An insurance company told my customer that she has to pay the difference between the $34 per hour they’re willing to pay and the $48 per hour I actually charge. The $34 per hour is their preferred shops’ rate. Is this legal?
Whether it’s “legal” or not would depend on the specifics, which we do not have. For an insurer to have their "preferred shop rate” is not illegal…it’s merely what they prefer to pay.
One important aspect of this issue is if your customer is the insured or a third-party claimant. If she is the insured, the policy contract may be at contention, but from what I can see, this is merely an attempt to get you to accept the insurer’s prescribed labor rate out of your fear of losing a customer. Some insurers are prone to such egregious activities in their efforts to reduce costs and increase their profits.
It is at best unrealistic to expect every automobile collision repairer, in a given market, to charge the same price for their labor and services, regardless of the quality and services offered, just as it is to expect every restaurant to charge the same price for their offerings.
Perhaps a more accurate and appropriate analogy would be to compel or mandate an auto insurer to charge the same premium/rates regardless of the value of the consumer’s vehicle, their driving record, their location, other drivers in the household and amount of coverage. The simple fact remains that when shopping different insurers for the same coverage, all insurers charge differently, even when all the shoppers’ various factors are the same!
Repairers are not bound to charge the same labor rates. Competition is what fuels America’s free enterprise system.
