This month, I’m sharing a question I received from a shop owner in the northeast who submitted the following question:
I have a customer who was hit by another vehicle whose driver was found to be at fault. The at-fault driver’s insurance company refuses to pay for necessary procedures, labor rates and quality parts. How can I make them pay what they owe my customer?
No Responsibility
The short answer is, you can’t make the insurance company do anything! Actually, the insurance company doesn’t owe your customer a single penny! Allow me to explain as briefly as possible.
The simple fact is, the at-fault party’s insurer didn’t cause the damage and therefore has no first-hand liability, legal duty or responsibility to your customer.
Through the policy contract between them, the at-fault party’s insurer owes a duty to protect their policyholder (the at-fault party). Part of that duty is to safeguard their policyholder’s personal assets up to the limits of their liability coverage. Doing so means they must step in on their policyholder’s behalf and attempt, in good faith, to resolve all the injured party’s (victim) damages and try diligently to eliminate any potential future claims against their policyholder…up to the limits of their liability policy limits.
With that said, the insurer can attempt to short-change, underpay, withhold proper allowances, deny, delay, call for used, aftermarket or no parts and make most any false claim they want to save their money. We see this across the country on a daily basis on various levels, and as time has passed, it seems to have gotten continually worse.
However, by conducting themselves in this manner, the insurer risks having a claim made against them by their policyholder for Breach of Contract (failure to keep their promises) or, in some instances, Bad Faith (failure to act in good faith) or Deceptive Trade Practices (against state law). Such claims may result in the courts sanctioning the offending insurer with huge punitive damages (even in the millions) to curtail such egregious conduct and send a message to all other insurers that such conduct will not be tolerated.
What It Means
So what does all this mean for you and your customer? The message here is that the only effective way for your customer to avoid or combat such insurer abuse is for your customer to:
- Seek a proper and thorough repair through their own personal insurer under their collision coverage (policy contract), or
- Move the at-fault party’s insurer aside and seek recovery of their damages directly from the one who truly owes them…the at-fault driver!
If your customer chooses option 2, I would suggest they send a demand letter-notice (certified, return receipt requested) to the at-fault party informing them of their insurer’s failure to resolve the damages properly and demand full payment for a proper and thorough repair from the at-fault party. We have sample correspondence that we provide our coaching/consulting clients where the at-fault party is encouraged to seek legal advice from an attorney of their own selection to protect their personal assets and interest as it would appear their insurer is merely looking out for themselves. Such correspondence is often effective at pulling back the curtain and exposing the insurer’s poor behavior and encouraging the at-fault party to get their insurer to step up and do the right thing to resolve the claim…or else.
Changes
This is no longer our father’s collision repair industry! Many things have changed, yet many repairers have failed to change with them. It’s extremely important for today’s collision repairers to understand the “big picture” regarding the roles of the insurer, the customer and the repairer, and their state’s regulations and laws governing their business and the insurance industry. It’s important for quality-minded repairers to effectively consult with their customers on how to safeguard themselves and their families’ personal safety and economic welfare while avoiding unnecessary and avoidable liabilities.
Quality-minded repairers have a professional, ethical and moral duty to properly inform and edify their customers when a proper level of repair is not being provided so the customer can make informed decisions that suit them and their needs rather than those of others. If not you, then who? And if not now, then when?
