Strategies for Preparing – and Presenting – Your Estimate - BodyShop Business

Strategies for Preparing – and Presenting – Your Estimate

The insurance industry's reluctance to pay what I consider to be fair and proper damage appraisals concerns me greatly. It also concerns me greatly that many shops aren't doing anything about it.

I believe the industry needs to pick itself up by the bootstraps and elevate itself by perfecting the basics. One of the first steps in this process is learning how to prepare a proper appraisal and then understanding how to logically present it to the appraiser.

Owning or managing a body shop has become an increasingly difficult proposition in today’s business environment. There’s an increasing amount of complexity regarding all facets of the repair process, from securing the job to delivering a quality repair. The curious paradox, however, is that even as shops strive to keep abreast of the latest changes in equipment, technology, law and other variables affecting their businesses, they often overlook these basics. Just as winning sports teams credit their success to following the basics, shops need to be flawless in executing basic strategies in order to maximize profits.

In the current market, most autobody repair bills are paid by an insurance company. As we all know, the insurer usually wants to inspect the damaged vehicle and will send a staff or independent appraiser to write an estimate on its behalf and to get an "agreed price" with your repair facility. One of the most important basics, then, is preparing a thorough appraisal and "selling" it to the representative of the insurance company paying the bill.

To help you do this, we’re going to cover some appraisal-preparation strategies. These are strategies I’ve developed in great part from my experiences as an independent appraiser and as a manager of a body shop. For the purposes of this article, we’ll assume your shop has secured the job and is waiting for an appraiser to inspect the vehicle.

Know Your P-Pages!
Be completely familiar with your estimating database. Read the P-pages to gain a thorough knowledge of what is or is not included in the procedure you’re performing. For example, in Mitchell’s UltraMate estimating system, if you replace a fender, the antenna and fender liner, R&I time is not included in the fender R&R time and must be entered as additional procedures.

Although most estimating databases are similar, differences do exist. ADP includes time for an initial test panel spray out in the refinish time of the first major panel, but Mitchell has no such provision, so the appraiser must make a manual entry for the procedure.

Take the time to read and re-read your estimating system’s database and its procedure pages. Most systems have P-pages online and/or in a printed book. ADP also provides online training seminars to help its Penn-Pro and Shop-Link users to become more familiar with system features and variables.

I can fill a book with the estimates I’ve seen both by insurers and body shops that were deficient because the writer didn’t understand the P-pages. One shop owner in Delaware called me for help recently because an insurance company wouldn’t pay him for the repair and refinish of adjacent panel welding damage. The appraiser insisted they were included operations.

I printed out the P-pages from my Mitchell UltraMate database that addressed that topic, and the shop presented the documents to the appraiser – and was paid for the procedures. That shop owner now keeps those P-pages on hand to refer to.

Prepare a Thorough Estimate
Nothing is as important as a first impression. When an appraiser comes into your shop, he’ll subconsciously be affected by his initial impression of the damaged vehicle. This impression may or may not adversely affect the amount of the estimate he writes, but you need to ensure that your estimate takes that uncertainty out of the equation. The best way to do that is to have your estimate prepared before anyone inspects the vehicle.

Take the time to thoroughly inspect the damaged vehicle, even if it means writing an estimate after working hours. Carefully look at all panels adjacent to the initial impact area and note door/hood gaps and any distortions caused by the accident. Look at the back edge of a front fender to see if it struck the front edge of the door next to it. Jack up the vehicle to see if there’s undercarriage, condenser, radiator or structural damage not visible from the top or front.

Look at the paint code to see if the loss unit has a three-stage finish. Check to see if chip guard exists on the lower portions of the vehicle.

If there’s structural damage or misalignment, you’ll need to include set-up and measure and structural alignment in your appraisal. Note the proximity of panel damage to the panel next to it to determine if blending the adjacent panel is necessary for a proper color match.

If a structural component or welded panel needs replaced, note how it’s attached to the adjacent panel. Adjacent-panel welding damage isn’t included in body labor or refinish times when replacing a damaged panel.

If the airbags have deployed, consult the mandatory replacement chart for the vehicle you’re repairing. If the bags deploy in a 2004 Dodge Stratus (without side curtain airbags), for example, you must replace the airbags, driver airbag module cover/horn switch, clockspring, steering wheel, complete steering column assembly, upper instrument panel and pad, and deployed seatbelt pretensioners (if equipped). How many estimates have you seen that omitted most of these items?

Be sure to enter times to aim the headlights if replacing or removing and installing them for any reason. Also remember to bleed the brakes when suspension work is performed. Perform a four-wheel alignment any time you work on the suspension or perform structural work that includes the front or rear body rails.

When using LKQ parts, remember that replacement times don’t include cleaning and preparing the used part for attaching to the damaged vehicle. They also don’t include transfer times of components from the damaged assembly to the replacement assembly. They don’t include any repair times needed to bring the LKQ part to an undamaged, ready-to-refinish condition. And the times may or may not include making sleeves for the replacement parts, depending on your estimating system.

