In February of this year, Don Harvey of International Collision Service in Englewood, New Jersey, wrote a letter to State Farm CEO Ed Rust, complaining about what he felt was an inadequate paint and materials reimbursement rate of $28 per hour. Harvey finally received a response in April from claims manager David Ziemer, but, unsatisfied with Ziemer’s comments, decided to write the State Farm CEO again to counter some of Ziemer’s points.
According to Harvey, one statement Ziemer made was, “In 2007, [State Farm] made the decision in New Jersey to increase our paint and material hourly refinishing rate from the surveyed rate of $23 per hour to its current $28 level.” Ziemer went on to say that the decision was made as a result “of the unprecedented increase in the cost of petroleum-related refinishing products” and State Farm’s commitment to ensure customers’ vehicles were repaired in a quality manner.
“I guess State Farm feels the price of petroleum-related refinishing products has remained a constant since 2007 more than five years, hence no increase,” Harvey wrote in a second letter to Rust.
Harvey pointed out that Ziemer then said, “Since this increase, New Jersey market area surveys reflected no increase in the hourly paint and material charges nor a request to move to a paint calculator methodology.”
To counter this point, Harvey included in his letter to Rust a copy of State Farm’s online survey to express his bewilderment on how, based on the questions, any rate could be determined.
“The only question asked dealing with paint and materials is, ‘Do you use an automated paint and materials rate calculator, yes or no?’” wrote Harvey. “I don’t see how a paint and materials rate can be justified by State Farm’s question.”
Harvey then asks, “If a multiplier in an estimating program is used, is that an automated rate calculator? And if a paint costing calculator such as Mitchell or Paintex is used, are they automated calculators? I believe the answer is yes.”
Harvey brought up a specific case in his shop where he claims State Farm “steadfastly held” to a $28 per hour paint and material rate, noting that the difference between what State Farm allowed and what the Mitchell paint cost calculating program came up with was $564.03 without an additional $112.73, which was the difference between the clearcoat normally used and the scratch resistant clearcoat required by the vehicle manufacturer.
Harvey concluded the letter by saying, “I respectfully request your looking into this matter and setting a precedent as a ‘good neighbor’ should, acknowledging the materials required to return vehicles to their pre-collision status and compensating fairly for those materials using an available paint and material cost calculating program as mentioned in New Jersey Bulletin No. 07-20 plus a reasonable mark-up, as these calculating manuals and programs are figured at an average cost to the repairer.”