Truce: Working with Insurance Adjusters - BodyShop Business

Truce: Working with Insurance Adjusters

If you ever need to energize a bunch of bored shop owners, bring up working with insurance adjusters. This topic can incite a lively discussion among even a reserved group of repairers.

That’s because everyone has a war story or two about an adjuster experience and they’re usually eager to share it.

One of my favorite war stories is when the shop I worked at was repairing a Corvette that was hit hard in the rear. When we discovered a buckle in the gas tank, we called the adjuster back for a supplement to replace the gas tank and anticipated a quick, routine reinspection from the adjuster to verify that the tank was damaged and that a new replacement part was going to be installed.

When the adjuster arrived for the reinspection, I gave him the supplement package and escorted him to the metal shop. There, I introduced him to the shop owner, who was then going to show the adjuster the Corvette, the damaged parts and the new parts.

Several minutes later, while back in my office, I heard the owner cussing and howling as he came back in the office. The owner told me that I had to go handle the adjuster because he was about ready to kill him and throw him out of the shop (or was it throw him out of the shop and then kill him? I can’t remember).

I must have given my boss a puzzled look because he then explained how the insurance adjuster thought that a new gas tank was unwarranted and that we should repair it. Still dumfounded, I asked my boss how the adjuster had come to that conclusion.

At this point, my boss was calm and laughed as he recalled his conversation with the adjuster while reinspecting the car. When the adjuster saw the Corvette’s damaged gas tank, he told my boss to repair the gas tank by cutting it open, straightening out the sheet metal and re-welding the gas tank back together.

My boss had been flabbergasted by this repair suggestion and asked the adjuster how he could justify such a repair. The adjuster then explained that he’d recently been discharged from the U.S. Army, where he’d worked as a mechanic and had actually performed such a repair but on a tank, the armored tread-driven kind with a 105-mm cannon.

After letting my boss vent for a bit in my office, I told him to put himself in the adjuster’s inexperienced shoes and instead of insulting the poor kid which he’d apparently done by being condescending and sarcastic he should make a technical argument for the new gas tank versus repairing the old one. I also said to give the young man some credit for having the nerve to make an off-the-wall suggestion to save money.

This story ended with our installing a new gas tank because my boss calmed down and explained to the adjuster that cutting, straightening and welding a gas tank isn’t an industry-accepted repair standard.

Clearly, the adjuster’s suggestion was wrong, but his rationale for seeking a less costly repair alternative has to be expected he was, after all, an adjuster.

The shop lesson here is to expect an adjuster to challenge a shop’s repair methods and to be prepared to respond in a professional manner with technically sound information.

But to negotiate good prices and receive good adjuster service, shop management and personnel sometimes have to do more than stay calm and offer a solid technical argument. Why? Because insurance adjusters use more than company policies to make settlement decisions. Like my former boss, they’re also motivated by their feelings and knowledge base.


The Process of “Working With Adjusters”
I’ve had years of experience on each side body shop and insurance company adjusting, estimating and supervising both. As a shop estimator and manager, I was sensitive to the needs of adjusters because of my prior experience as an insurance adjuster. I used my knowledge from the insurance side to influence adjusters into giving my shop good service and preferential treatment. How? I knew most adjusters had thankless jobs and endured heavy workloads, upset customers, confrontational shop personnel who constantly challenged claim costs and legitimacy, and relentless management/company scrutiny of their performance. So I always tried to make the adjuster’s experience at my shop as painless and efficient as possible.


I knew that having a good working relationship with adjusters is more than being friendly and getting along. It’s about implementing repeatable and worthwhile adjuster processes that achieve business goals and objectives.

I not only looked to negotiate the best estimate price possible, but I also wanted the adjuster to give my shop prompt service, whether it was new assignment priority for the initial appraisal, an immediate response to a supplement request or even just returning a phone call.

