The Business of Steering - BodyShop Business

The Business of Steering

Every day, insurance companies steer vehicle owners away from shops they consider “troublesome” and toward shops they don’t.

Sometimes, their steering is perfectly legal.

Sometimes, it’s not. When it’s not, they’re often betting that neither the vehicle owner nor the shop owner will be knowledgeable enough of the law to know that they’re breaking it.

It’s a fairly safe bet on the part of insurers.

It’s no surprise that vehicle owners are ignorant about this stuff, but you, the owner of a collision repair business, can’t afford to be. You should not only know your state laws regarding steering, but also understand the insurance contract between insurer and insured (for first-party claims) and what an insurer owes a third-party claimant (someone who isn’t insured by — and therefore doesn’t have a contract with — that insurance company).

For the most part, insurers are careful about what they say, ensuring they stay on the right side of the law. But sometimes, especially at the local level, adjusters get overly confident (or desperate) and resort to other, more mafioso-like steering methods — the kind of methods that bully, rather than nudge.

And these methods often are illegal.

Take the story of an Oklahoma shop owner who recently lost a job to a DRP shop. “After taking my estimate to the insurance company, this young lady was told to take it to their DRP shop,” he says. “This was the shop that repaired her vehicle the last time, and she wasn’t pleased with the repair — and she did not want them to repair her car again. When she said, ‘no,’ she was told it would be two weeks to a month before they could get an adjuster to my shop to OK my estimate. Finally she relented because the driver’s door wouldn’t open, which was very unhandy with two small kids. It was very difficult for her to tell me not to order the parts she had just given me permission to order. But she felt she had no choice.”

Thing is, she did have a choice — but neither she nor the shop owner knew it. Which is exactly what this adjuster was counting on. “I don’t think there’s any question that the insurer must make a good faith effort to have someone look at the vehicle within a ‘reasonable’ time,” says Erica Eversman, chief counsel for Vehicle Information Services in Bath, Ohio. “Looking at DRP contracts, insurers require shops to review and prepare an estimate within 24 hours. I think there’s a good argument to be made that the same responsiveness should be practiced by the insurer, irrespective of shop affiliation.”

So how should the shop owner and vehicle owner have handled this situation and what can they do about it now? Eversman advises the following:

1. The vehicle owner needs to file a complaint with her state DOI, clearly explaining that the insurer told her to take her vehicle to this DRP shop, her prior repair experience with that shop made her not want to return, she had already signed a repair authorization with the other shop and the insurer denied her the right to choose her own shop by refusing to handle the claim (including getting an adjuster out to see the vehicle) in a timely manner.

“I believe the tactic of delaying claims payments/management for the purpose of forcing customers to use a DRP facility is an unfair, deceptive claims handling practice that the DOI needs to hear about,” says Eversman, adding that the consumer should also file a complaint with the National Association of Insurance Commissioners at

2. If the customer is a third-party claimant, “she has no obligation whatsoever to wait for the insurance adjuster to ‘see’ and ‘approve’ the shop’s estimate,” says Eversman. “She could have had her vehicle repaired without the adjuster’s ‘approval.’ She could have told the insurer something like, ‘I don’t have any obligation to involve you in the repair. I’m doing so as a courtesy to you and the person who hit me. I intend to have my car repaired by this body shop.’ ”

3. If she’s a first-party claimant, the terms of her contract may require her to give her insurer a chance to review and OK the estimate. “However, the contract of insurance should not ever be read to mean that the insurer can hamstring her by dragging its feet when fulfilling obligations,” says Eversman. “It’s absolutely unreasonable in ordinary circumstances (this isn’t Hurricane Katrina and millions of cars need to be seen) for an insurer to fail to review the vehicle within 72 hours. She might have a legitimate claim against her insurer for bad faith. If her insurer can’t get someone out to look at her car within 72 hours, that’s tough for the insurer. The customer has signed the authorization, and the repairer should begin the repair. It’s the insurer’s obligation to look at the vehicle in a timely manner — if it wants to be involved in the repair. Otherwise, it’s an easy argument to make that the insurer waived its right to review the vehicle.”

If this situation ever repeats itself, this woman simply needs to tell her insurer that she has fulfilled her obligations to the company by putting it on notice of the accident and need for repair. Says Eversman: “If they give her the same hooey about two to four weeks, she’ll stun them when she says, ‘That’s too bad, but the shop is going ahead with the repair without your review because I need my car back right away and can’t wait for you. The repairer will send you the final bill.’ After that, I bet the insurer will get someone out to the shop straight away.”

We all know that insurers aren’t going to stop steering. It makes good financial sense for them. Which is why it makes good financial sense for you to be able to counter their steering by knowing the law and being able to explain to consumers what their rights are under it.

Most consumers aren’t going to know unless you tell them. And not knowing and not having are dangerously close to the same thing.

What good are rights if no one exercises them?

Georgina K. Carson, editor

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