as well as those from others in the industry. The result was tremendous. Earlier this year, CCC updated its Labor Time Premise (bit.ly/CCClabortime) to include the following language: MOTOR recommends a review of the OE service information at the time of estimate preparation to confirm the OE manufacturer repair procedure(s). MOTOR assumes the repair facility is equipped with the necessary tools, equipment and training to complete any given repair following published vehicle manufacturer repair procedures. I presented SCRS with some thoughts and ideas, and Aaron and others clearly ran with them. I’d love to see similar language like that turn up in the other estimating systems, and
I know SCRS is actively having conversations with them to work this out. I’ll keep our ABAT members posted in Texas Automotive as things develop. When I first reached out to SCRS on this topic, the association was also looking into addressing OEMrecommended operations that weren’t necessarily reflected in these estimating systems. I offered some feedback on this as well, as I’ve always believed that it’s extremely important that repairers review the OEM procedures at the time the estimate is prepared to make sure nothing was missed. This coincided with a DEG inquiry (bit.ly/DEG17251) that identified a time assigned to a 2018 Ford F-150 pickup box outside panel that was based on an outdated procedure. That time has since been updated. This is why inter-industry communication matters! As I was working on this message, this magazine’s editorial director, Joel Gausten, shared something that Aaron told him during a recent conversation they had on my communications with SCRS: “I think this is a great example of how local feedback can influence national-level activity. It demonstrates to ABAT members how in touch they are with the things that can ultimately affect them. They have the intuition to know that there are resources available that might carry greater influence that they can work with to try to initiate change. I really appreciate the foresight that Burl, Jill and others have at the state level. We’re all pulling our oars in the same direction, and it’s important to rely on each other’s support. If a collision repairer is not a member of their local association, it’s important for them to get involved.” Thank you for those great words, Aaron! It’s a pleasure working with SCRS, and I’m thrilled and grateful that you were able to add my concerns and ideas to your greater efforts to improve this industry. Every member of ABAT is better for having SCRS at their side through our association’s affiliation with yours, and I hope they will consider joining SCRS as national-level members as well.
4 MAY 2021 Texas Automotive
burl@burlscollision.com
TXA
5 MAY 2021 Texas Automotive
Executive Director’s Message The 2021 Texas Auto Body Trade Show: All about the Location
P
Preparations are in full swing for the like SEMA and the NORTHEAST® 2021 Texas Auto Body Trade Show, and Automotive Services Show. We I am more excited than I have ever been brainstormed ideas to bring in more and for this year’s event. Not only do we have more attendees and vendors each year. so much in store, but we also have so The one thing the other two big shows many new things to be excited about! Last possess is the destination factor – SEMA month, I wrote to you about the woes in Las Vegas and NORTHEAST just of finding a new facility, so I thought it across the river from New York City. Of would be the perfect time to tell you a course, in Texas, we have no shortage of little more about our new location for the confidence in our great state. I’m sure show, the Irving Convention Center’s you’re me1 in thinking that we are a Wheel Technologies Ad_TXA0319.qxp_Layout 1 2/26/19 11:00 AM like Page Toyota Music Factory. destination just for being Texas – and we We have always had lofty goals are. We just have to deliver on the fun for the Show, including that it would when they get here. Our previous venue someday gain the notoriety as one of was great in so many ways, but it lacked the biggest shows in the country – just in the experience department.
