State Farm Booting Dealer Shops from Select Service, Ohio Shop Says
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Ohio Shop Says State Farm Booting Dealer Shops from Program

Jason Stahl has 27 years of experience as an editor, and has been editor of BodyShop Business for the past 15 years. He currently is a gold pin member of the Collision Industry Conference. Jason, who hails from Cleveland, Ohio, earned a bachelor of arts degree in English from John Carroll University and started his career in journalism at a weekly newspaper, doing everything from delivering newspapers to selling advertising space to writing articles.

The manager of a dealership collision repair facility in Ohio says his shop was recently kicked off State Farm’s Select Service program with no explanation. And he is seeing a trend of other dealer shops in his region being jettisoned from the program as well, with State Farm seemingly favoring independents and large MSOs.

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The shop, with gross annual sales of $1.4 million, started seeing its score, which had been in the 800s, go down last July.

“I kept asking why, and they said, ‘We are changing the way we’re scoring you, but we can only share so much information,’” the manager, who wishes to remain anonymous, said.

In December, the shop was notified of its removal from Select Service via email – this after being on the program for many years.

The manager claims five other dealer shops have been ousted from the program since December. He has been tracking this by searching for shops via zip code on State Farm’s shop locator.

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With the advantage independent shops have over dealer shops, the manager said this latest blow is making business a tough go of late.

“Dealer shops have a significant disadvantage over independents as far as offering discounts and what not,” he said. “They say it costs too much to get our cars fixed with you. How can you compete on that level with the independent who is giving a parts and labor discount?”

This kind of activity is nothing new and demonstrates the hazards of relying too much on DRP work – and calls into question the term “partnership” to describe the business relationship between a body shop and insurer. Insurers drop shops all the time off their programs without any explanation, no matter how many years they have been working together.

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Faith Quality Auto Body in Murrieta, Calif., is an independent but was also booted from Select Service after having been on the program for 20 years.

“No warning, no probation, just dropped us,” said Lee Amaradio, owner of Faith Quality Auto Body. “They said our dashboard wasn’t in the top percentile and they were sorry but they were dropping us.

“I tried several emails and phone calls, and they never even answered one. So we moved our labor rate back up and moved on. What we found was that they expected the same discounts and labor rates they had when we were a DRP; they acted quite offended and started working at keeping vehicles out of our shop. It took them awhile but they succeeded, and our State Farm work, after it was once about $2 million a year, is now among the least of all of our insurers.”

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Amaradio heard from loyal customers that State Farm flat-out told them not to take their vehicles to his shop and, if they did, not only would the repairs not be guaranteed but the repairs would be delayed.

“They can make their dashboard say whatever they want, and with their one-sided agreements, they are not anything like a partnership,” Amaradio said. “These one-sided agreements mean nothing to the shop owner; they are all in favor of the insurer and cannot be negotiated.”

We reached out to State Farm for comment, but they said they could not get into specifics.

“The State Farm Select Service program is a network of auto repairers committed to providing quality auto repairs for State Farm customers. Repairers invited to participate in the Select Service program have to meet performance standards established by State Farm. Due to confidentiality, we do not discuss the specifics of our relationships with vendors.”

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