Just Say No: Can you save me my deductible? - BodyShop Business
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Just Say No: Can you save me my deductible?

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You wouldn’t think of asking your dentist to save your deductible. So why, then, do our customers think it’s perfectly acceptable to ask us to save theirs? Maybe because we started it.

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If you’re like me, certain word phrases are just plain annoying. The one that bothers me the most is, “Can you save me my deductible?”

How many times have you heard this from a customer? Not a week goes by that I don’t hear it at least once, and it never fails to make me want to stick my head in an oven and turn on the gas.

I’ve always had people ask me to save their deductible, even in the ’70s when I first started in the business. I think it’s been going on a long time, but with our shrinking profit margins, it’s become more and more difficult for shops that do this to continue to – and the shops that don’t are speaking out against it more than ever.

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I’ve always asked myself why the general public thinks their deductible is a freebie that can just be ignored. Maybe it’s because a lot of shops offer to save the customer the money. A shop around the corner from mine has the reputation of saving deductible. Unfortunately for the customer, shops like that usually use the savings as an excuse for doing subpart work.

I’ve lost track of how many times I’ve had a customer pull into my shop to get an estimate on fixing another shop’s mess. And the customer always says the same thing, “They said they’d save my deductible, but after I told them I wasn’t happy with the repair, they told me that if I wanted it done right, I would’ve paid full price.”

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Therein lies the problem.

Any time a shop offers to save a deductible, it makes all the other shops look overpriced. The customer forgets about the quality of the repair because he’s only thinking about the $500 he doesn’t have to come up with – until he gets his car back and has to get it redone, that is. Unfortunately, as long as shops use those savings as a way of creating more work, it makes the whole industry look bad.

So what can you do when faced with a customer who’s asking you to save his deductible? Just say no.

A Typical Scenario
The best way to compete with shops that don’t charge the deductible is to do quality work. It doesn’t take long for consumers to see that they really don’t get a bargain – and that you do actually get what you pay for.

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Whenever a customer asks me to save him money, I explain to him that since the insurance companies set the labor rates, as well as dictate the parts markup and material allowances, it’s impossible to save him money and still fix it right. In this day and age, it seems odd to me that people think you can jack up an estimate to cover their checkbook.

I always explain that my insurance labor rate is $10 below my street rate – that I actually have to discount my labor rate to get the insurance work. Is the public that ignorant of the facts, or do they simply think that because it’s an insurance job, we make more money and should pass it on to them? I’ve had customers act like they’ve won the lottery because they have an insurance claim.

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Unfortunately, if a customer has his mind set on not paying a deductible, he’ll probably go to a shop that won’t charge it. The only time I ever seem to change someone’s mind is if he has a small deductible – like $50-$100. Usually he’ll realize that it really isn’t costing him a lot to get his car fixed. But if it’s $500 or more, people usually want to save something. It doesn’t help that the customer might have had his car repaired in the past by a shop that didn’t charge the deductible – so now the customer thinks it’s a common practice.

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I’ve explained things till I was out of breath, but I still lose most of those customers who are dead set on saving something.

A good example of this was a woman who had a 1997 Ford Taurus that was hit square on the right front door. The window was broken, and even the window regulator was bent. After I completed an estimate that was well over $1,200, she proceeded to tell me that her insurance company had already looked at the vehicle and had given her a check for about $300. She had a $500 deductible and wanted me to fix her Taurus for the $300 – instead of charging her the $800 that was on her insurance appraisal.

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I told her that insurance companies usually write the lowest appraisal possible and that there was no way I could do it that cheap. She then asked about finding a door in a junkyard. I pointed out to her that the insurance appraiser had based his estimate on using a used door already. In typical fashion, she said she remembered the “old days,” when you could just tell the insurance company one thing, but do another. I explained to her that that’s the reason why they have appraisers of their own.

Needless to say, I didn’t get the job. I wonder if she found anyone to do it right for $300?

I bet that every shop in the country has chosen not to charge a deductible at some point. I’ve done it, but I could probably count the amount of times on one hand. The one that stands out was a new Lincoln Navigator. The driver hit a deer and then went off the road onto some boulders. Besides all the sheet metal damage, the frame had to be replaced. The agreed estimate was more than $12,000, and the owner was a long-time customer of our dealership. Although I didn’t charge the $100 deductible, I still did the repair properly. I felt that in this particular instance, I was rewarding a customer for his loyalty.