Enter Toyota Music Factory… Toyota Music Jill Tuggle Factory opened ABAT Executive Director in September 2017 and was a city-planned entertainment and music district slated to be named Irving Music Factory. It was expected to entertain over 2.5 million guests per year. Before its opening, naming rights were changed, and Toyota entered into a 10-year agreement with the city, furthering its ties to the community after moving its headquarters here to North Texas. It’s continued on pg. 19
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6 MAY 2021 Texas Automotive
7 MAY 2021 Texas Automotive
Editor’s Message
BACK TO BUSY
I
It’s finally happening. With more Americans getting their COVID-19 vaccines every day and restrictions relaxing across the country, it appears extremely likely that travel throughout Texas will dramatically increase over the next few months. This means that the ABAT community is likely to see its heaviest workload in more than a year. The light at the end of the tunnel is getting brighter, and we at Texas Automotive look forward to spending the rest of 2021 reporting on the good news surrounding our readers’ return to normalcy. Of course, these positive developments also mean that I’m gearing up to spend some serious time on the road the rest of this year! I’ll be attending ABAT’s 2021 Texas Auto Body Trade Show – the largest event of its kind in the Southwest – this September 17-18 at the Irving Convention Center in Irving. I can’t wait to be a part of this in-person event and connect face to face with our readers and the people who help the Texas auto body industry thrive. I hope everyone reading this will take advantage of this
Joel Gausten Editor
opportunity to meet up with your peers to network and learn in an incredible setting. It’ll be a great way to celebrate the industry’s resilience in recent times while gaining the training and insights necessary to plan for a more prosperous future. It’ll also be a chance to have some real fun! Look for more information on this year’s Texas Auto Body Trade Show in future issues of Texas Automotive – and make your plans to be there! In other news, ABAT continues its efforts in Austin on behalf of the industry and the consumers it serves. Check out this month’s coverage of the recent House Committee on Insurance hearings on House Bills 1131 and 2534 – major legislation that would protect Texas motorists and auto body consumers like never before. Until next time, stay safe, active and positive. Better days will be here before we know it! joel@grecopublishing.com
8 MAY 2021 Texas Automotive
TXA
Russell & Smith Logging Big Paint Hours with USI Booths & Prep Station Buying a paint booth is a huge investment, and there are many factors to carefully consider before selecting one. Will the booth work well in a region where there’s a ton of humidity and with drastic changes in the weather? How long do you think the booth will last and will it require a lot of maintenance? Will your painters be comfortable using it every day and finally, will the company making the booth provide solid training and reliable customer service? To answer these questions before acquiring two Chronotech spray booths and a prep deck from USI ITALIA back in 2004, Collision Center Manager Kevin McIllveen at Russell & Smith Body Shop in Houston, TX spent six months studying the market. He was looking for the best booths that matched his needs to use in a brand-new 36,000 sq. ft. facility that the company built from the ground up. Mcllveen, age 56, entered the industry more than three decades ago as an estimator and has worked for Russell & Smith Body Shop since 1993. His goal with his new spray booths was to improve the efficiencies in his paint department and to accommodate his production, he said, while simultaneously saving time and energy if possible. The vetting process was arduous but worth it in the end. "We did our research so that we could make an educated decision," he said. "I went to NACE two years in a row and talked to literally everyone and asked a lot of questions. We knew that this was going to be a very significant investment, so we took the time to perform our due diligence to cover all our bases. We invested in their prep stations as well, which was another good decision, because my guys can work so much faster and effectively with five different places where we can spray. We put a curtain up in the prep booth that provides us two additional spaces that are heated and properly ventilated. So, when we are really jammed, we can handle the workload and maintain our cycle time without interrupting or slowing down our production." After using them for a very short time, Mcllveen could clearly see that his Chronotechs were more than capable as they quickly became a centerpiece in his new, high-end, modern shop. "We have four paint teams here, consisting of a painter and a painter’s helper and we consistently log approximately 600-700 paint hours weekly,” he said. “We switched to waterborne paint when we opened this facility because we want to provide a healthier climate for our employees and the community as a whole.” Why was Mcllveen able to improve his numbers by simply adding two USI booths? “In the end, it all comes down to their airflow because we never need blowers or additional air to cure these vehicles. The fans in these Chronotechs are exceptional because they feature variable speeds, so we can switch depending on the parameters of each job. Our painters are producing an impressive product day after day, so these booths are saving us both time and money. We paint an average of 400 cars every month, so
we push these booths and they never let us down.” Any issues that Russell & Smith Body Shop have encountered with their USI ITALIA booths have been rare and far between. But Mcllveen feels good knowing that if called upon, the company will respond and find solutions promptly. “If you do your scheduled maintenance and keep everything clean, these booths will last you 30 years and maybe even longer. The issues that we have encountered with the Chronotechs have been minor and quickly solved, which is impressive when you think that we have been using these booths daily for the last 16 years. I tell people that these booths will be here long after I’ve retired!” After training provided by USI ITALIA, Mcllveen’s painters were able to start spraying after one day, he said. "The Chronotechs are designed to work with waterborne paint, which makes it easier for our painters to do their work. After a very short time, all of our guys were comfortable and the results were consistently exceptional.” Mcllveen is also impressed by the Chronotech's sturdy construction and durability. "Some booths are just a box, but these are wellbuilt," he said. “I know, because I've seen them all and there isn't anything like a USI ITALIA booth." His career in collision repair industry has been a great experience and products like his USI ITALIA spray booths and prep station are a part of that, he said. “We haven’t had to furlough anybody here and that’s because we value our people and, in the end, our Chronotechs are part of the team.”
