Parts, Policies and Patsies - BodyShop Business

Parts, Policies and Patsies

Shop manager Bradley Wooten asks why American Family Insurance is getting by using strictly used or A/M parts.

write for aftermarket everything, etc. After a month or two of this, I called him directly to find out where these new “policies” were coming from. They came from him.

He then proceeded to tell me that, “There’s a new sheriff in town” and that things were going to be different from now on. Over the next two years, we had countless episodes with this carrier who refused to pay even the most basic of services. We continually kept the vehicle owners in the loop, ultimately charged them the dollar difference and then helped them with all the necessary documentation to file consumer complaints with the state’s Bureau of Insurance.

Once the spotlight was shone on the carrier, they tried to turn the tables by disparaging my company, my estimates, my technicians and anything else related to my company. He also encouraged his appraisers to do the same.

But once we recorded enough documentation and statements (two-years’ worth), we had our corporate attorney contact their legal counsel about trade disparagement. The nonsense stopped, we received an official apology from the corporate office, the supervisor quit and we now enjoy a much more professional relationship.

Reasons You Disagree with Their Policy

With respect to the carrier that you’re having a problem with, I’d suggest you or your corporate attorney contact the corporate office of the carrier and ask for a sit-down meeting and a written copy of the policy in question.

I’d give them a list of reasons why you don’t agree with their A/M/used parts policy, such as:

  • Safety – Who’s going to warranty the used structural members and installation? Aftermarket structural parts are nearly non-existent, but used structural parts are abundant. And it may be impossible to install a used structural member assembly back to its original location and attaching points due to overlapping seams, joints or sleaving areas.

    I-CAR, ASE, OEMs and the like typically don’t have specific installation guidelines, only general. In certain instances, it could prove nearly impossible to properly access all the necessary welding points in a used assembly. Don’t re-engineer the vehicle.

    From a cost standpoint, make sure to include the time to trim, sleeve, corrosion protect, sound deaden, structural foam and prime and block. Anything that would be different from a new OE part installation must be accounted for.

    Typically, this LKQ structural member phenomena is market by market. Currently in my market, this isn’t a regular occurrence – thanks to repairer education, cycle time, LKQ pricing/availability and cooperative insurers.

  • Diminished Value – The carrier very well may be responsible. DV is a very sharp double-edged sword, and it’s too large a topic to touch on here. Suffice to say, the carrier and/or the shop may be liable if the vehicle isn’t repaired properly. It’s fair to say that if you fix the car properly, repairer DV typically won’t be an issue.
  • Long-term functionality – There’s that pesky warranty to deal with. Used parts and A/M parts may affect a valid factory warranty on a vehicle. And if a used or A/M part is used in the repair and then subsequently fails and causes collateral damage to other components – body or mechanical – the OEM typically reserves the right to void the warranty. If the replacement part is older or has more mileage than what it replaced, watch out.

    Bottom line, the OEMs hold most of the face cards in the warranty game, so proceed intelligently and confirm that the carrier is taking full liability in case of a failure.

  • Shop reputation – The shop doesn’t need bad word-of-mouth.
  • Not cost effective – If you’re writing the estimate correctly, these types of parts may not be. When using LKQ parts on an estimate, the estimate should include those necessary “not included” items such as stripping paint, epoxy and urethane priming, R&I all necessary trim, replacement of non-R&I parts like decals, emblems, stripes, mouldings and appliquŽs, overhauling assemblies, inspection of movable parts, etc. Once these items have been determined, only then can you tell if it’s still cost effective to use an LKQ part.

Explain YOUR Company Policy

After your company has contacted the insurer’s corporate office, explain to them your company’s policy on LKQ and non-OEM parts. If there’s conflict in the two policies and no common ground can be had, let the carrier know that you’ll be enforcing your company policy on this issue.

About two years ago, we had a current-model-year domestic full-frame sport utility that got hit in the rear by a larger truck. The damage was severe enough that it needed everything from the rear doors back – inside and out. Structurally, this truck was a complete mess, and we determined that the vehicle was a total loss based on the use of new OEM parts. Well, the carrier came out and declared that the vehicle was repairable based on the use of a used rear clip.

