Connect with us

Shop Operations

Tow the Line: Making a Profit Is Considered Fraud?

Advertisement

Writer John Shortell is body shop manager at Secor’s Collision Technology in New London, Conn. He’s been in the collision industry for more than 20 years and has developed computer software for body shop scheduling called BodyShop Schedule Pro, for subletting towing called Tow Bill Helper and for printing estimates in dollars called Dollars & Sense. For more information, visit www.bodyshopsolutions.com.

When a Progressive adjuster wanted to see the invoice given to me
by the towing company (he didn’t want to pay my markup), I asked:
“Would you ask a grocery store clerk for the invoice from his
wholesaler to see what the store paid for that can of beans
you’re about to purchase?”

Click Here to Read More
Advertisement

Did you know that making a profit is considered fraud?

That’s right! According to some people at Progressive Insurance, marking up a sublet bill and making a profit is committing fraud. I’m now a crook who needs to hang his head in shame and fear a visit from the Connecticut DMV dealer’s licensing cops.

I’m costing the insurance company, and they’re not taking it anymore.

Recently, some second-in-command named Jason at Progressive’s Glastonbury, Conn., office called me to talk about a towing bill. A customer had called wanting us to pick up his 2005 Subaru Legacy at some garage on the other side of the state. I said, certainly, no problem. I called the towing service we use and sent them to pick up the car.

Advertisement

The towing company paid the towing and storage charges owed to the garage that originally towed the vehicle. Then my towing service towed the vehicle to my shop and billed me for his towing expenses, plus the money he’d paid to the other towing company.

We started a repair order, called upstairs for a check, chased down two people to sign the check and paid the entire bill.

Next, I entered both tows into my trusty Tow Bill Helper software, which magically marked up the entire amount to give me my desired sublet gross profit. What? You don’t make a profit on sublet repairs? Some business person you are.

Advertisement

Anyway, before we had the customer’s vehicle towed, we explained to him the problems we’d have with his insurance company, Progressive. We carefully explained that Progressive would probably be willing to pay less than the amount needed to properly repair his vehicle and that he’d be responsible for any differences between the cost of the repair and what Progressive was willing to pay. He seemed to understand.

Knowing the Progressive appraiser would soon arrive to look at the vehicle, I had my technician bring the car in and take off the few parts necessary to write an accurate appraisal. We had the vehicle up on the lift when the appraiser arrived. It had extensive damage to the underside.

Advertisement

I, my technician and the appraiser spent about half-an-hour examining the vehicle looking for all the damage. Normally, I would have written an estimate prior to the appraiser’s arrival, but he showed up before I had the chance.

The appraiser then spent about an hour out in his office on wheels creating what Progressive calls an estimate. Of course, as predicted — and as we warned the customer — Progressive’s estimate was deficient. Their hourly labor rate was $6 less than I accept. We figured the owner would be responsible for about $500 to make up the difference.

Then it got interesting.

The appraiser asked for a tow bill, so I gave him the printout from my Tow Bill Helper software listing both tows, what they cost and the total. Apparently, Progressive has been holding seminars on my Tow Bill Helper because he immediately said, “Nope, I need the originals.”

Advertisement

I asked him what he meant by “originals.” When he said he wanted to see the slips that I was given by the towing service, I told him those slips were private internal business documents for our eyes only.

He insisted that he needed to see them. Then I asked, “Would you ever, in a million years, dream of walking into a store and asking the clerk to see his invoice from his wholesaler to see what the store paid for that can of beans you’re about to purchase?”

Advertisement

He appeared confused. Had no one ever challenged him on this before? He told me he’d pay me for towing when he had those slips. I said, “No problem.” I’d just have to charge the customer, and then he could get reimbursed by Progressive.

Once the appraiser left, we called the vehicle owner and explained the damage, how much it would cost and how much Progressive was willing to “give” him. He was not happy. Why should he pay more than his deductible? Good question. He shouldn’t. But I certainly wasn’t going to repair the vehicle just to pass the time. We need to make a profit on every repair. Otherwise, why bother?
The customer told me to hold off on repairs until he talked with his insurance company. You can guess how that worked out for him.