9 MAYLakes, 2021NJTexas USI of North America | 565 Commerce Street Franklin 07417 Automotive | 201-405-7761 | s.moretto@usius.com | www.usius.com
ABAT FEATURE
by Alana Bonillo
Weathering the Storms: How Body Shops Survived a Challenging Winter (and More)
Time and time again, Texas auto body shops continue to show their resilience. This past year-plus has brought more than enough challenges; each and every time, repairers have emerged stronger than before. In addition to the pandemic, the Lone Star State was subjected to severely unique weather conditions earlier this year that hadn’t touched the Southwest in decades. Snow, ice, hail and freezing temperatures disabled areas, tore down structures, left millions with no power and even claimed lives. “It pretty much crippled us,” shares Darrel Smith (McDaniel’s Quality Body Works; Longview, Kilmore and Gilmer). “We actually had to close the whole week, just with the temperatures being what they were.” The ABAT Board member and longtime shop owner hadn’t seen temperatures here in Texas drop that low – and weather so severe – since he was a young boy. Forecasts indicated the storm was to come in “hard and heavy,” but Smith never thought it would require the need to shut down for more than a few days. However, “it stayed frozen until the weekend,” and he wanted to make sure his employees (including many who come from rural areas) stayed safe and off the roads. “It cost us a week, but customers were patient and understanding.” Shortly after reopening, business began to roll in. The abundance of damage Smith saw on vehicles coming into his shops wasn’t just the result of accidents on icy roads; it was also a result of carports collapsing under the weight of the snow and ice and damaging the vehicles parked underneath. Smith even had to deal with this directly at his business. A carport collapsed at his Gilmer location, causing damage to three customers’ vehicles. Thankfully, he was able to put in a claim and rectify the damage for those consumers. Despite these issues, Smith says all three shops are “packed to the hilt” with business related to the storm two months later. Houston-based Helfman Collision Center was shut down for an entire week. “The city of Houston and the entire state were not prepared for an ice storm like this in any fashion,” states Greg Luther, body shop operations director and ABAT Board Member. “We had to shut down for a week, as there was nothing we could do.” The area, which was among the hardest hit, went without power and water. Thankfully, the shop didn’t experience much
damage other than a burst pipe that has long since been fixed. Luther says the shop didn’t see too much of an influx of business afterwards, as most people stayed off the roads and those vehicles that were in accidents were “completely wiped out.” ABAT Board member Logan Payne, manager of Payne & Son Paint and Body Shop, Inc. in Dallas, was among the lucky ones, as his area had not been severely affected by the ice and cold. “We took a few days off because no one was delivering parts and most customers were staying off the road. Everyone held tight for a while, but we were one of the fortunate shops; we didn’t lose power or water. Aside from having a dead week, realistically that was it for us.” The one small inconvenience for Payne was having to fix the shop’s air compressor, which was damaged due to the storm. Aside from the brief shutdown, business picked up at Payne & Sons after the storm. Not surprisingly, customers are still bringing in vehicles that experienced some type of damage from slipping over icy curbs and the like during that ordeal. Just when things were maybe beginning to settle down, some areas of Texas were hit with a storm in early April that – according to Sam Egan, shop manager of DeMontrond Collision Center in Bryan-College Station – brought down hail the size of “ping pong balls or larger.” Soon after, the business’ two locations saw an influx of vehicles. During the previous winter emergency in February, Egan’s operation lost roughly four days of work and had to close down to avoid the big freeze and undrivable roadways. At that time, he did not see a huge abundance of work, as he believes most stayed off the roads. However, the April hailstorm was a different story. “We’ve seen at least 200 cars come between both shops inquiring about what to do.” To help expedite things, the shops teamed up with PDR LINX to run a drive-through for Progressive insurance, which enabled vehicles to come and get assessed for damage before being set up for an appointment with the collision centers. At one point, the business saw roughly two cars every 15 minutes – eight cars an hour. With summer just around the corner and more people being vaccinated throughout the state, Texas shops will hopefully see a steady stream of sunshine – and vehicles – coming to their bays from here on out. TXA
10 MAY 2021 Texas Automotive
11 MAY 2021 Texas Automotive
Cover Story