I worked hard to build a professional relationship with adjusters based on trust and confidence. It wasn’t unusual for an adjuster to see credits on a supplement or even receive a check back when estimates were mistakenly overwritten. I sought to assure adjusters that both they and their customers would be welcomed into the shop and receive prompt and courteous service. I wanted the adjuster to sell my shop and be willing to come back for future claim transactions.

The problem today is that as body shops grew and matured throughout the 1980s and 1990s, shop owners and general managers who grew their businesses by actively participating in day-to-day estimating handed off management of adjuster relationships to other employees who lack experience.

These new estimators often lack negotiation skills and haven’t had those years of on-the-job training. Therefore, they’re less likely to appreciate the value of savvy negotiating and the business rapport required to develop a solid working relationship with adjusters.

They not only don’t grasp the value of having a good working relationship with adjusters, but they also don’t understand what constitutes a good working relationship.

Clearly, the estimate or “agreed price” impacts job profitability. So being able to negotiate a good repair price is an important measure of a healthy adjuster relationship. But it’s also worthwhile to have an adjuster:

  • be responsive when a shop needs a reinspection;
  • return a phone call;
  • complete and turn in his paperwork so the shop has an appraisal to work off of;
  • approve and pay a supplement in a minimum amount of time.

And it’s definitely worthwhile for the adjuster to have a positive shop experience so he’s willing to come back and do a good job the next time around. Heck, he may even refer customers or put in a good word to his claim office.

Long-time shop owners and managers have learned all this from numerous years of experience and by trial and error. And I’ve talked to more than one shop owner and adjuster who has told me how a new estimator or customer-care person almost ruined a business relationship with an adjuster or particular insurance company.

Because of the debate and compromise associated with negotiating a repair agreement, it’s hard for a new estimator to balance the needs of both the adjuster and the shop. Like new insurance adjusters, new estimators are either too tough trying to gut an adjuster or too easy giving away the store to get an agreed price.

So how does a shop improve how it works with adjusters? By looking at “working with adjusters” as a shop process with specific goals that have to be met and improved upon. The overall process of your shop working with adjusters has three primary goals:

  1. The adjuster process has to be profitable achieve high prices;
  2. The adjuster process has to be efficient and have minimal impact on both job workflow and the estimator’s time;
  3. Working with adjusters has to be professional and result in a positive business rapport between the shop and the adjuster.

Because the adjuster/body shop relationship is a two-way street, employees need to realize that dealings also have to be sensitive to the adjuster’s needs. It’d be senseless for me to advocate a one-sided business relationship. If both parties didn’t benefit, why have a relationship at all?

Both the adjuster and the estimator have goals that must be satisfied to achieve a good working relationship:

  1. Price/profit goals for the shop, it’s high prices; for the adjuster, it’s low prices/cost.
  2. Productivity goals for both the shop and adjuster, it’s efficient workflow.
  3. Business rapport goals for the shop, it ensures future sales; for the adjuster, it creates trust in the shop.

Let’s take a closer look at all three goals.


Prices & Profits
The principle objective for both the shop and the adjuster is to maximize company profits. Without profits, neither the shop nor the insurance company would stay in business.

From the shop perspective, pricing negotiations focus on high prices; from the adjuster perspective, repair costs need to be low. Logically, it’s difficult to appreciate that opposing profit goals for both the shop and the adjuster can be satisfied through accurate estimating but they can.

It’s been my experience from both the adjuster side and the body shop side that there’s sufficient room to raise repair prices if the propensity for over-repairing among body shops is significantly reduced.

When I was a field adjuster, my average severity or estimate amount was far lower than most company adjusters in my region and in my claim office. But, my estimate analysis measures for things like parts discounts, average labor rate, LKQ parts usage and aftermarket (A/M) parts usage were always worse than most adjusters.

What I did pay for, I paid top dollar.

Still, I consistently paid less per auto claim than my co-workers. How? Because my estimates and supplements were more accurate than my co-workers. I rarely paid to over-repair a car.

