Six days after terminating his Select Service agreement with State Farm, Pure Reflection Paint & Collision Repair, Inc. owner Rusty Barrett sounded remarkably unaffected.
 
“We’ll figure it out because that’s part of business,” Barrett said despite the loss of 35 percent of his work in his Shelbyville, Ky., shop. “They came to me eight years ago when I opened, I didn’t go to them. I started my business and I made the choices to get where I’m at.”
 
Barrett said he decided to drop out of Select Service due to State Farm’s claim that he violated their contract by agreeing to a $500 cap on paint and materials. Barrett wrote a supplement for $127 in paint and materials, which was subrogated by Travelers to State Farm. Barrett told State Farm that either they or Travelers would pay the supplement. State Farm also took issue that there was supposedly a discount given to Travelers. According to a “most-favored-nation” clause in the Select Service agreement, State Farm is to receive any and all discounts offered by a shop to any other insurers or customers.
 
“If there was a discount, it would have been passed on through the shop to whatever party. We don’t give discounts,” said Barrett. “State Farm said whether or not I agree to the paint cap, when I let that car go to the customer, I accepted the cap. But common sense tells you that you believe in good faith the insurer will pay the supplement.”

Barrett said that at the time of this article, the supplement has been paid by Travelers.
 
State Farm Consultant George Avery said doing subrogation reviews is not an uncommon practice for the insurer.
 
“It is an opportunity to look at an estimate and follow up with the repairer,” Avery said. “We may see a parts discount provided to a competitor written by a Select Service shop and ask the shop why this happened. Sometimes there’s an explanation for it. Maybe the way it was written on the estimate was confusing. But it’s simply a way to follow up on such things.”
 
Barrett claims that over the last six months, State Farm also asked him to make two changes to his standard estimates: add a statement on the State Farm guarantee, and remove a statement that said customers would be charged 2.5 percent interest on any unpaid balances over 30 days. Barrett told State Farm that this statement applied to the customer, not the insurance company.

“I told them I wasn’t going to do that,” Barrett said. “I said that’s my policy, not yours. I don’t tell you guys what to do.”
 
Barrett, who has five employees and $1 million in gross revenue including a towing company, says he can go after more customer-pay and fleet work to make up for the loss.
 
“I don’t care if you’re Insurance Company A, B or C, you’re not going to tell me how to run my business. I’m here for the customer, and I don’t mind letting my customers know that,” Barrett said. “I’m a repair shop, not an insurance company. If State Farm tells me to not tell the customer this or that, the customer then wonders if I’m working for her or the insurer. I tell them that I’m the one guaranteeing the work.”
 
Avery said that one could say it’s true that State Farm tells repairers how to run their shops because, by signing the agreement, repairers agree to provisions that may change the way they do business.
 
“An agreement is an agreement,” he said. “In there are provisions that local management will monitor to make sure the shop is in compliance. If we see a price that’s not competitive in the market but the shop still charges for it, we’ll capture that and evaluate it in determining the performance of the repair facility. But if a shop puts something on the estimate that flies in the face of the agreement, that’s another thing.”

Barrett says everyone is making a big deal over his decision but he doesn’t really believe they should be.

“Let’s let A, B or C Insurance Company pay their part and then we’ll discuss it,” he says. “It’s like they were telling me how I should run my business and who I should do business with. I don’t need the bullying act.”

Barrett released this statement to State Farm following his decision to terminate his relationship with them:

“Our shop will continue to do work for State Farm policyholders, and we look forward to a continued relationship with you. I feel that our shop is an asset to the community of Shelbyville, and I believe I am correct in stating that we have always been able to satisfy you. We will give you and your customers the best quality and service that we have provided in the past.”