News: AAA Says Record Number of Americans Will Hit the Road Over July 4 Holiday
Insurance companies’ tendency to underpay on collision repair labor was spotlighted in Newsday, a New York newspaper, thanks to Long Island Auto Body Repair Association (LIABRA) Executive Director Edward C. Kizenberger.
In a letter to the editor reprinted below, “Labor rates for cars not high,” Kizenberger disputes claims made by state insurance Superintendent Eric Dinello in an Aug. 7 Newsday story (click HERE to read it). According to the article, New York insurance companies recently were ordered to factor reduced driving and rising gas costs into any pending rate increases before the state insurance office. Dinello said in the story that collision repair costs, and thus insurance rates, are increasing nationally because cars are becoming more complex to repair. Kizenberger’s response follows:
I read with great interest the article about auto insurance rates ["Insurers cautioned," News, Aug 7]. The auto collision repair industry will attest to the fact that collision repair labor rates have not increased in any significant way in many, many years. In fact, the current labor rate averages paid out by most auto insurers for collision repair are less than half of what mechanical repair shops labor rates are.
This also holds true for most other service industries from copy machine repair rates through plumbing and electricians. Labor rates paid out to collision repair shops by most insurance companies lag far behind and are rarely adjusted for inflation or other contributing factors such as increased energy costs and raising insurance premiums. As the article alludes to, yes, there are increased labor costs associated with today’s complex vehicles, but generally the rates paid out to repair these complex vehicles are as antiquated as a Model T compared to a Mercedes Benz.
Click HERE to read Kizenberger’s letter on the Newsday Web site.