If only a part was needed, I avoided paying for an assembly. I carefully discriminated between related and unrelated damages. My supplement frequency was high, but my average payout per supplement was very small. I also scrutinized job repairs in the body shop and deducted for any repair operations that weren’t performed by the shop. And I strictly mandated that shops not move forward on supplemental repairs unless they advised me what was going on.

Shops quickly realized that they couldn’t just cut off or replace a part to prove that it was needed on a supplement and expect me to pay for it. I asked for an opportunity to discuss with the shop owner where he was going with the repairs and to make sure that he was taking a conservative repair approach and not just the easiest repair path.

It also only took a couple of times of my getting burned by paying for repairs on a car that should’ve been totaled to learn to pay shops to thoroughly diagnose all the damages before the car was repaired. Without this additional payment, there’s little incentive for shops to waste time and money to determine whether a “borderline total” is actually totaled.

I also never depended on the shop to make the call between “old” and “new” damages and “maintenance” or “pre-existing” problems with the customer’s vehicle. That wasn’t their job.

I also encouraged more repair-versus-replacement of parts by paying fair labor times for things like bumper covers, accessing labor to facilitate repairs, and even extra labor time to thoroughly diagnose and test (i.e. multiple wheel alignments and R/I times to test single part replacement instead of a complete assembly). I also paid more for typical end-of-the-estimate add ons as long as they applied to the job at hand and not unjustified additions.

Comparing apples to apples, I paid higher repair prices for the repairs that were performed, but I was actually persuading body shops to do a better estimating and damage analysis repair no more or no less than what a job warranted.

And because of my extensive claim-handling experience, I was also able to eliminate claims or claim payouts not related to a specific claim on a damaged vehicle more often than other adjusters.

Without tooting my own horn, I did a better job than my co-workers because I’d spent several years not just as an auto field adjuster, but as an adjuster handling medical, bodily injury, theft and homeowner claims. Many auto adjusters come from the auto side only, or from body shops. I had more training and experience in investigating and policy interpretation, which broadened my auto field adjusting and allowed me to mitigate claims by doing more than just writing an estimate.

That said, let’s examine what you can do to achieve your goal Ð high prices Êwhile meeting the adjuster’s goal low prices/costs.

First off, properly preparing for the adjuster’s inspection at your shop is just as important as writing an accurate estimate. This should be the first step of your “working with adjusters” process. (More on how to do this later).

The most common shop mistake during the initial appraisal and negotiation process with adjusters is that there’s little or no active participation by the shop. Never ever leave adjusters alone at the car during an initial appraisal!

A shop estimator must aid the adjuster by validating damages and determining the best repair procedures. Having two people going over the car together is also a good quality-control process to assure the estimate is thorough and accurate.

A body shop representative also has to be present to immediately challenge any proposed estimate changes the adjuster wants to make. Any inadvertent errors or omissions on the shop estimate also need immediate acknowledgment to the adjuster as an estimating mistake and not an intentional attempt to over-write or under-write the vehicle’s damage estimate.

As a shop estimator, my daily workload was totally unmanageable, and I often found myself saying “OK” to the adjuster as he ran out the door saying: “I’ll send you a copy. Call me if you need a supplement.” But when supplement time came around, I always knew I had lost labor, additional operations and add-on opportunities that should’ve been included on the original estimate sheet. Worse, my supplements were always lighter than they should’ve been because it was far more difficult to renegotiate once an initial agreed price was reached.

As an adjuster, there were two body shops that consistently did an excellent job negotiating with me. Usually each shop owner escorted me out to the damaged vehicle and went over every single item on the shop’s estimate. Once I agreed to a damage appraisal at the car, I couldn’t get away with making changes to the shop estimate after I left the shop. And while at the car, I had to defend every change I made to his estimate while face-to-face with the shop owner.

At these two shops, the owners and shop personnel also were professional and polite and made sure the car was accessible and ready to be moved or partially disassembled if needed.

It was even more impressive to me that I always received their full attention without interruption, distraction or small talk. Each visit began with a handshake and ended with a handshake very businesslike.