Include line items necessary to repair the vehicle properly. These are items and procedures that are not included in any procedures in the database and must be entered manually. These may include cleaning for delivery, replacing sound deadening panels in doors and floors, door skin bonding kits, anti-flutter kits for doors and roofs, masking jambs, color sanding and buffing.

When masking jambs and tinting for color match, make sure the times are listed as "refinish" procedures to ensure that material costs are calculated. When removing stripes or adhesive emblems and moldings from damaged panels, be sure to list time to clean the adhesive residue from the panel.

Remember that the cost of filling primer isn’t included in refinish materials and that the labor of feather-edging a repaired panel is not included in repair time for that panel. A separate line item must be made to address this procedure – and remember to make it a "refinish" procedure.

Also keep in mind that the 2.5 hour clearcoat cap is just a guide; it’s not written in stone. In addition, it doesn’t include urethane parts and interior surfaces. It’s also worth mentioning that material cost caps are arbitrary and illegal in most states.

When a vehicle is put on a bench-type frame machine, be sure to dress the pinch-weld damage. In addition, R&I rocker moldings to provide access needed to set the car on the machine. I-CAR specifically addresses this procedure in its structural repair seminars.

Understand Markup vs. Profit
If you’re marking up a part or sublet item, always remember that mark-up is not profit. For example, if you have a part that has a list price of $100 and you paid $75 for it, you made $25, for a 25 percent gross profit. However, if you buy an LKQ part for $75 and mark it up 25 percent ($18.75), the total price is $93.75, for a 20 percent gross profit.

In order to make a 25 percent gross profit on the $75 part, you need to mark it up by 33.4 percent. This can be done easily by multiplying your cost by 1.334: $75 X 1.334 = $100.05.

If a 30 percent profit is your goal, multiply your cost by 1.429.
Tables are available that give multipliers for any percentage that you desire. Just ask your accountant.

Be Prepared
Don’t let the appraiser doing the inspection show up without an appointment. It’s extremely important for you to be prepared – and present – at the time of his inspection. Take your estimate and walk around the car with him. Show him what you’re doing and explain the logic behind it. Why? Because if you just give him a copy of your estimate and let him write an appraisal on his own, he may miss damage that you saw and may not review your estimate properly – or at all.

By you showing every aspect of your estimate to the appraiser, you’ll force him to see the repair process through your eyes. For example, we just received a rental car claim that was already seen by an insurer. The vehicle was hit in the front, and the left front fender was shoved into the door, damaging the front of the door. The appraiser, however, failed to see the damage on the door and merely blended the left front door after replacing the fender.

If the shop owner had been prepared, he could have shown the damage to the appraiser at the time of the initial inspection, eliminating the need to call for a supplement (at least for that particular item). Also, if the appraiser missed the left front door damage, there’s a good chance he missed other items as well.

Unless you’re going over your estimate line by line with the appraiser, have him print off a preliminary estimate for you to review before he locks the appraisal in its final form. It may not be possible for you to get a finalized estimate before he leaves your facility, but you should always strive to make that happen – since it’s to your advantage and eliminates nasty surprises.

Knowledge Is Power
Research and become familiar with the laws of your state regarding the appraisal process and whether the appraiser must leave a copy of the appraisal before leaving. For example, in Pennsylvania (where I perform most of my appraisals), the appraisal must be done by a personal inspection and the appraiser must leave a signed copy of his appraisal at the time of inspection. This is a powerful tool for you and helps to ensure a proper initial appraisal is performed.

Also take advantage of any training, seminars and information available to you that will help you in the appraisal process. You may wish to attend I-CAR classes that illustrate how the factory wants various repairs and procedures performed. Does this knowledge benefit you? Absolutely. For example, if you write to replace a damaged sub-frame but an appraiser wants you to repair it, it’s to your advantage to be able to explain to that person that I-CAR and the OEMs don’t consider a sub-frame a repairable structure but, rather, a critical suspension component that must be replaced when damaged.

Collect factory bulletins that support your position regarding factory-recommended procedures. A recent Ford bulletin only recommends using remanufactured alloy wheels when there’s been no machining or welding done to make the repair. If you know of its existence and have a copy on hand, it could make a difference in your bottom line and also ease the appraisal process.

Although no one will deny that insurers are becoming ever more aggressive in their approach to the appraisal and repair process, your shop is in a more powerful position than you might think. But it’s up to you to take the necessary steps to help level the playing field.

Writer Bob Cicconi is the material damage supervisor for Premier XXI Claims Management, which settles rental-car claims. He’s a licensed auto damage appraiser in Pennsylvania and Delaware. Cicconi also managed his brother’s body shop for three years. He holds an Automobile Claim Liability Specialist designation (ACLS) and a Casualty Claim Liability Specialist (CCLS) designation from American Educational Institute and is I-CAR Platinum Certified. He recently completed a paralegal course at Delaware County Community College and continues to attend school courses and training seminars that affect the profession.

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