SAFE PARTS, SAFE PROCEDURES: HB 1131 Gets heard in austin In today’s collision repair industry, proper parts and procedures should never be a debate. Auto manufacturers state what needs to be done and used, and repairers are responsible for following these recommendations and requirements to ensure occupant safety. Unfortunately, insurers have historically pressured facilities to pursue less expensive – and arguably less safe – options to get a damaged vehicle back on the road. This long-running tug of war played out at a recent hearing in Austin on legislation that could change the battlefield forever. Sponsored by Representative Travis Clardy (R-Nacogdoches) and endorsed by ABAT, House Bill 1131 aims to (among other things) establish that Texas automotive insurers may not specify the use of a “like kind and quality” part unless the insurer and the part’s manufacturer can conclusively demonstrate that it 1. Meets the fit, finish and quality criteria established for the part or product by the original equipment manufacturer of the part or product; 2. Is the same weight and metal hardness established for the part or product by the original equipment manufacturer of the part or product; and 3. Has been tested using the same crash and safety test criteria used by the original equipment manufacturer of the part or product. Marcia Seebachan, one of the plaintiffs in the landmark 2017 multimillion-dollar lawsuit against John Eagle Collision Center (Dallas), was among those who appeared before the Texas House Committee on Insurance to testify in support of this effort. Seebachan, who (along with her husband, Matthew) suffered life-threatening injuries when their improperly repaired Honda Fit was involved in a subsequent collision, told the Committee that she “strongly” supported the bill. “When we allow people to make changes that are going to impact the structural integrity of these vehicles, it undermines the process […] The only way to prove that those repairs are sufficient is through adequate testing that shows that they are.” A licensed clinical social worker, she compared the stringent guidelines she must follow in her occupation to those of the auto body community. “I’m not allowed to go practicing, in the State of Texas as a social worker, with techniques on my clients that are not tested, reliable and valid […] I can’t imagine making a choice in my profession that affects the life, health and safety of others based on what I have deemed to be good enough. I would never do that – and [insurers] shouldn’t be allowed to either when people are at risk.” Kevin Fisk, a representative from LKQ Corporation, testified
in opposition to the bill, arguing that manufacturers of nonOEM parts would face obstacles in developing products that meet the guidelines outlined in the legislation’s language. “There are criteria set for auto parts that no [aftermarket] part manufacturer could meet, simply because the OEMs are not going to give their specs or standards for what that might be. They would never provide that information to competitors. We feel that this bill would stifle healthy competition, increase the cost of repair for the vehicle and eliminate consumer choice on what types of parts could be used to repair the vehicle.” Dallas-based attorney Todd Tracy, who served as lead counsel for the Seebachans in their case against John Eagle Collision Center, made it clear in his testimony that he didn’t buy Fisk’s reasoning behind LKQ’s refusal to support the legislation. “The gentleman from LKQ noted, ‘Well, we don’t know what the OEM parts are made of, because we can’t replicate [them].’ Engineering 101 tells us that you can reverse-engineer anything. You can go buy a Hyundai, a Kia and a Chevrolet; you can tear it down and reverse-engineer it, and they can tell you exactly what the material’s made of. It’ll take you a weekend. For them to sit there and say they can’t replicate what the OEM is doing is disingenuous.” Additionally, Tracy stressed the importance of repairers strictly adhering to how the OEMs say a repair should be conducted. “Crashworthiness is really simple; it’s the science of preventing or minimizing serious injuries or death following an accident through the use of the vehicle’s safety systems. When vehicle repair facilities don’t follow OEM repair guidelines and/or don’t use OEM-approved parts, the repair shop suffers and their insurance companies suffer – because lawyers like me come after them, and we hit them for tens of millions of dollars in verdicts. “The men and women who put our vehicles back together again in the right way are heroes,” he added. “This bill will protect Texas repair facilities – if they follow OEM repair guidelines and if they use OEM repair parts.” The American Property Casualty Insurance Association, the Texas Coalition of Affordable Insurance Solutions and the National Association of Mutual Insurance Companies joined LKQ in providing opposing testimony on House Bill 1131. The Committee was largely critical of this testimony, often grilling the insurance industry representatives on everything from the quality of parts to the disclosures offered to consumers on their use. As just one example, Beaman Floyd of the Texas Coalition
14 | MAY 2021 | Texas Automotive