And because they went out of their way for me, I made an extra effort to accommodate their needs and provide the best service I could. I called and scheduled my appointments for specific days and times of day so the owners were sure to be there. I prioritized their field assignments and supplement requests, paid labor time for any testing that I suggested, helped them to deal with the local claim office and pending payments, made customer referrals even though they weren’t direct-repair shops. (Shortly after leaving the company, both shops became part of the company’s DRP program.)

The bottom line was: These two shops consistently delivered exceptional service so, consequently, I gave them good service and paid higher prices for their services.

The following are a few effective negotiating strategies to help you attain higher prices when working with an adjuster:

  • Be polite, professional and prepared.
  • Write an error-free shop estimate for presentation to the adjuster. Always double-check your estimate or have a co-worker do it.
  • If you list an operation on the estimate, be sure it’s one that your shop will do (i.e. don’t push a boatload of R/I if your shop mostly tapes off trim).
  • List open or possible additional repair actions as estimate line items.
  • Always reference database P-pages, included and non-included operations extensively.
  • Use facts and not opinions to support your estimate line items, such as written documentation from acceptable authorities (paint or equipment manufacturer, OEM specs, I-CAR, etc.).
  • Stay with the adjuster during the appraisal.
  • Give the adjuster your full attention.
  • Perform a line-by-line damage review of the shop estimate with the adjuster.
  • Assist the adjuster to find hidden damages.
  • Have a vehicle-storage-and-damage-access process that facilitates estimating, teardown and diagnosis while the adjuster is present.
  • Ask the adjuster to defend his damage or repair opinions.
  • Be flexible and open minded. Ask the adjuster to make alternative repair suggestions, and document his suggestions.
  • Consider diagnostic testing as a way to resolve differences of opinion agree on test outcomes and how you must document the test should a repair option fail. Get paid for testing.
  • Keep a file or reference sheet that describes each adjuster’s preferences.
  • Be prepared for LKQ parts and assemblies, and know what’s included and not included labor operations.
  • Use your CAPA reference guide to identify whether A/M parts automatically imbedded by adjuster’s estimating program are actually certified.


To meet their daily quotas, adjusters must use their time efficiently. They can’t afford to shoot the breeze, wait for cars to be moved or cleaned off (snow, ice, mud), come back for multiple supplements, waste time sifting through a shop’s old parts piles trying to decipher handwritten shop notes, waste time auditing and reconciling parts invoices, or try to organize a pile of supplement proofs.

As for body shops, they can’t afford to spend unproductive time with an adjuster or have every adjuster-written job get bogged down with delays because of multiple supplements, reinspections, authorizations and payment terms.

Both adjusters and estimators need to use their time together wisely and reduce or eliminate unnecessary re-visits, authorizations and supplements. Adjusters may have territories that are quite large, and this makes it difficult for them to get back to your shop in a timely manner for a supplement reinspection. Always ask adjusters to give you an idea of their weekly travel schedules to coordinate a supplement reinspection date and time that works best for both of you.

Preparing the vehicle for presentation to the adjuster should be the first step of your “working with adjusters” process. Many shops don’t do this. In fact, lack of preparation in presenting, inspecting and identifying vehicle damages with an adjuster is a common body shop mistake.

You have to allocate space, manpower and time to properly present the damaged vehicle. Anticipating and documenting an adjuster’s inspection arrival date and time with a scheduling system that parallels the production scheduling system will help you to allocate people and building space. Also, everyone in the office has to participate in the process of contacting the adjuster. Then they need to document on a production board or adjuster schedule board the date and time the adjuster is expected to come out on jobs.

A daily review during morning release meetings of an adjuster’s inspection schedule for both initial estimates and supplement reinspections can eliminate the last-minute scrambling that occurs when adjusters arrive to inspect a car. I know that many adjusters just show up and don’t call prior to their inspections. But, if they’re constantly reminded of the benefit to them, most will gladly call to schedule their visits when they realize that scheduling helps them get in and out faster, reduces their supplement frequency and improves their estimate accuracy.