Advertisement

About an hour later, we get a call from another body shop, about 30 miles away, wanting to pick up the car. A Progressive DRP wanted to pull a car from my shop. Oh well, no biggie. It wasn’t the first time, and it sure won’t be the last. We gave them the charges for towing, storage and teardown.

I had a nasty cold and went home for the rest of the day. That evening, my assistant called me to tell me she’d received a call from this Jason at Progressive. He wasn’t happy. My assistant explained all the charges incurred and informed him that the vehicle wasn’t leaving the shop until they were paid. He rattled off a list of insults and asked that I call him in the morning.
The next morning, I was feeling a little better. Then Jason called.

Advertisement

He immediately began complaining that I was giving his company a hard time. How dare I mark up a tow bill? I’m running myself out of business, appraisers and insurance companies are all talking bad about me and I’m so unreasonable. He told me his company doesn’t pay a markup on any sublet bills. We don’t deserve it. We don’t do anything. Why should we make a profit on a sublet?

We don’t do anything when we buy parts either, but we make a profit on them. We mark up used parts. We don’t make the paint and materials, but we make a profit on them. Any time your money is tied up in parts, materials, sublet bills, anything, you should be making a profit.

Advertisement

Jason told me I was committing fraud because I wouldn’t show him my tow slips. When I explained that those invoices were private business documents that no one but us had a right to see, he shot back that I would have to show them to the IRS if they wanted to see them.

Yes, Jason, I would.

Since I was committing fraud, Jason said he was going to file a complaint with the DMV or was going to convince the vehicle owner to file it. I begged him to file that complaint. I’ve been trying to get the Connecticut DMV to give a formal ruling on the towing and storage issue for a year, but they refuse to stick their necks out.

Advertisement

Some in the department think it’s illegal to mark up a tow bill. Can you believe it? People in charge of enforcing Connecticut laws don’t understand the laws they’re supposed to be enforcing.
Towing and storage laws only apply to licensed towers, something we are not. Our shop does not own a wrecker — therefore it’s not bound by any laws regulating wreckers. I can charge whatever I want for towing (being reasonable, of course).

The DRP shop picked up the car and paid the bill in full. I charged for my time and money invested in that repair order. I even charged for the time I wasted trying to explain economics to Jason at Progressive. Unfortunately for Progressive, I doubt if they got their money’s worth.

Advertisement

Oh yeah, I almost forgot, Jason informed me that, “From now on, any customer who has a car in your shop will get a letter from us explaining how difficult you are to deal with and that they will probably have to pay money out of their pocket if their car is repaired there.”

Truth is, I tell Progressive’s insureds and claimants the same thing, only Progressive is the difficult party in my version.

You may be thinking to yourself, “Real smart jackass, you lost a job because you were too stubborn.” And you’d be right. I did lose the job. In fact, it was a $10,000 repair, of which about $1,000 should have been net profit. But Progressive only wanted me to make $500 net profit.
Yes, that’s better than nothing, but accepting that would’ve set a bad precedent, wouldn’t it? And if I had accepted $500 this time, they’d want a better deal next time.

Advertisement

You have to draw the line at some point.

But some don’t. Progressive is paying the DRP shop $2 per hour less than they were so generously offering me. Meanwhile, the DRP shop manager asked me how we get more money out of the insurance companies — how we manage to get paid what we get paid.

He was clueless that taking on this job — at the price the insurer was willing to pay — was the answer to his own question.

Writer John Shortell is body shop manager at Secor’s Collision Technology in New London, Conn. He’s been in the collision industry for more than 20 years and has developed computer software for body shop scheduling called BodyShop Schedule Pro, for subletting towing called Tow Bill Helper and for printing estimates in dollars called Dollars & Sense. For more information, visit www.bodyshopsolutions.com.

Advertisement
2 Comments

POPULAR POSTS

Sponsored Content

Preaching to the Non-Converted: Shops Speak Out on Proper Scanning, Diagnostics and Calibrations

Sponsored Content

Shop Inventory? Your Account Manager Can Help with That!

Sponsored Content

Pro Spot International Launches New PR-5 Mobile Riveting and Bonding Station

Sponsored Content

4 Ways Training Can Help You Succeed During this Time

Connect
BodyShop Business