News: Consolidator Report
Regardless of where the majority of your business comes from, one fact of life of owning a collision-repair shop is having to negotiate with an insurance adjuster.
shop owners wince when that thought comes to mind, others have
perfected their methods and have built a reputation of fairness
and organization that has made this daily activity much more palatable.
According to Tom Tomasiewicz, owner of G&D
Auto Body in Larchmont, N.Y., it all comes down to two important
skills: preparation skills and people skills.
"The biggest problem," says Tomasiewicz,
"is many shop owners don’t know exactly how much the jobs
are costing them." While this may sound basic, Tomasiewicz
is quick to point out that parts, materials and labor costs aren’t
always cut and dry. About 10 years ago, Tomasiewicz started keeping
close track of exactly what each job cost, and almost immediately,
he realized they weren’t always as profitable as he thought.
Tomasiewicz recommends you take the time to
prepare a blueprint of a vehicle’s damage by dismantling the damaged
area and by getting a true assessment of everything that will
be necessary to repair the car. While this extra work may be time
consuming, try asking yourself, "Do I know the exact cost
of the labor involved in each job I do?" If the answer is
no, how can you possibly know what a fair repair cost would be?
"Document every time and operation that
will be involved in the repair of the vehicle," Tomasiewicz
says, "and pay special attention to the procedure pages for
the different estimating systems. Make sure you’re aware of what
procedures may not be included in the initial labor estimate,
and be prepared to show why these additional procedures will be
When it comes to materials, "lumping"
the cost of paint and body materials may also cause you to underestimate
the cost of a job. Instead, try itemizing the cost of each material
to be used. To help with this, many paint manufacturers offer
software that will provide precise costs for various jobs.
Finally, prepare a detailed estimate in a logical fashion, keeping
related procedures and costs together. While all this may be time
consuming, it will inevitably make your job easier when the adjuster
arrives, and it will allow you to order parts and track costs
Perfecting Your People Skills
Once you’re face to face with the appraiser, your people skills
will need to take over. Remember, we all prefer doing business
with people we like, so the relationships you build with adjusters
will be crucial.
You should strive to build a reputation for being fair and reasonable.
As you come to know what to expect from each adjuster, each adjuster
will come to know you as well. If you can demonstrate how your
estimate was put together, you’ll find the adjuster more likely
to accept your assessments; on the other hand, if you repeatedly
ask for more than is fair and reasonable, adjusters will come
to your shop prepared to do battle, undoubtedly making your job
more difficult in the long run.
You’ll also find it helpful to keep track of your dealings with
each adjuster and each insurance company. To do this, Tomasciewicz
takes advantage of business-management software that lets him
compare his results by adjuster. This way, he knows in advance
how much preparation he needs to do and what areas he needs to
What if you do all your homework, research the job, write a detailed
and fair estimate and try hard to be reasonable, but you still
can’t agree on a fair repair cost? That’s where all the homework
you did will come in handy. Being prepared will enable you to
demonstrate why the procedures and materials you’ve itemized are
Tomasiewicz also suggests asking the appraiser just where his
authority ends and what’s out of his hands. If something is beyond
the appraiser’s control, ask who can make the decision on the
area in question.
As a last resort, you can request that a specific appraiser no
longer be sent to your shop. Again, having the comparisons discussed
earlier will make your case much more effective.
The Art of Negotiation
Like most things in life, negotiating with an adjuster – and in
general – may be more of an exercise in people skills than anything
else. Most people would prefer working with someone with whom
they get along – adjusters included – so do what you can to make
the daily activity of negotiation as pleasant and hassle free
as possible. If you view it as a daily battle, that’s exactly
what it’ll be.
Writer David Streger is president of Israel Streger Insurance
Agency in New Rochelle, N.Y., and writer Barrett Butlien is a
small-business planning specialist and a registered representative
of Allmerica Investments in Tarrytown, N.Y. Both are members of
the Automotive Industry Advisory Council (AIAC), a comprehensive
resource organization for owners of independent and franchise
service stations, collision-repair shops, auto-parts dealers,
related businesses and their membership organizations. To learn
more about the services of the AIAC, call (800) 227-1159.
Play Fair, Paid Fair
As a business person, you should expect payment for everything
you do – but not for what you don’t do, says Dick Strom, owner
of Modern Collision Rebuild in Bainbridge Island, Wash. "We
do supplement most estimates and, if we can’t negotiate what we
need to do each job correctly and safely, we let some other shop
bear the responsibility of an irate customer," Strom says.
"Frankly, I would rather go fishing than alienate perfectly
At Strom’s shop, he and his employees negotiate with the insurance
adjuster on the vehicle owner’s behalf for fair compensation.
For this reason, Strom says more than 70 percent of his customers
are referrals or repeat customers.
"We don’t cheat our insurance representatives, and we don’t
tolerate being cheated by them," he says. Recently, when
two scraped Merkur door glasses were cleaned up with buffing,
Strom returned $900 to the insurance company. As a result of this
business policy, the insurance adjusters trust Modern Collision
Rebuild, and Strom usually gets what he needs to properly repair
Strom does get the customer involved in the negotiation process
if an insurer’s estimate is insufficient to properly do the job
and if the adjuster is unwilling to negotiate. Strom tells the
customer it will be impossible to restore the auto to preaccident
condition and to still make a reasonable profit for what the insurer
Strom compares the insurer’s estimate, line by line, to what it
would take to do the repair properly. He then tells the customer
that he’ll have to pass on this repair. "We say there are
other shops that will gladly accept the insurance check, and remark
that, ‘We guarantee you’ll be back to see us next time you need
the services of an autobody professional.’ "
By this time, Strom says, the customers are usually on the phone
with the insurer, insisting Strom’s shop do their repairs. "We
seldom lose a job under these circumstances, but when we do,"
Strom says, "we usually get all their future work as predicted."