As we all know, supplements cause delays and interrupt production. Still, many body shops depend on a supplement to get the right price for a job. Not a good idea. In fact, the so-called “tight” adjuster estimates are more a result of poor preparation by the shop in the initial damage-identification process with the adjuster than with some insurer policy of “write only what you can see.”

I agree that supplements are harder to address or prevent when adjusters inspect cars at drive-ins, tow yards or residences. But when a car is at the shop and appraised thoroughly, supplements should be kept to a minimum or, at the very least, to a minimum dollar amount.

What follows is a handy supplement checklist that’ll aid your shop:

  • Follow good estimating procedures for assessing and validating damages and repair actions.
  • Ask the adjuster under what circumstances he has to re-inspect and authorize additional repairs.
  • Ask the adjuster what supplement “proofs” are required.
  • Keep a file or reference sheet describing adjuster supplement-handling preferences.
  • Always document the likelihood and specifics of potential supplements.
  • Give the adjuster early notification of additional damages.
  • Schedule reinspection appointments, and be prepared with car, parts and test results.
  • Solicit feedback and agreement from the adjuster on proper repair actions.
  • Don’t surprise the adjuster with unexpected parts and labor even small ones.
  • Give credits back for parts and labor when applicable.
  • Create a detailed supplement package to give the adjuster.
  • Always include an authorization to pay the shop directly.
  • Have a routine, disciplined follow-up process to assure timely adjuster response and payment.
  • Always advise the vehicle owner of supplements, adjuster process and ultimate payment responsibilities.
  • Find out who’s responsible for cutting supplement checks (adjuster or inside claim rep).

Creating a supplement package to hand the adjuster when he arrives for a reinspection is a must. Presenting a supplement package, the car and the old parts to the adjuster immediately is a sign of shop organization and professionalism. And as long as an adjuster was advised in advance of what to expect on a supplement, the re-inspection visit will go much more smoothly and efficiently.

The adjuster’s supplement package should include:

  • Copy of adjuster’s original estimate.
  • Copy of shop’s supplement repair order.
  • Copy of shop’s original repair order.
  • Copies of parts’ invoices or sublet invoices (highlight supplement items).
  • Other proofs such as measuring printouts, dealer parts diagrams, tech bulletins, etc.
  • Photos.
  • Copy of authorization to pay shop directly.


Business Rapport
Consider your audience when improving adjuster processes. Treat adjusters like you do customers. Vehicle owners demand immediate availability, friendly service, high quality, quick turnaround and timely communications in order to feel satisfied and to come back or even refer others to your shop. They also want to trust that their expectations will be met consistently by the shop.

What encourages and discourages an adjuster’s trust in a body shop? What are the adjuster’s expectations? How are adjuster expectations and viewpoints formulated? How does a body shop satisfy an adjuster’s expectations in a meaningful way?

Understanding how an adjuster thinks and is influenced helps to determine the kind of steps or processes needed to satisfy the adjuster so he’s compelled to repeatedly deliver favorable services and referrals to your shop.

Even though insurance adjusters are representatives of their company, they’re still individuals with unique characteristics and emotions. Like all front-line employees who aren’t responsible for creating company policy or operating philosophies, adjusters are “yes-men” doing a job in order to get through a workday with the least amount of hassle.

What follows are a few factors that influence adjusters:

  • They often have demanding workloads, schedules and time constraints;
  • They’re trained to constantly focus on how wisely company money is spent;
  • They’re concerned with insurance fraud;
  • They have good local knowledge of the market’s best practices.

Adjusters are under the same intense pressure from their companies to reduce claim costs as estimators are pressured to increase prices. And unless a person has investigated and settled insurance claims for a living, it’s hard for an outsider to appreciate the impact insurance fraud has on an adjuster’s psyche.

Society’s high propensity to commit and accept insurance fraud is constantly in the face of insurance adjusters. (See sidebar titled, “Why Adjusters Are Concerned About Insurance Fraud.”) Insurance adjusters come across some form of insurance fraud on a regular basis, and these experiences can turn even the most open-minded individual into a cynic when it comes to evaluating the validity of an insurance claim.