by Joel Gausten of Affordable Insurance Solutions offered comments that mostly highlighted the market benefits of non-OEM parts. “We think that the use of alternative parts is important. We know that there is good price competition in the use of alternative parts […] Right now, we have situations that I think are very telling where some of the original manufacturers are actually dropping the prices and competing with the price of aftermarket parts. They have programs that go in and try to compete at that price point with aftermarket parts. We think that’s quite healthy. “Safety is absolutely critical, but I think it’s important to recognize that there are several good paths to safety,” he added. “If we can do it in a way that’s economically efficient and keeps rates down, we think we need to still be able to do that.” Floyd also argued that market-driven competition ultimately benefits consumers. “You have a lot of choice as a consumer about how you get your car repaired, but we are also trying to meet efficiency points and price points, frankly, that keep costs under control and help us ensure, one, that there is competition. Any part manufacturer and body shop is in the marketplace competing in a fair way to keep costs down […] The idea of cost control in that space is not antithetical to quality, we don’t think. We just don’t want to create, essentially, a monopoly for parts or particular shops. We think it’s healthy for everybody – and for the price point of insurance – to have some competition in auto repair.” Floyd’s comments were not well received by Committee member Celia Israel (D-District 50), who cautioned him not to use terms like “efficiencies” when discussing the “human tragedy” of an automobile accident. “There’s a disconnect between the industry and what people are experiencing, whether it’s health insurance or coverage with their automobile […] Using the word ‘efficiencies’ is a reason why people don’t like insurance companies. You’re looking at the book – ‘Here’s our bottom line, and the consumer has choice.’ You’re offloading. I don’t know what the answer is, but it seems to me like there’s a better way.” Representing ABAT as well as himself, Chad Kiffe (Berli’s Body & Fine Auto Finishes) spoke of his experiences as the general manager at an OEM-certified facility that regularly struggles with insurers over proper repair procedures. “House Bill 1131 is a consumer-safety bill; this is to help protect consumers by getting properly repaired vehicles. I’m a general manager of a body shop here in Austin, TX; I have firsthand knowledge of what we go through on repairs and how insurance companies dictate to us how to fix a vehicle. It is extremely difficult to run a business when you have the insurance company trying to tell you how to fix a vehicle, what parts to use and where to buy the parts.” Ware Wendell, executive director of the citizen advocacy organization Texas Watch, offered public support of House Bill
The Committee was largely critical of the opposition’s testimony, often grilling the insurance industry representatives on everything from the quality of parts to the disclosures offered to consumers on their use. 1131 while noting that it is not designed to remove aftermarket parts from the picture– so long as they meet the same standards as OEM products. “All this bill does is say, ‘Please follow the manufacturer’s recommendations.’ It does not require OEM parts […] They just have to actually be like kind and quality in terms of fit, finish, weight, strength, etc. They have to be proven parts – that’s it.” Addressing his House colleagues, Representative Clardy urged their support for a bill that is desperately needed in today’s shop-insurer landscape. “The days of the shadetree mechanic are long gone, particularly when it comes to the safety components of these vehicles […] This is more than just a ‘parts’ bill; this is more about the process and the procedures. “Automobile insurance is a very expensive product,” he added. “Likewise, for most people in Texas, their automobile is […] one of the largest investments they make with their funds. So, this hits people in the pocketbook but also can hit them very much in the real world in which they live if repairs aren’t made safely and properly.” ABAT President Burl Richards tells Texas Automotive that he is encouraged by the strong testimony in favor of the bill and the pushback given to the opposition. “It’s clear that the Committee members were informed on our industry’s issues and why it is so important for consumers that this bill gets passed. I commend our lobbyist, Jacob Smith, and Ware Wendell at Texas Watch for doing their part in getting our message heard by those who can make a difference. I also thank the members of ABAT, especially Chad Kiffe, for their ongoing efforts to draw attention to this very important cause.” As the Texas Legislature moves forward with perhaps its busiest legislation session ever, lawmakers will be tasked with doing the right thing and giving their full support to this critical and potentially history-making bill. Perhaps the most succinct way to sum up why House Bill 1131 matters is to share these words from Wendell’s testimony: “We support this bill because safe repairs save lives.” Texas Automotive strongly urges readers to view the entire video of the hearing on House Bill 1131 at bit.ly/3sC6Kp7 for further perspectives from both sides of the matter. The discussion begins at 3:20:32. TXA
15 | MAY 2021 | Texas Automotive
Cover Story
by Joel Gausten
