Cost shifting is a serious problem and exposes all of us to the dangers of salivating lawyers and do-gooder consumer advocates looking to make names for themselves. It still amazes me that insurance companies practice — and even worse, encourage — cost shifting. I get it all the time with color sanding and buffing. "Well, I’ll give you a couple hours here or there," the appraiser tells me. And even their supervisors are doing this with blessings from their supervisors.
Some of the stuff they try to pull scares me. For example, they’ll write extra parts and tell me not to call for a supplement because the money for the part I don’t need should cover anything extra I may find.
To keep myself out of trouble, I’ve come up with a very good "cover your butt" solution. Whenever an appraiser monkeys around with the estimate to give me the time I need for a legitimate procedure, I write my own estimate — after I’m done with the repair — that mirrors exactly what we did to repair the car. I make my estimate match dollar for dollar that of the insurance appraiser’s estimate. Then, to cover my butt some more, I explain the whole thing to my customers. I tell them we repaired their cars according to our estimate and not the insurer’s. I go over the estimate line by line, and if they ask why the dollar amounts are the same, I explain the insurer’s cost-shifting practices. I show them the differences between our two estimates and which items the insurance appraiser played with. By doing this, I’m completely open with my customers, and it gives me a chance to explain what we did to repair their cars. They get a copy of my estimate along with the invoice, and everything matches perfectly. And if a part wasn’t needed, the customer gets the money back; I leave what to do with it up to them. Believe it or not, some actually send it back to the company.
Let the insurers practice cost shifting all they want. You have a chance to expose it to your customers, making the insurers look like the bad guys. At the same time, you’ll get the respect and recognition you deserve for being an honest business person.
No More Games
I started doing this because I can’t stand playing these games. I’ve been working in body shops for about 30 years; as a 7-year-old kid, I used to help my dad sand cars and sweep the floors of his shop. Back then, the autobody business was pretty dang corrupt. And even up until five or 10 years ago, appraisers would walk into a shop and bluntly ask for cash as an incentive to beef up their appraisals. None of these guys are around anymore, but now the insurance companies are cracking down on the excesses of the past and, unfortunately, they’ve gone way too far.
We have only ourselves to blame for this … our industry that is. There are still too many crooks out there, and the sad thing is that most of these guys don’t think they’re doing anything wrong because the insurance companies have forced their hands.
So now the insurance companies have all these guidelines (which, by the way, are illegal in many states), and they put their appraisers through boot camp and brainwash them into idiocy. A lot of the appraisers who came from body shops seem to have all memory of the work involved in collision repair wiped from their minds.
Then there are the appraisers who remember what it’s like in the shop. They remember how hard we have to work to make a profit, and they’re stuck in the middle. They want to help us get what we need to repair the car properly, but they also have to keep their bosses happy. For example, I need 30 percent of the base paint time for color sand and buff. The insurers rules say the appraiser can’t pay me for that, so he pays me to do things I’m not going to do. He has to keep both of us happy and just does what he can to help. The appraiser means well.
A lot of these decisions are made at the corporate level. The appraisers and some of their direct supervisors know what we need. According to a couple of appraisers I’ve talked with, the supervisors quietly encourage the appraisers to do what they have to do to get an agreed price with the body shop while, at the same time, remaining within the company’s guidelines.
I don’t know if the insurers know I’m doing this or not. I really don’t care. I don’t discuss it with them, but I do discuss it with my customers. And it’s not all the time that I have to do this. Things are slowly getting better. As body shop owners and managers become more educated and as competition prevails — driving out the less honest and less intelligent people — we’re getting closer to the point where we can get paid for everything we do.
But we still have a long way to go. We have to stick to our guns, learn how to write a good estimate and, most importantly, do everything we get paid for. It just takes a couple shops to screw up things for the rest of us.
The Second Estimate is Born
The first time I began covering my butt was on a big hit. The car had $15,000 in damage and was nearly totaled. But it was a good job; most of the damage was cosmetic, and the customer didn’t want the car totaled because she would have lost several thousand dollars. The appraiser was nervous about fixing the car. He was afraid of a supplement that would put it over the top, so he handed me his appraisal and told me not to call him for a supplement. There was damage to one of the quarter panels, and he’d written to replace it. It definitely didn’t need replacing, and he knew it, but he didn’t want me calling him back for any more money. I decided we’d repair the quarter and see how the job went. If extra parts were needed, the cost of the panel might cover them. If any money was left over, I’d give it to the customer and let her decide what to do with it.
It turned out we did find a few hundred dollars worth of extra parts that needed replacing. When we finished the repair, I was short about $100 and had to eat it. It was a big job, so it didn’t bother me too much. But what did bother me was not putting on that quarter. What if the car got re-inspected? It was my reputation on the line. So I spent two hours writing an appraisal that matched exactly what we did to the car. It even showed the $100 discount I gave to keep the job at the agreed price. When the customer picked up her car, I went over everything with her and gave her a copy of my appraisal. On my invoice I wrote, "Repaired per body shop’s estimate."
Now, every time my repair varies from the insurance company’s estimate because of cost shifting or some other reason, I write an estimate or change the estimate I’ve already written to reflect exactly what we did.
The insurers can shift things all they want, but I’m gonna shift ’em right back where they belong.
Writer John Shortell is the body shop manager at Secor’s Collision Technology in New London, Conn.