Ask the Expert: Is It Illegal to Deviate from an Insurer's Estimate?
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Is It Illegal to Deviate from an Insurer’s Estimate?

If an insurer pays a customer to do certain repairs and the customer doesn’t want certain things done, is it illegal for the collision repairer to not repair or replace something the insurer has paid for?

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Barrett has authored numerous industry trade journal/magazine articles, including several cover stories for BodyShop Business. Having grown up in a family-owned collision repair business and owner/operator of two successful collision repair facilities, his ongoing efforts as industry speaker and repairer coach-consultant are geared toward educating professionals and consumers to achieve equally successful resolutions to automotive-related property damage issues. Such issues include proper and thorough repair, reasonable repair profitability for repairers as well as equitable claim settlements for both claimants and the responsible/paying parties. ADE offers numerous professional services nationwide.

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If an insurer pays a customer to do certain repairs and the customer doesn’t want certain things done, is it illegal for the collision repairer to not repair or replace something the insurer has paid for?

Thank you for your question, and I believe the answer is…NO!

Unless there are any state laws and/or regulations to the contrary, it’s generally understood that once the insurer pays to indemnify the consumer (policyholder or third-party claimant), the consumer may use those funds however they deem appropriate…or not use them for repairs at all. It would be no different than if an at-fault party was to pay their victim in cash for the damages they caused.

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Here are some scenarios to help illustrate my point:

Let’s say you prepare an estimate/blue-print for a proper and thorough repair and the insurer pays it in full and your customer elects to not do the paint work as they’re saving their money to one day get an overall paint job. Have they or the repairer done anything wrong?

The customer owns a Jeep and ask that you not replace their front bumper as they intend to add a custom bumper and winch and want the insurance money for the aftermarket one he wants. Have they or the repairer done anything wrong?

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You prepare a full and thorough blueprint and the insurer pays it in full. The customer, however, decides to not get it repaired and instead trades their vehicle in as damaged and uses the insurance proceeds toward a replacement vehicle. Has he or you done anything wrong?

I believe the answer to each scenario is, “No, of course not.”

Once an insurer pays to indemnify the consumer, the consumer may then do as they wish with the claim proceeds. It’s the consumer’s monies to do with as they wish. The vehicle owner’s insurer, should they choose to, may then terminate the policy because the damages were not repaired and the insurable risk is no longer desirable to them.

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The only time this may not be accurate is if and when the customer has a lienholder and the lienholder’s name is included on the insurer’s payment draft. The lienholder will want the vehicle fixed to ensure its value remains intact to ensure the buyer doesn’t spend the proceeds on other things and then lose interest in the damaged vehicle, stop making payments and allow it to be repossessed. The lienholder will want to retain the vehicle’s value (and their collateral) until their loan is paid in full.

Remember, too, that under most situations a body shop (unless a DRP) has no legal or fiduciary duty to the insurer. The only interaction a collision repairer should have with the insurer is when it pertains to the repair and when it’s in the best interest of the customer/consumer.

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Note: Collision repairers should not deviate from the authorized repair estimate of record unless the customer is notified and approves the deviation/change. When this takes place, it should be well documented and be clearly and accurately noted on the final invoice.

Remember, “It’s not about doing one thing 100 percent better, it’s about doing 100 things one percent better…consistently.”

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