First: As a company policy, we do not do clips in our shop.

Second: The time they “allowed” for a rear clip was an insult. Santa and his elves couldn’t have done it in their allowance.

Third: The carrier was advised that they’d be exposing themselves to a DV claim once the repairs were done since we had already referred the owner to a DV appraiser.

Fourth: The cycle time was going to cost them 2K in rental. The claimant owner was in a comparable full size SUV at $65 per day times 30 days = $1,950.

Needless to say, they total-lossed the vehicle.

Steps to Take

These are the steps I’ve taken and recommend to you:

  1. Inform him of his right to pick any shop he wants.
  2. Inform him of his potential financial liability due to the parts issue.
  3. Explain to him how to file a complaint with the state Bureau of Insurance.
  4. Assist him with any pertinent documents.

Our company policy on parts is OEM first, LKQ second, aftermarket third. If a customer absolutely wanted an aftermarket part (it hasn’t happened yet), we’d explain to him our concerns and ultimately have him sign an authorization to use them.

If we feel the repair cannot be done correctly without OEM parts, we explain to the customer what the dollar difference would be and that it would be his responsibility to pay – or he could pick another facility.

If you’re currently repairing vehicles using the insurer’s suggested methods of repair, STOP. You’re creating a huge potential liability for your company that finger pointing isn’t going to fix. As the repair professional, your company is responsible for what repairs are done, not the carrier, not the owner, not the appraiser.

If the carrier wants to do something that violates your company policy and maybe the law, so be it. Weigh your reputation with your customers versus the relationship with the carrier.

If you decide to sell out and be a patsy, that’s fine, but no complaining. If you decide to stand up and fight, then you need to educate the consumer, your competition and the insurance industry at large. Keep the vehicle owner in the loop. He’ll appreciate it and will become your strongest ally.

My final point is that no one’s forcing you to do business with this carrier. Sometimes you have to agree to disagree and move on to carriers whose policies are more in line with yours.

Writer Pete Petursson is the owner of Precision Auto Body L.L.C. in Manassas Park, Va. Petursson’s been in business for 15 years and has been the president of the Washington Metropolitan Auto Body Association for the last three years.

You May Also Like

Reader’s Choice: What Does the Future Look Like for EVs?

What is the future for EVs, what can shops expect, what are the pros and cons, and what must we do to prepare?

“What is the future for EVs, what can shops expect, what are the pros and cons, and what must we do to prepare? What will our role be? It addresses an unknown future. I have read that some manufacturers like Tesla are going all-in while others like Toyota are dabbling in the market but are going to keep giving consumers what they want for now." – Brad Larsen, Unique Auto Body, American Folk, Utah

Reader’s Choice: Required Vehicle Safety Inspections

If we are going to agree that inspections are needed when a collision occurs, then we should all be on the same page on what that means.

Reader’s Choice: Why Don’t Insurers Pay the Prevailing Rate?

If in the past insurance companies would only pay the prevailing rate, then why do they not have to pay the prevailing rate now, since the prevailing rate went up?

Meet the Auto Body Instructor: Norm Markham

Norm Markham was a student at Dennis Technical Education Center in the early 1980s and is now one of the collision repair and automotive refinishing instructors there.

Auto Body Shop Financials: Breakeven Point and Beyond

Knowing your fixed costs and breakeven point up front may be the difference in making money in a month or not.

Other Posts

Putting Your Passion for Your Auto Body Business to Work

It’s critical to create a culture where everyone embraces doing his or her job with the highest quality and providing excellent customer service — with the same passion that you as the owner have.

Don’t Eat the Bear in One Bite: Planning Your Future in Steps

Just like you don’t need to eat the bear in one bite, you don’t need to have a fully fleshed-out plan in order to have a successful future as a retired body shop owner.

Mystery of the SEMA Show Sticker Man Solved!

Meet Mickey Kahl, owner of Kahl’s Body Shop who’s been fighting insurers in his town a lot lately.

Meet the Auto Body Instructor: Amanda Levine and Deana Jones

With Amanda Levine and Deana Jones both dedicated to teaching collision at the Center for Applied Technology North, the school can offer a more focused approach.