News: CIF Announces Support for Repairers Impacted by Hurricane Ian
Are Double Standards OK, Depending Who’s Paying the Bill?
A double standard [where you write a different estimate if the repair is paid by an insurance company rather than a customer paying out of pocket] creates an image of what this industry is trying to defeat, which is that we’re crooks. I don’t want to present one image to one customer and another image to another customer. I want to fix the vehicle correctly to start with. If a shop owner thinks he’s sticking it back to an insurer by charging them more, then all he’s doing is furthering the problem. Double standards have to stop.
The biggest thing a double standard leads to is cost-shifting. We see a lot of cost-shifting going on. When someone says, “I’m going to charge more on this job to make up for some money I lost on the last one,” this puts the customer in the middle of the whole situation. One customer is going to walk away thinking he got a great deal, and another is going to walk away feeling like he’s been robbed.
So the customer reaction is that he doesn’t trust those shops and that he’s going to look for somebody who’s going to give him the information he needs so he can make a logical choice. Then he’s very wary of even a reputable shop. He might come to my shop, but he’s full of questions. He wants to see everything, which is great for me because I’m glad to walk him through the shop and show him what’s going on. But he’s still very hesitant. The female consumer is probably more so than the male, and we see more females walk through our doors than men.
But after a bad experience with a shop, I don’t think customers ever trust us as an industry 100 percent. They’re always very wary. I think we can regain their trust, but it takes a lot of work. It takes a lot more effort to re-earn it.
Honestly, I don’t know where the temptation to have a double standard comes from. [I think some shops are tempted to] write the estimate high if they think they’re going to run it through the insurance company, counting on the fact that the insurer is going to knock them down an hour with the time here and there. So they’re using [the estimate as] more of a bargaining chip. And again, same circumstance, if you say to the insurer you need five hours to fix this job, then insist on five and tell them why. Don’t go in thinking, “I need five, so I’ll ask for six.”
Unless the customer wants to know what the worst case scenario is, I might go ahead and write it up for the customer to give them an idea. Otherwise, I don’t write for unseen damage. We’ll warn the customer that there’s a probability of finding hidden damage, but we can only write what we can see because guessing is only going to lead to a problem down the road. It’s easier to write what we see, tear it down and then re-write.
I don’t know where that obligation to write a lower estimate for a customer paying out of pocket comes from, unless the shop owner thinks he’ll gain a customer by saying, “If you’re going to pay for it, we’ll cut the price back because we won’t have to go through the hassle of billing the insurance company.” They feel like they’re doing the customer a favor, but I think they’re harming the relationship, actually. It hurts the customer.
Now if it were me as the customer, I’d know they have a double standard and are therefore untrustworthy. Will they do what they say they’re going to do? I think that hurts the relationship. And that makes it tough on every other body shop in the world when that customer goes to another shop and you say, “No, this is what needs to be done,” and he responds by saying, “This other shop didn’t tell me that.” Well, the other shop may not be doing the kind of work to put your vehicle back to pre-accident condition.
Now if that customer wants [us only to repair certain things] because he’s paying out of pocket, then it becomes my choice if I want to do that job. Why? Because I don’t want him going out there saying, “Kraftsmen painted this and look how bad that color matches. They didn’t blend the fender.” Well, the customer failed to tell his friend that he told me not to do that. So then it becomes my choice to do that job the way they want it done or not.
I’d go about this by determining if it will affect the quality and safety of the repair and if it affects the image of what I put out on the street for future reference. I don’t want anybody to say, “Did Mike over at Kraftsmen do this? Oh my gosh, what a mess that is.” It all comes down to the quality and safety of the repair.
After I tell customers this, they’re no longer confused. I think they then become more willing to spend the money to get it done right. You give them some simple explanations on topics like blending, letting them know why on some repaired cars there seems to be a difference in the shade of the door as compared to the fender. It opens their eyes, and they understand, usually saying, “Oh, I never knew that.”
If a customer thinks we’re only trying to make an extra buck at his expense, then we tell him that what we’re going to do will keep his vehicle re-sale value up, and we’ll make sure it’ll put his vehicle back to what it was before the accident happened. We stress to him that’s what we want to do and nothing else.
Double standards have to be prevented on an everyday basis. Work with all the insurers who come in your door, and say, “These are the times I want. This is why I need these times, and this is how we’ll fix the car and make it correct.” Be forceful sometimes to the point of saying, “If you want to do it that way, I’m sorry, you’ll have to find another shop to do this job because I’m not going to do it.”
It takes confidence in your product and work, and I hate to say it, but it takes a steady flow of work, too, to be that confident when negotiating with insurers. Inevitably, when you start seeing a work slowdown, you start seeing shops give in to that sort of thing, and that’s not the way it should be. I think some of the newer shops that spend a lot of money on new facilities and equipment tend to run into bigger problems during a slowdown because they have huge overhead.
Shops need to be advised of their profit margins. If they need to make X amount of money on a job, then do it right or just don’t do it. When you start cost-shifting, using a double standard and cutting corners, all you’re doing is taking money out of your pocket in the end because, inevitably, those things will come back to haunt you.
I’ve owned five body shops, have worked in several and do consulting now. My experience is that you write an estimate to cover what you can see and what you anticipate. Insurance companies write from the perspective of what you can see only. If you see a wheel that’s laid in, you know it’s going to need some suspension and alignment work. An insurance company won’t write any of that. They’ll leave it as space open for a supplement. A body shop will write everything they can see and everything they can realistically anticipate. Why? Because if the estimate does go to an insurance company to get reviewed and paid, the shop wants to eliminate, or at least reduce, the difficulty of getting a supplement in the future when the car is actually repaired.