House hears abat-endorsed appraisal clause bill The Texas House Committee on Insurance recently heard testimony on House Bill 2534, legislation that would require all Texas auto insurers to include an Appraisal Clause option for insureds. The bill is sponsored by Representative Travis Clardy (R-Nacogdoches) and endorsed by ABAT. Testifying in support of the bill, ABAT Board member and public insurance adjuster Robert L. McDorman (Auto Claim Specialists) stressed the importance of the Appraisal Clause as a consumer-protection tool. “Appraisal is the absolute mechanism to define loss when a dispute over the loss arises. The Right of Appraisal is a fast, inexpensive method to resolve loss disputes […] It also levels the playing field for the consumer.” To illustrate the need for the Appraisal Clause, McDorman revealed that his clients have seen an average 28 percent – or $3,600 – increase in total loss disputes as a result of invoking the provision. Additionally, he noted that it is “routinely” discovered that “the insurance carrier has written [for] an unsafe and improper repair.” Joe Woods of the American Property Casualty Insurance Association and Jon Schnautz of National Association of Mutual Insurance Companies offered testimony in opposition of the bill, both stating that making the Appraisal Clause available in all policies would result in financial strain to insurers and (in Woods’ words) “inflated claims.” Committee member and former body shop owner Ramon Romero (D-District 90) later asked Schnautz to respond to the figures McDorman shared. “Do you find it concerning that the previous witness said that you can be off by an average of $3,600 between whatever system you’re using now and what is determined as the actual cash value? I’m concerned with that; I don’t know if you are.” “I think it would have to be put in context a little more,” Schnautz replied. “There are going to be some claims where the number was wrong initially. If that was happening on some huge percentage of claims, I agree – that’s of concern.” Ware Wendell, executive director of the non-partisan consumer advocacy organization Texas Watch, brought attention to the irony surrounding the opposition’s refusal to embrace House Bill 2534. “It’s strange for me to be making this point, [but] it was the carriers who wanted appraisals put in the policies. Here I am, standing up representing consumers [and] telling you we need appraisal, and you’re hearing from the carriers, ‘Wait a second, wait a second. Let’s not do this.’” Gary Vucekovich, president of McKinney-based claims administration company ForeSight Services Group, testified in favor of House Bill 2534. “The only way to make the customer whole is to refer them to a licensed public insurance adjuster to determine the actual cash value of the vehicle. By doing this, either the insurance carrier ends up paying the disputed portion of the total loss or the GAP
provider does.” Vucekovich added that establishing the Appraisal Clause in all policies would help him avoid constant battles with insurers over full payments to consumers. “[In] the last two and a half years, 24 out of 25 times, the primary carrier had to issue another check. I like those odds, so I now refer the customer to their policy. Hopefully, that policy has the clause in it that allows them to invoke their Right of Appraisal […] Please make the Appraisal Clause mandatory to protect the insured.” Representative Clardy urged the Committee to give the bill their favorable consideration. “The Right of Appraisal clause in a car insurance policy is designed to be a way of reaching a settlement where there’s a dispute over the amount of a loss between the policyholder and an insurance company […] The Right of Appraisal offers an amicable resolution to the disputed loss; it allows unbiased professionals to determine that loss and – importantly – it offers an alternative path to lawsuits.” Readers are encouraged to view the video of the complete hearing on House Bill 2534 available at bit.ly/TDI42021. The discussion begins at 1:58:28. TXA
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Founder Robert McDorman
Ask The Expert What is the Prevailing Practice and How Is It Determined? Dear Mr. McDorman: I operate a collision facility in East Texas. We are OEM-certified for each make and model that we repair. We always completely disassemble our clients’ vehicles and write a complete repair plan as outlined by the manufacturer guidelines to present to the carrier. Many times each month, while working with our clients’ insurance carrier and discussing the needed operations and procedures to return their vehicles to pre-loss condition, we are told some of the OEM-required operations and procedures we have listed in our repair plan are not considered prevailing practice in our market. I don’t understand how it is possible that a carrier will recognize certain operations and procedures in one market and not in another. Regardless of the carriers’ prevailing practice methodology, we have a duty to our clients to perform the repairs as stated under the OEM guidelines. When a client’s carrier takes this position and refuses to accept liability for these required operations and procedures that it deems are not the prevailing practice in our market, it always leaves our client owing a balance on top of their deductible to return their vehicle to