Fraud awareness is also one of the reasons I strongly emphasize estimating accuracy to shops. Shop personnel often make inadvertent estimating mistakes or casually add more parts and labor than is necessary (or without a high degree of certainty) on damage estimates with little or no realization of the impact they’ve made on the adjuster.

Unfortunately, shop estimating errors are rarely viewed as harmless mistakes by insurance adjusters. The high occurrence of everyday estimating errors experienced by claim adjusters while inspecting cars at body shops serves as the reminder to the adjuster that he needs to be constantly on the lookout for insurance fraud.

Estimating errors are another reason to be with the adjuster at the car and to go over the car damages line by line. That way, the shop estimator can attest to the estimating error as not being an intentional act to inflate the estimate price.

Also, keep in mind that adjusters go to a large number of body shops regularly. The problem with this is that an adjuster compares your shop practices and employees to the best and worst he sees in the local market.

So, when an adjuster is negotiating with your shop, he may be mentally comparing what you’re looking to get paid to another shop that has exceptional technicians for example, a painter who does an extraordinary job of color matching (reducing the need for blend time) or a metal tech who’s a wizard on multi-dimensional pulls and doesn’t require a ton of labor time, etc.

Don’t get me wrong. Insurance adjusters understand that settling claims sometimes requires having to compromise on a reasonable amount of extra expense before the customer or body shop will accept the terms of a repair agreement claim settlement. They only hope that it doesn’t happen on every claim.

For an adjuster, job satisfaction is attained by being efficient (in and out of the shop) and negotiating a low price in a friendly and professional environment. When an adjuster is confident that a body shop isn’t out to get him, the adjuster is more likely to nurture a positive business rapport with that shop.


To get the best price possible when working with adjusters, be prepared and organized to receive the adjuster. Make sure your estimate is accurate and has been double-checked. Personally review every line item at the car with the adjuster, and be ready to tear down or access hard-to-identify damages.

It’s worth the time and effort to develop a professional rapport with insurance adjusters. This rapport will not only reduce stress, but will lead to higher prices, increased efficiency and, ultimately, improved profits.

Writer Jake Snyder is the principle of CR Management Systems, a consulting, training and business-development company. He’s been in the industry for more than 15 years, has managed a collision repair facility, held various claims positions with Allstate Insurance Company and performed consulting and product development for Body Shop Video’s Business Development Group. Snyder can be contacted at (732) 886-5340 or at [email protected].


Why Adjusters Are Concerned About
Insurance Fraud

Fraud is usually categorized as hard or soft fraud.

Hard fraud is a deliberate attempt to stage or invent an accident, injury, theft, arson or other type of loss that would be covered under an insurance policy.

Soft fraud sometimes called opportunity fraud occurs when a policyholder or claimant exaggerates a legitimate claim. Soft fraud also commonly occurs when people purposely provide false information to influence the underwriting process in their favor when applying for insurance. To lower premiums or increase the likelihood that the application for insurance will be accepted, people may under-report the number of miles driven or misrepresent where a car is garaged.

Although the motivation to commit insurance fraud is always monetary, the amount varies greatly from a few extra dollars on an insurance claim to thousands or more stolen by organized fraud rings. The National Insurance Crime Bureau noted in a 2001 report that “insurance fraud is the second most costly white collar crime after tax evasion.”

The Insurance Information Institute estimated that property/casualty fraud cost insurers about $24 billion in 1999 or about 10 percent of claims. They also estimated that the total cost of all fraud at that time was between $85 billion and $120 billion annually.

In a poll taken in 2000, The Insurance Research Council showed that 24 percent of Americans thought it was OK to overstate insurance claims to make up for paid premiums, and 35 percent thought it was OK to pad an insurance claim to offset the deductible they’d have to pay.

No wonder insurance adjusters aren’t very trusting.

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