The approach to writing it if a customer is paying out of pocket is exactly the same. What I do if a customer wants an inexpensive repair is to write the full-blown estimate as if I were repairing it under normal circumstances, and then I go over that estimate with the customer. Together, we strike out the line items he doesn’t want and discuss what the results of striking out those line items will be. Let’s say you have a car that’s damaged in the left fender and the left front door, and the proper repair is to de-trim the left rear door, paint it and put it all back together. If the customer elects not to de-trim the left rear door, you can tell him, “Look, that’ll save you $250 off the repair, but it will also put you at risk for not having a perfect color match.”
A body shop’s mindset is that the insurer is responsible for returning the car to pre-loss condition. That’s why the customer pays premiums. So when an insurance company says, “We don’t want to blend into that left rear door,” we say, “Too bad, pal. You talk to the customer and tell him why you don’t want to blend into the left rear door and then we’ll tell him why we should, and we’ll see who wins.” We do this because our job is to serve the customer, not the insurance industry.
In all honesty, you do what the car needs the most. In the event the insurance company is footing the bill, you don’t cut corners – ever – because the insurance company is responsible in their contract with the insured to return that car to pre-loss condition. They have no right to say, “Hey, Mr. Body Shop, will you cut a corner here and there for us?” Then we’d respond by saying the customer isn’t cutting corners when they pay their premiums.
Let’s say the owner of the car gets a check from ABC Insurance for $2,000 and there’s an estimate from the body shop for $2,000. The vehicle owner has his money in hand and says to you, “We want you just to do this and this.” We’d say that’s fine. The reason being is that the insurance company owes the customer for the damages done to that car. They don’t have the right to force the customer to use that money to repair those damages. That customer may never get the car fixed. It really comes down to a determination of the customer’s rights when I approach estimating and dealing with the insurance company.
I think “double standard” is a term that casts a negative light on something that really isn’t unethical. I think what happens is exactly what I described. Estimates get written based on reality. And then when insurance companies become involved, they want things changed to benefit them. And sometimes when customers foot the bill in some way, whether it be with the insurance company’s money or because they decide not to make a claim, then they may want the estimate changed to benefit them.
Either way, the gray area is when the estimate change occurs. If the change occurs to benefit the insurance company, then I think body shops perceive that as an improper thing to do because in that situation, you aren’t protecting the customer’s rights. But when it’s changed to benefit the customer, then it’s done because the person who owns the car requested it, and you can document everything accordingly – so it’s perfectly ethical to do that.
The customers decide how they want to benefit. Do they want to benefit by the repair of the car, by receipt of the money or by a combination of both?
Another example: If the customer has a scratch on his wheel and decides he can live with it, it’s really not your right to tell him he can’t live with it. You’ve got to do what he says. Now if the insurance company comes out and says they want the customer to live with that scratch on the wheel, we’d say, “Absolutely not. We’re not allowing you to railroad our customer. Go down the street and railroad someone else’s customer.”
The job is to protect the consumer, bottom line. If you do that every time, then the gray area becomes clearer. The shop benefits by making the customer happy. You may not get to do everything that you feel you should do on every car, but if you make the customers happy, then they’re going to tell people and you’re going to get more business.
If you’ve been writing estimates for 20 years, you know when the car needs a low-end control arm and when it doesn’t. Nine out of 10 times you know, and when you’re sure, you put it on the estimate. Whereas the insurance company can write 10,000 estimates and never include a control arm because it’s against their company policy. This is even though the adjuster can look at it and have a strong feeling that it’s going to need it. To say you’re writing something you can’t see gives it a negative inference. You write what you know is damaged – and sometimes you can’t see it physically – but you know it’s damaged because you’ve seen it so many times.
What I think happens is the insurance industry wants to cut corners on the repair, and they’re so overzealous in doing it that the people they’ve indoctrinated into their belief system become almost brainwashed into believing what they do is right. These adjusters are, for lack of a better word, pawns who are moved around by middle and upper management. They’re forced to do things at the insurance company’s direction. Even they aren’t sure why they’re doing it.
A perfect example is when they put caps on paint materials. That’s something upper management in insurance companies said they have to do, and they’ve convinced their estimators that body shops are raping the public when it comes to paint material money. In reality, that’s not true. But if you talk to insurance adjusters who’ve never been on the repair side and don’t know what’s going on, you’d think every body shop owner is eating dinner with Bill Gates.
The insurance companies twist it, making things an issue when there really isn’t an issue, like with a double standard. The fact is, [a double standard] doesn’t happen that often when the customer is going to pay out of pocket and then [changes his mind and] takes an estimate to an insurance company – and then the estimate grows. That whole concept is the insurance company’s presentation of it. The fact is that estimates rarely shrink and go lower. When you think about it, an estimate is based on what you can see. And what you can see is never going to change. The only thing that changes is what you can’t see. Naturally, what you can’t see is what’s going to make the estimate increase, not go down. So for somebody to say – and this is a thing you hear insurance adjusters say all the time – “Every time I get a car repaired here, the price goes up!” Well, duh. What do you expect it to do?
A lot of it’s common sense. Unfortunately, there are a lot of people who don’t really have that.