We were on State Farm’s direct repair program but quit because they didn’t want to pay our labor rate of $48 per hour. They said the customary rate in our area was $45 per hour. At times, we will work off an estimate that is $50. We have a job where our estimate is written identical to State Farm’s, but with labor price and program differences, we have a difference of $147.19. What is the best angle to take to get this money without burning any bridges with State Farm?

Question asked by Curt Hufty, Collisions Unlimited, Flora, Ind.

Thank you for your question. It’s one that I’m sure others have asked themselves many times.
 
First of all, congratulations on taking the initiative to remove and divest yourself and your company from a program that was found to not be beneficial to you or your company. There are many resulting benefits and advantages you will enjoy, but none greater or more rewarding than being in control of your own business. Being truly independent can be exhilarating!
 
There is a very easy answer to your question but no easy, quick way to explain it. Plus, the answers may vary based on several factors, including but not limited to:
 
1. First or third-party claim (insured party or claimant against the at-fault party’s insurer).

2. What “bridges” are you afraid of burning? Your relationship with your employees, your customers or the insurers?

3. Are you concerned with short-term effects (upsetting your customer) or long-term resolutions (changing the insurer’s behavior)?
 
It’s important to know and accept several facts and harsh realities that you no doubt already know but should be reminded of:

1. Your customer chose you because of your expertise and integrity. Simply stated, they trust you and have confidence in your abilities.

2. The insurer was chosen because they were trusted to be there to protect the consumer and make them whole in their time of need.

3. The insurer’s goal is to save as much money as possible by paying out as little as possible. Saved monies = bottom-line net profits.

4. The customer’s goal is to be returned to their prior condition with little hassle and little cost and get a repair which offers peace of mind.

5. The insurers could care less if you make or lose money on a repair…they simply don’t care if you prosper or go out of business.

6. The insurer and your customer are diametrically opposed – the customer wants what’s coming to them, and the insurers want to hold on to what they have.

7. Your company and the insurer’s desires are also diametrically opposed…you both want the same things: to serve your customer, avoid losses and liabilities, and obtain/keep the money!

8. You and your customer are aligned. You both want proper and thorough repairs and for the insurer to pay the fair and reasonable cost.

9. A contract exists between you and your customer. You both have duties to one another (you repair the vehicle, they pay your bill).

10. If your customer is making a claim against their own policy, a contract exists between your customer and their insurer and they both have certain duties and expectations as outlined in the policy/contract.

11. If your customer is a claimant (making a claim against the at-fault party and their insurer), no duty or obligations exist! In most states, your customer may seek and obtain repairs and demand that the at-fault party pay the bill. The customer has no obligation to involve the at-fault party’s insurer before or while repairs are performed.

12. There is no contract between your company and the insurer (unless DRP), and there are no duties between either of you to one another. Both of your duties and obligations are to your customers as defined under the terms of your individual contracts.

13. You, as the business owner, may charge your full rates, offer discounts or even give away your services for free (for awhile, anyway). It’s your business, and it’s therefore your choice!
 
The most effective method to receive full payment for your services is to remember the above and to inform and bill your customer. It’s their vehicle, their repair, their repair bill and their choice to either pay it and forget about it, pay it and seek recovery from their insurer (under the terms of their contract), or go after the at-fault party for any unpaid and/or underpaid differences. Or they could choose to forego the underpaid process just as you have the right to terminate the repair (there’s more to these options, but space doesn’t allow addressing them here).
 
ADE Coaching/Consulting clients seek recovery of underpayments (short-pays) from their customers through either taking an Assignment of Rights and/or Power of Attorney, which places the repairer in the shoes of their customer seeking legal action as the customer, or by the repairer charging their customer for the short-pays and encouraging the customer to seek recovery from the insurer themselves. Most often, with the repairer’s efforts to edify, support and assist their customers, their customers are able to recover the underpayments from the insurers without seeking legal action.
 
You and others have no doubt been confronted with an insurance appraiser stating, “We don’t pay for that. You’ll have to get that from your customer.” There’s a very good reason they do this…because it most often works! Insurers know that most repairers don’t wish to seek recovery from their customers for short-pays in fear of alienating them and losing their future business and referrals. This fear encourages insurers to become even more stingy…oftentimes to the point of abuse.
 
Our repairer coaching/consulting clients, however, are finding this not to be the case. When customers’ expectations are properly managed and they’re properly informed, they become their own advocates and will work diligently to get proper repairs and payment from the insurer, especially when they’re confronted with having to pay out of pocket! In turn, you’ll find that your best customer is an informed consumer, and they can be a tremendous and oftentimes ferocious force in getting an insurer to reconsider their denials and/or underpayments. And when they do, they become lifelong fans and supporters of you and your business and will actively refer their friends, family and colleagues to you for repair…and protection.
 
Remember, "Only when the risks begin to outweigh the rewards will behavior change."