Insurer Knocks $261 Off Estimate Due to Age of Vehicle - BodyShop Business

Insurer Knocks $261 Off Estimate Due to Age of Vehicle

Gary Powers has been in the collision repair industry for over 30 years but said he had never seen anything like it: an insurance company telling him it was taking $261 off the paint and materials charge on the estimate due to the age of the vehicle repaired. Powers even asked a couple of his friends in town who own shops, and they, too, had never heard of that tactic.

The car was a 1998 Chevy Malibu, owned by Powers, who runs GR Powers & Son in Joplin, Mo. He was a third-party claimant as the car was parked and hit by another in the right rear quarter panel. According to Powers, the quarter panel and bumper were fixable, but a new taillight was needed.

The original estimate, written by an appraiser with Traders Insurance, was for $1,100, but when the check came in the mail, it was short $261. Powers called the insurer to ask about the discrepancy.

“They said it was their policy to knock [paint and materials] off if the car is over 10 years old,” Powers said. “I said, ‘How am I going to buy over 10-year-old materials?’ I was pretty upset because the car was my dad’s and has sentimental value to me.”

Several sources throughout the collision repair industry voiced different opinions on the matter, but most sided with Powers.

“Unless there is a Missouri law that stipulates this discount, this is nonsense,” says Charlie Barone, a former body shop owner and current licensed damage appraiser. “Unless this is a first-party claim and the policy language provides for such discounts based on the age of the car (insurers will specify aftermarket parts in some cases on older cars), Powers should simply refuse and tell the adjuster he’ll simply charge his customer for the difference. If it’s a third-party claim, he should tell the customer to send certified mail to the at-fault party with a copy to his or her liability carrier, telling them that the claimant will hold the tort feasor legally liable for the difference and will take such actions as required.”

“This is just another one of these deals in which an insurer tries to strong-arm a shop owner,” Barone added. “In many cases, it works because the shops are scared to stand up for themselves. So you can’t blame an overly aggressive insurer for trying, no?”

Bob Smith is a licensed appraiser for Storm Appraisal & Management Service who lives and works in Missouri and is thus familiar with some of the state laws. He said Traders might be hiding behind “comparative negligence.”

“In an auto accident, if I damage your car and it is determined that some of the blame lies with you, then I only owe you for the portion that I was responsible for,” Smith explained.

Smith said he can also understand the insurer’s philosophy behind deducting the $261 if the car was in extremely poor condition prior to the accident.

“If it was the kind of car that bit you if you got within 20 feet of it, say it had a six-hour door ding before the accident that became an eight-hour ding, I can see the insurer taking something,” he said. “But I don’t see how you can depreciate a repair to a whole unless the part being repaired had previous damage of some description. Given a normal vehicle, I don’t understand how an appraiser would even want to try and depreciate a repair.”

Smith also suggested that Powers file a complaint with the Missouri Department of Insurance (DOI). When body shop owners complain to DOIs, the DOIs typically say, “We don’t get involved in business disputes between shops and insurers.” But given that Powers is not only the business owner but also the consumer in this case, his complaint might have more weight.

John Shoemaker, president of JSE Consulting in Norfolk, Va., said the insurer has a right to seek betterment in this case.

“I’m sure the paint the repairer is using isn’t old, it’s what he’s painting over,” Shoemaker said. “The insurer shouldn’t be taking it from the repairer, it should be a betterment against the insured.”

Shoemaker said an insurer cannot arbitrarily take a dollar amount from a repairer or an insured – the amount must be specified as a betterment against the job.

“If the paint on the vehicle was faded and the new paint made the vehicle look ‘better’ than before, then the insurer is justified in taking a betterment,” he said. “The betterment must be taken as a percentage of appearance improvement, i.e. 30 percent betterment for degraded paint. The betterment could be contested if only a portion of the vehicle was painted because an argument could be made that the vehicle doesn’t look better. To further muddy the waters, it would also make a difference if the vehicle owner was a claimant versus the liable party. The claimant would be in a better position to fight a betterment verdict.”

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