Hand it Over! Getting Insureds to Pay their Deductibles - BodyShop Business
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Hand it Over! Getting Insureds to Pay their Deductibles

What should I be doing to get insureds to pay their deductibles? Vehicle owners believe anything their carriers tell them, but I’m often treated with disdain – and sometimes abused – when asking for their contractual portion of repair money.” – Bill O’Keefe, president, Avenue Collision Specialists, Paramus, N.J.

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This is a valid concern and a constant frustration for many ethical repairers. How can an honest collision repairer compete for jobs with competitors who bury deductibles? How can he convince insureds – blinded by their desire to avoid paying the deductible they agreed to pay when they signed the policy – that their deductible is part of the actual cost of a complete and pre-loss condition repair? How can we make it so nice guys don’t finish last?

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Try putting their need to pay their deductible into bottom-line terms they can relate to. Without directly bad-mouthing any of your deductible-eating competitors, develop a concise word track that will educate customers and let them know there’s no fat to trim and give away in the process of honest collision repairing. At the same time, reason with them concerning the fact that any shop that would cheat insurers is a likely candidate to also cheat its customers.

Tell ‘Em Like It Is
Educate customers so they learn that, because of insurer control over the collision repair industry combined with competition among shops, the net profit of the average collision shop today is between 0 and 5 percent. No shop that writes an honest estimate or works honestly from an insurer-generated estimate can afford to give away any of this meager profit.

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Start by saying something like: “To the disgrace of our industry, there are still shops out there that will fraudulently inflate the estimate they write to cover your deductible. Or else they’ll use inferior parts, cheat you on labor or otherwise perform inferior repairs on your vehicle to bury the deductible you agreed to pay when you purchased your policy. But the truth is that shops like ours, which will honestly and fully restore your vehicle without cutting corners, can’t afford to absorb any portion of your deductible. The only ways deductible-burying shops can exist and stay in business is through fraudulently misrepresenting and/or inflating the actual costs of repairs to the insurer or through performing less-than-honest and pre-loss repairs behind your back.

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“We value your business and, since our staff and technicians have families of their own, we understand your concern for your family’s safety. That’s why our technicians are I-CAR trained and ASE certified [or whatever, depending on the recognition and training your techs have received]. This assures you that the repairs we perform will fully restore your vehicle. When it relates to collision repairs, there’s more than a little truth in that old saying, ‘The bitterness of poor quality remains long after the sweetness of a cheap price is forgotten.’ ”

Once a Cheater, Always a Cheater
Reason with the potential customer that any shop that’s willing to cheat insurers will have no qualms about cheating them, the vehicle owner.

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You can say something along these lines: “Burying deductibles (by padding estimated and/or final costs of repairs) is unscrupulous and illegal, and is punishable by heavy fines and/or imprisonment. Though there are many ways these unscrupulous shops can shortcut the quality of repairs to your vehicle – easily infringing on its aesthetics, resale value and your family’s safety following the repair – our good reputation is based on the fact that those things won’t happen here. The shop that has no conscience concerning cheating your insurance company will have no conscience in cheating you in the repair of your vehicle.

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“We value you and your future business. Feel free to check out our reputation with the Better Business Bureau and Chamber of Commerce [or whatever]. By the way, remember that you can pay your deductible on Visa or Mastercard, [some repairer associations also have 90-day same-as-cash arrangements for deductibles] so payment is easy. I know you’ll want your vehicle repaired correctly the first time around. You don’t want the inconvenience and frustrations associated with return trips for re-repairs that should’ve been done correctly the first time. Are there any questions I can answer concerning any aspect of the repairs we’ll perform on your vehicle?”

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Making Customers Honest
Know your competition’s weaknesses and, without slandering them, impress upon these potential customers the benefits of allowing you to repair their vehicles. Remember, the average consumer still craves honesty in business dealings, and it’s those honest consumers who you want to attract and retain. But some might not be so honest and might get you into hot water if you’re not careful.

A point worth considering: At one of our Autobody Craftsman Association meetings, a representative from my state’s Insurance Commissioner’s office informed us that in my state, when the insurance draft contains only the name of the insured or claimant on it, (i.e., where no lien holder’s or repair shop’s name is indicated), it’s the option of the person whose name appears on the draft to spend the money in whatever way he or she desires. Each state’s insurance department has established its own set of rules on this, but if your state’s rules are similar to mine, then a situation like this might arise:

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For instance, the estimate for restoring pre-loss condition insurance-quality [whatever that might be] repairs includes replacing a scrape-damaged bumper cover. If the vehicle owner decides he can live with this damage (it’s only a cosmetic imperfection, which in no way affects the safety of the vehicle), he might opt to save the costs involved in repairing or replacing that portion.

In such cases, since the draft is his to spend any way he desires, it’s best to have him deposit the draft and write you a personal check for the actual repairs you perform. Protect yourself by producing a repair order that accurately describes the repairs you performed and also emphasizes in detail those parts the vehicle owner opted not to have you complete. If he insists that you don’t repair a safety-related item, it’d be best to avoid dealing with him at all rather than risk future liability for being associated with an inferior, unsafe or improper repair. Any omitted item or operation, which might become a potential safety-related liability should, at the very least, be indicated on a legally prepared wavier and signed and dated by the vehicle owner. In addition, verbally make him aware that by signing this wavier, he alone is accountable for any risks involved.

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In this case, though, the best policy would be to refuse involvement in this kind of repair. As Mom used to say, “Honesty is still the best policy.”


Writer Dick Strom and wife Bobbi own and operate Modern Collision Rebuild, a 10,000-square-foot shop, in Bainbridge Island, Wash.

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