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I also explained to the customer that I was doing this because he was such a loyal customer so he didn’t expect it all the time. And about six month later, his wife had a crash, and they never asked about saving anything.

Saving Deductibles Costs Us
The customer may be getting something for free, but someone has to pay the price. Saving a deductible:

  • Shrinks your paycheck. The way I look at saving a deductible is that since I refuse to do subpart work, any money I don’t charge the customer comes out of my pocket. If you had a $2,000 job in your shop and the customer had a $500 deductible, the deductible represents 25 percent of the total repair cost. Given the fact that insurance companies usually only allow a 25 percent markup on parts, which means a 20 percent profit margin, do you discount the parts to cover it? What if there were no parts on a repair – just labor? Using that same $2,000 job and a labor figure of $38 an hour, you’d actually be working for $28.50 an hour. Maybe some small one- and two-man shops can work this cheap, but I bet most shops can’t. They need to cover their overhead.

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Granted, if you had an $8,000 or $9,000 job in the shop with $6,000 in parts and the customer had a $100 or $250 deductible, you may be inclined to eat it and just knock it off the parts. But those situations are rare.

  • Further tarnishes the industry’s image. The integrity of our business is undermined whenever a shop constantly undercuts another shop by not charging a deductible. Our industry already suffers from poor public perception. Why should we reinforce that image instead of trying to change it?
  • Raises some legal issues. If you bill an insurance company for something you didn’t need or something you didn’t fix, you’re committing fraud. You’re misrepresenting the damage to the insurer.

If, however, you choose to do all the repairs that are needed but you don’t charge the deductible, you could claim that you gave the customer a discount on the job – similar to what some glass companies do to get more business. That’s your choice. It doesn’t mean it’s a smart thing to do, but at least you’re not breaking the law.

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What about the customer who comes in and has you do an estimate and then gets an agreed figure with the insurance company? After he gets his check, he comes back to you and says he wants all the work done – except for painting the scratches in the bumper. If it would’ve cost $250 to refinish the bumper, he’d probably save his deductible. Some people would say that, in this instance, you’re working for the customer and that he has the right to choose what work is to be done to his vehicle. And he does.

However, this reinforces the point that you can’t do it right and still save the money on most jobs. Still, if the customer understands that the vehicle won’t be repaired exactly as agreed and that he’ll only be billed for the work performed, then it’s OK, right?

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That’s a judgment call. The insurance company would likely look at that and question what happens if that same vehicle gets damaged again. Would that same bumper be written up again, causing them to pay twice for the same damage? Granted, this would be an issue between the customer and the insurance company, but speaking as a shop manager for a shop with many DRP arrangements, I have to make note of prior damage. Can you run an honest business and still overlook things like that?

Just Say No
Can you imagine what would happen if you went to the dentist and said you wanted to hide your deductible? He’d probably ask you if you really needed pain killer for the cavity he was filling. Or how about going to get a prescription filled and asking the pharmacist if he could save your insurance co-pay? I’m willing to bet that your prescription would end up like your tooth: unfilled.

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The bottom line is that if you want to do quality work and maintain a good reputation with the public as well as insurance companies, play by the rules. You may think you’re helping a customer by saving his deductible, but you’re hurting yourself – and the industry – at the same time. Writer Mike Muir manages a dealership shop in North Conway, N.H., and has been with the dealership since 1985. Back then, he had one bay in the back of the service department. Today, his shop is in a separate building from the rest of the dealership and specializes in collision repair – though Muir’s been known to restore classic cars for certain customers. In his spare time, Muir plays electric and acoustic guitar, and writes music.

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  1. He refers to his 1973 Mercury Bobcat as a “classic.”
  2. He asks if that 4-inch-deep dent can be “buffed out.”
  3. He says he has a “parts car” in his driveway.
  4. He says he doesn’t care if the damaged parts get painted.
  5. He begins by telling you how he used to do body work in the driveway so he knows how to save money.
  6. He tells you he saw an episode of 20/20 that exposed how shops hide deductibles.
  7. He shows you the insurance check, and then asks, “What can you do for me?”

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