its pre-loss condition. My question is, what is the prevailing practice, and how is the prevailing practice determined? This is a great question. The prevailing practice is an industry standard for operations and procedures recognized as a liability by the carrier in a specific market area by a specific group of collision repair facilities. I understand the prevailing practice is based on the average prevailing practices from a selected group of collision facilities in a specific market area. The prevailing practice from carrier to carrier is determined by their own internal methodology; to my knowledge, their assumptions and methods are never disclosed. Also, the policy language about the prevailing practice varies from carrier to carrier. We routinely see carriers use the prevailing practice methodology to escape liability. In 2018, I attended several meetings with the Texas Department of Insurance (TDI) over under-indemnification issues. When the prevailing practice issue was brought up during the meeting, the Deputy Commissioner stated, “We do not recognize or monitor the prevailing practice or prevailing rate. We call this ‘the black box.’” So, apparently even TDI has no idea what goes into determining these “prevailing practices.” In support of your question about the prevailing practice methodology, I recently had an in-depth conversation about this topic with a USAA senior insurance manager who presides over 14 states. His exact words were, “The market sets the prevailing practice.” My response was, “So, if 99 collision facilities are performing a specific operation and not asking to be paid for it, and one shop is performing the operation and asking to be paid for it, because the 99 shops are not asking to be paid for what they have Robert is a recognized Public Insurance Adjuster and Certified Vehicle Value Expert specializing in motor vehicle-related insurance claim resolution. Robert can be reached at (800) 736-6816, (817) 756-5482 or via email at AskTheExpert@ autoclaimspecialists.com.
done, this penalizes the one shop that performs the operations and does ask to be paid for it, and you will not pay them?” His response was, “Yes, it is our policy right.” In my professional opinion, the prevailing practice methodology used by carriers can be best described as a “black box used to escape liability.” The insured has the absolute right to request the prevailing practice methodology, supporting documents and the data to support the carrier’s claimed prevailing practice used to fund its undisputed liability. Any such assertions on behalf of the carrier or their representatives as to what they are or are not liable for must be supported and documented as a policy right of the insured. As the writer of the contract, the burden of proof falls on the carrier, and the carrier must support its prevailing practice methodology assertions and be held accountable for any short gaps and/or misrepresentations of such. Unfortunately, this rarely (if ever) happens. What is happening here is that the insurance carrier is using an asserted but unsubstantiated prevailing practice dictate to administer claims that are not accurate, credible or supported by facts. It is crystal clear to me as a public insurance adjuster that there is a potential indemnity issue any time a certified shop is performing OEM-authorized repair operations and procedures and the carrier pays only for operations that are consistent with market prevailing practices according to its unregulated prevailing practice black box. In each case where the insured is having to pay a difference between the OEM-approved repair plan and the insurance carrier’s perceived prevailing practice, the insurance carrier has under-indemnified the claim and not made the insured whole. Any algorithm for determining something as broad and vague as “prevailing practice” must contain many assumptions and much subjectivity. Without knowing what is in the black box, we can reasonably guess that all of the assumptions and subjectivity are used to bias the output in the carrier’s favor. Any time there is this kind of subjectivity, we must be able to obtain the proper
18 MAY 2021 Texas Automotive
by Robert L. McDorman documents and employ appropriate resources to identify and understand the differences. If this can’t be done to the insured’s satisfaction, the insured has the option to invoke their right of appraisal in most policies in contest of the loss statement presented by the insurer. The Appraisal Clause in most policies allows loss disputes over a covered loss to be resolved amicably by appraisers or two appraisers and an umpire. The under-indemnification in total loss and repair procedure claims in Texas is rampant. Besides the higher settlements for total loss clients averaging 28 percent above the carrier’s undisputed loss statement, we have also reduced clients’ out-ofpocket expenses by an average of 35 percent on repair procedure disputes. These under-indemnification percentages are staggering and harmful to Texas citizens. Please call me should you have any questions relating to the policy or covered loss. We have most insurance policies in our library. Always keep in mind a safe repair is a quality repair, and quality equates to value. I thank you for your question and look forward to any follow-up questions that may arise. Sincerely, Robert L. McDorman TXA