(Information courtesy of Auto, Inc., the official publication
of the Automotive Service Association.)
Talk Repairs, Not Price
Never talk price with any adjuster – always talk repairs, says
Lou Baffa, former president of the Auto Body Association of America.
For example, let’s say you’ve inspected, measured and written
the estimate for frame damage and structural repairs on a specific
vehicle, and your charge for this repair is $500.
If you talk the money game, you’ll lose. "He’ll offer you
$300, and you’ll cut your own price to $400," Baffa says.
"He’ll then say, ‘We’re $100 apart. Let’s split the $100.
The best I can do is $350.’ So, you’ve now lost this money-talking
game and also forgot that the $100 you just split was your money."
This won’t happen if you talk repairs; explain what has to be
done and the price of each operation. "If I was offered a
lower price," Baffa says. "I would ask, ‘What do you
want to take out from the repair for $150? Do you want to eliminate
the sag damage? The bent goosenecks and the undercoating?’ "
To teach the adjuster a lesson, Baffa says, you need to take the
adjuster to the supermarket to settle the matter. A bit unconventional,
"You get the cart and place $6.50 worth of items in it,"
he says. "Go to the cashier with the adjuster, and place
the items on the counter, putting down a $5 bill. The cashier
says, ‘You have $6.50 worth of items.’ You tell her, ‘$5 is all
I’ve got.’ She tells you, ‘What do you want to leave out for $1.50?’
"Tell her to repeat it again to the adjuster."
The adjuster should now know that if he wants all the frame work
done, he has to pay for all the frame work done.
Remember, anyone can talk about lowering a price without understanding
body repairs. By talking repairs, however, the adjuster will soon
According to Baffa, it’s easy to collect in full for straightening
time by applying this understanding. Take another example: Baffa
had a white, two-door Chevy Lumina Coupe that sustained damages
to the complete left side, requiring obvious replacement of parts
such as the front bumper, the side-view mirror, the left front
fender and the door panel. The coupe also had some damage to the
rear quarter panel. "We got along OK until the quarter panel,"
Baffa wanted $180 to straighten it, but the adjuster said he would
pay $120 at the most. "I’ve known this adjuster for more
than five years, and he hasn’t done any body repairs since then,"
Baffa says, adding that he doesn’t really know if the adjuster
had ever performed body repairs.
The adjuster was figuring three hours at $40 per hour, and Baffa
was figuring four hours at $45 per hour. "We were $60 apart,
and he would not budge," Baffa says. " … This got
me disturbed, so I called Oswaldo into my office. I told the adjuster,
‘This is Oswaldo, and he’s doing the job on the quarter panel.’
I asked Oswaldo to go into the yard, look over the left quarter
panel on the white Lumina and to come back into my office.
"I asked Oswaldo, ‘How long is it going to take you to straighten
that quarter panel?’ He said, ‘I don’t know. When I finish, I
finish.’ I bust out laughing and the adjuster said, ‘What’s so
funny?’ I told him, ‘You’ve been telling me it’s going to take
Oswaldo three hours to straighten the quarter panel, when Oswaldo,
who’s doing the job, doesn’t know how long he will take."
The adjuster half smiled, and Baffa ended up obtaining his price
for the quarter panel.
Why? Because Baffa, through his examples, talked repairs, not
price. Remember, any estimate is nothing more than a guess, but
because you’re the expert – the one performing the repairs every
day – your guess is an educated one.
(Information courtesy of The Golden Eagle.)
What’s a shop owner to do when insurers refuse to pay for procedures
they previously paid for?
"Stop arguing," says Mike Melfi, a Chicago shop owner
who’s president of the Coalition for Collision Repair Equality
(CCRE). "Stop letting your emotions rule your thinking process.
Request a supplement and ask for what you need to properly repair
Also be fully prepared to justify your requests – both to the
insurer and the car owner. And if the insurer refuses to allow
your request, involve the customer, says Melfi.
"For years, we’ve consistently insulated the customers from
the collision-repair process," he says. "We’ve negotiated
on their behalf time and time again. We’ve performed task after
task for free on their behalf. We’ve paid the differences out
of our pockets to upgrade them to OE parts. We’ve accepted paint
and material caps that paid us cost in some instances.
"Shame on us."
When you’ve been the consumer – for example, say you were getting
your home remodeled – were those professionals forced to conduct
their business with you the same way? Hardly, Melfi says.
"As a consumer yourself, does your insurance company ‘bargain’
with you when it comes time to pay your premiums?" Melfi
asks. "Do they concede anything to you? What would their
reaction be if you told them, ‘You’re the only company that charges
for that,’ and then refused to pay them?
" … It’s time to peel away the layer of insulation that
surrounds our customers. It’s time to explain to them that we
need to perform certain procedures to assure a quality repair."
Melfi suggests telling customers that it is they who have a contract
with the insurer and then arming them with the ammunition they
need to effectively negotiate with that insurer. And, if an insurer
calls you after speaking with a customer, tell the insurer that
the issue is between them and their insured. Refuse to argue.
"You may actually find that you enjoy this business again
if you try this method," Melfi says, adding that your customers
will quickly learn that you’re their ally, which will help to
improve customer relationships.
If the insurer still refuses to budge, you may have to charge
your customer for the additional work, but, Melfi says, "If
the insured takes the additional bills to small-claims court,
along with his policy that cites the insurer promise to restore
cars to ‘preaccident’ condition, the customer will, in all probability,