Let’s say a customer comes to you for a self-pay repair. You would arrange the repair directly with your customer and keep them informed regarding the status of the repair, anticipated completion date, and discovery of any hidden damage, their options and any additional repair cost.
Now, ask yourself how the process works in your shop when an insurance claim is involved. Like most, once you “seize the keys,” you likely excuse your true “customer” from the process while reminding them to not forget to grab their garage door opener and placing them in the care of the rental car company with the parting words, “Thank you again! We’ll call you when it’s done!” That’s the last time you see them before they come back in and pick up their vehicle.
Too Much Responsibility
Collision repairers generally take on far too much responsibility in their customer’s repair, including negotiating the cost of repair. In doing this, they often agree to concessions in parts quality, labor allowances, procedures and materials – concessions that are not theirs to give away and not in their customer’s (or the shop’s) best interests. All the while, the customer is kept in the dark so as not to inconvenience them or expose them to unsavory aspects of the business.
Insurers know perfectly well where their responsibilities lie at all times regardless if they’re dealing with their policyholder (the “first-party” insured and/or the “third-party claimant”). All too often, however, an insurer’s representative may inadvertently or intentionally overstep their bounds and attempt to make certain demands of repairers even though they have no authority to do so. They’re able to do this due to the repairer’s lack of knowledge and understanding of their true role in the repair process. Or, the repairer may feel subservient to the insurer and fear loss of goodwill, loss of business and fear of reprisal.
Let’s review the various roles and responsibilities in an insurance-related repair.
The Customer’s Role
The customer is a policyholder making a claim under the terms, conditions and restrictions of their policy-contract with their insurer for damages they have caused and/or sustained in a covered loss. The coverages afforded are clearly described in the policy-contract and are limited to what the insurer has agreed to offer and what the customer has paid their premiums for. Coverage offered relative to auto damages generally falls under three coverage options: collision, comprehensive and liability.
Collision is coverage provided by the insurer relative to physical damages. This is physical damage sustained due to being involved in an impact with another object or upset (i.e. rollover) and is generally limited to the replacement value of the covered vehicle.
Comprehensive is coverage that provides payment to repair or replace the covered vehicle for damages incurred resulting from non-collision related events such as theft, vandalism and “acts of God” such as wind, fire, flood, hail, animal hit, etc.
“Liability” applies to situations where the repairer’s customer is a third-party claimant (the victim of another) who will be making a claim against the at-fault party. Unlike policyholders, claimants are not subject to policy provisions or restrictions. They’re seeking repair of their damages from the at-fault party, but generally, as a courtesy, they will deal with the at-fault party’s insurer who is obligated to step in to protect their policyholder under the property damage (PD) portion of their policyholder’s liability coverage.
Originally, adjusters had three responsibilities when resolving a claim:
- Verify that coverage (collision, comprehensive of PD) was in effect at the time of the loss
- Verify that the damaged vehicle was the vehicle covered under the policy at the time of the loss (collision/comprehensive)
- Verify that the claimed damages were incurred as a result of the covered loss (not prior or unrelated damages)
Over time, adjusters/appraisers took on the role of determining the methodology and cost of repair and began negotiating repair costs with the repairer directly in an effort to save repair costs. This simply came about due to body shops allowing them to do so. Today, the claims person’s role includes reducing claims costs when, where and often.
The insurer’s only concern is what it will cost them. While they have prescribed duties within the insurance policy contract, they generally are not concerned with quality or level of service provided as they have no liability. This generally includes direct-repair partners who provide a hold-harmless agreement or waiver of liability with the participating insurer to protect the insurer from liabilities arising from their referrals.
The Repairer’s Role
The repairer’s role is to serve their “customer” (as defined by most state regulations) by providing a repair estimate/repair plan and informing the vehicle owner what is needed to properly and thoroughly repair the vehicle.
Based on their knowledge, training and experience, the repair professional is the only one who knows what it will take to perform a proper and thorough repair and how much it will cost.
The customer wants a repair that will restore their vehicle to its pre-loss condition to the best of reasonable human ability to safeguard their personal safety and economic well-being. This is especially important when they’re leasing or have an existing loan on the vehicle as the lessor since the bank or mortgage company will have a vested interest in ensuring the vehicle is repaired properly.
Consumers have many rights afforded to them under their insurance policy and by most state statutes, regulations, codes and laws governing automotive repair. Customers are all too often not informed of issues they have a right to know about and, as a result, they unknowingly and unwillingly forfeit their ability to protect their rights.
Being the repair expert, the repairer is obligated to their customer, and when the unwary customer’s rights are being infringed upon, the repairer should inform them about this so they can be involved in their own repair and protect their rights. Many repairers do their customers a disservice by leaving them out of the process, inhibiting their ability to secure a proper repair. Under most state regulations, this “interference by the repairer” or negotiating away the customer’s legitimate entitlements may place the repairer in harm’s way.
More importantly, repairers need to understand that many, if not most, auto insurers care little about what repairers think or want. For many insurers, their only concern is to reduce claims costs while avoiding potential liabilities. The only “liability” insurers have is being viewed as taking advantage of the unwary consumer while placing their own financial interest first.
Such activity may be found to be “failure to act in good faith.” This abuse is highly frowned upon by state overseers and the courts and thus can lead to huge penalties levied against insurers. The problem is the insurer often takes advantage of the consumer with no fear of being held accountable. Only when the customer is kept abreast of the issues and asserts their rights will the insurer feel as though they may be exposed to potential liability. But this usually doesn’t concern insurers due to the fact that most repairers are reluctant to involve their customer in any disputes from fear of inconveniencing them and alienating the insurer.
This is why many shops hear claimspeople state: “We don’t pay for that…you’ll have to have your customer pay that out of their own pocket”. They know that few repairers are willing to involve their customer and therefore are empowered to become more brazen in their efforts to contain costs.
It’s important for quality-oriented repairers to fully understand that many insurers don’t care one iota about the repairer or their wants, needs or ability to survive (let alone thrive). To many insurers, the repairer is merely an impediment in the claims process and, unless you earn it, the insurer’s claims people have little to no respect for the collision repairer. Quite honestly, why would they when most repairers fail to earn their respect due to the manner they conduct their business? Using the analogy of a deer’s fawn being hunted by wolves, the wolves know they need to be careful to avoid being injured by the adult doe’s hooves, but they will do what they can to get the desired results they seek while being careful doing it.
The quality repair professional is the equalizer to help your customer when needed. You should always do the right things for the right reasons and in the right way. Doing so will earn your customer’s loyalty and their referrals over the years to come. It will also enable you to earn a reasonable profit while avoiding unnecessary liabilities for issues that may arise down the road.
As the repairer, you should be on-hand to advise your customer of what is required “to properly repair their vehicle to its pre-loss condition to the best of reasonable human ability” and the cost. Also, what the insurer has denied and/or failed to provide so that your customer can take whatever steps they wish to receive what they’re entitled to.
In doing this successfully, the repairer can avoid unnecessary liabilities by placing those liabilities where they belong…onto their customer, who should then look to the insurer (or at-fault party) to address and resolve the issues. Once resolved, the customer can then direct the repairer to provide the processes, parts and materials they desire. In turn, the repairer can then accept the tasks and associated liabilities by receiving the full and proper compensation from the customer.
Only when claims people understand what your company stands for and that, when necessary, you will involve your customer and expose the insurer’s bad behavior will those insurers change their behavior and begin to conduct themselves in an appropriate manner.