A document obtained by consumer advocacy group Consumer Watchdog shows that Mercury Insurance pays its DRP shops incentives of up to $750 to use aftermarket and reconditioned parts while penalizing shops for using OEM parts.
According to Mercury’s CARS Program Facility Rate Agreement, the California-based insurer pays body shops 20 percent over their cost for non-OEM parts, while it pays 5 percent less than the shops’ cost for OEM parts.
On its Web site, Consumer Watchdog said, “Incentivizing repair shops to use inferior parts when repairing policyholders’ cars endangers policyholders even if it may save Mercury money and increase profits. Consumer Watchdog believes that the internal document was issued recently and reflects the current arrangement between Mercury and its body shops.”
Consumer Watchdog did not say from where it obtained the document. The repair agreement was part of the organization’s “10 Reasons You Can’t Trust Mercury Insurance” list released last week.
Click HERE to see the list and to download a copy of Mercury’s repair agreement (found in item 6).
Last year, California fined the insurer $250,000 for claims handling violations.