Since the Patriot Act, two-party checks have been difficult to deposit without having the correct paperwork. Insurance companies know this, and some have started ignoring the direction-of-pay on supplements. Other than legal action, which I have no problem with, do you have any suggestions?
Insurance companies often use ‘bank drafts’ for settlement payments, not checks as generally presumed. And drafts can be cancelled after deposit and release of the vehicle, leaving the repairer in a lurch. The bad part is the only one the repairer can then go after is the vehicle owner (unless a DRP ‘partner’ is their customer, since that is who their contract is with). Who wants to dun their customer for paying a bill the insurer should have paid?
Receiving bank drafts endorsed by the customer is a nice courtesy, but perhaps a poor business practice. Insurers make money on the interest for such delays, and when figuring how much money is in play, it could be millions of dollars a year in gained interest/profits. When dealing with repairers, insurers have no incentive (contractually or legally) to hurry or avoid unnecessary delays…it literally pays them to do so. After all, the vehicle has been delivered, the customer’s out of the matter and, in reality, the customer owes because the insurer owes the repairer nothing!
I encourage our shop clients to use a well-constructed repair authorization. In it, we encourage repairers to request that the customer have the insurer write the check/draft in the customer’s name (as well as their lienholder when applicable). The customer then takes the risk in depositing the draft in their bank account, and the customer then provides their personal payment to the repairer for the services rendered on their behalf – including any and all supplements before delivery of the vehicle. If the insurer should stop pay on the draft, it will be an issue between the customer and the insurer and not involve the repairing body shop that is off repairing other vehicles, as it should be.
Auto Damage Experts (ADE) encourages that the customer payment be made by credit card (up to $500 to avoid excessive fees) and that the customer pay the balance with certified bank funds and/or cash.
As for supplements, customer vehicles should not be released until full payment for all billings (initial and supplemental) are paid in full. The “No Tickie, No Laundry” policy is simply good business and reasonable and will encourage insurers to avoid short-paying the supplement and handle the matter more quickly with the customer – especially if the vehicle is moved to storage and charges may apply after three days notice of completion, as is the state mandate in Florida. This also encourages the repairer to have their invoice completed and job-costed and all supplements prepared and submitted prior to delivery of the vehicle…as well as to avoid those late nights trying to prepare and submit supplements and only getting 60 cents on the dollar due to desk audits and ensuing short-pays!
Note: ‘direction-to-pays’ should only be used under special circumstances with only trusted insurers and only after a written assurance (by email or fax on company letterhead) that the full amount of the supplement will be provided. Otherwise, they can overnight payment to the customer!
Dealing in a professional, business-like manner with your true ‘customer’ will help you avoid unnecessary and costly legal action. As the viral phrase goes, ‘Ain’t nobody got time for that!’ Such payment policies are professional, avoid unnecessary liabilities and simply make more business ‘cents.’
For more information on ADE Repairer Coaching/Consulting for you and your company, call me at 1-888-868-9891 or e-mail me at [email protected].
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