Executive Director’s Message continued from pg. 6 appropriate that we would choose a location that had ties to the auto industry, but that’s not at all why we chose this magnificent location. On its website, Toyota Music Factory touts itself as an “experience” and a “world-class entertainment destination” – and for good reason, too. Home to over 15 bars, unique restaurants and entertainment facilities, it is a fun place to go. It has axe throwing, Cajun food, a wine cellar, a honky tonk, a cinema, a Brazilian steakhouse, pizza, desserts and so much more. It also has its own calendar of events, with live music happening in several places onsite, including the lawn area located right in the center of it all. It’s not all hustle and bustle, though; there are plenty of places to relax and unwind – especially in our host hotel, Texican Court. I can’t wait to share more information with you about this super-cool, Texas-themed boutique hotel that is located just steps away from the Show. Be on the lookout for more information on the hotel, the Show and its educational offerings in the coming months. See you in September! jill@abat.com TXA
19 MAY 2021 Texas Automotive
The Consumer’s Voice
by Joel Gausten
A Nightmare Made Worse: A Former State Farm Insured Tells All As Steve Huggins learned last fall, a person’s life – and their impression of their auto insurer – can change in an instant. While at a stoplight in his 10-month-old Ford F-350, Huggins was rear-ended by “four drunk people” in a vehicle that had been loaned to them by a GEICO insured. Although Huggins and his passenger survived the crash, his vehicle was not so lucky. “Looking at the truck, common sense told me that the frame was bent,” he recalls. After initially receiving a $4,900 estimate from a local shop to replace the bumper and tailgate, Huggins saw his hunch proven right when that facility soon discovered substantial frame damage and contacted GEICO, which towed the vehicle to a Ford shop in Fort Worth. Soon after, Huggins received a call from GEICO informing him that the repair was going to exceed the limits of their at-fault insured’s policy. The carrier advised him to contact his own insurer, State Farm, to move forward with the repair. Unfortunately, this is when things started to take a frustrating turn. Nearly a week after reaching out to State Farm, he received an email from the company stating that it had approved the truck repair at a Chevrolet dealer body shop north of Waco. Not surprisingly, he was shocked and angered to receive this information. “I contacted the dealer and told them to stop and not do anything to my truck. The guy at the dealer told me the truck had left Fort Worth, went to another dealership and then ended up at his shop. I only authorized it to be taken to one location, but they took it to two other places. On top of that, State Farm did a virtual [estimate] on my truck at this body shop, and all of a sudden, my truck can be repaired for only $2,000? What a rip-off!” After threatening State Farm that he was going to report the vehicle stolen if it wasn’t returned to his property within three hours, he was back where he began – with a truck in desperate need of proper repairs. He then had the truck looked at by a Ford dealer, which ultimately passed on the job due to the demands of the repair and recommended that he have the work done at Helfman Collision Center in Houston. In addition to pushing State Farm on covering Helfman’s full estimate after the insurer said it would pay for only 60 percent of it, he insisted on the use of a Ford-approved frame.
ATTN ABAT MEMBERS:
Looks can be deceiving: This rear-end hit resulted in nearly $50,000 worth of damage. The final repair bill after all was said and done? Just under $49,000. Huggins estimates that his diminished value claim could yield around $13,000 more. “When a guy starts out at $2,000 and it ends up at around $63,000, something’s wrong. If I had someone working for me who couldn’t estimate work any closer and would be off by that much, I’d probably fire them.” After more than 50 years as a State Farm insured, he has switched to Farm Bureau. Thankfully, he has a much higher opinion of Helfman Collision Center and its body shop operations director, ABAT Board member Greg Luther. “I’d recommend Greg to anybody. He did nothing but bend over backwards to help me out. My experience working with him was first class.” Although Huggins finally received the repair he deserved, the best part of this tale is that he and his passenger walked away from the accident with their lives. “I’ve got to give Ford credit. They’ve built one hell of a tough truck, and their safety systems work.” TXA
GIVE YOUR CONSUMERS A VOICE!
If you have customers who’ve had issues with their insurance companies (under-indemnification, total loss disputes, etc.) while their vehicles were at your shop, Texas Automotive magazine wants to hear their stories! Contact Texas Automotive Editorial Director Joel Gausten at (603) 680-4324 or joel@grecopublishing.com to discuss having their story featured in our newest series, “The Consumer’s Voice”! 20 MAY 2021 Texas Automotive
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