Who Should Pay the Parts Restocking Fee After a Total? - BodyShop Business
Connect with us
Close Sidebar Panel Open Sidebar Panel

Shop Operations

Who Should Pay the Parts Restocking Fee After a Total?

Who is responsible for paying the parts restocking fee after a vehicle is totaled by an insurance company?

Advertisement

Barrett has authored numerous industry trade journal/magazine articles, including several cover stories for BodyShop Business. Having grown up in a family-owned collision repair business and owner/operator of two successful collision repair facilities, his ongoing efforts as industry speaker and repairer coach-consultant are geared toward educating professionals and consumers to achieve equally successful resolutions to automotive-related property damage issues. Such issues include proper and thorough repair, reasonable repair profitability for repairers as well as equitable claim settlements for both claimants and the responsible/paying parties. ADE offers numerous professional services nationwide.

Who is responsible for paying the parts restocking fee after a vehicle is totaled by an insurance company?

Click Here to Read More
Advertisement

First, we must define “parts restocking fee.” In my opinion, this is the fee a parts supplier would assess when parts are returned to them where they would need to provide a refund and return the parts back to stock or inventory. This is not to be confused with a “parts return fee,” which would be assessed by the repairer when the parts are found not to be needed due to several reasons such as:

1. The election was made to forego the use of “non-OEM aftermarket” parts and instead use OEM replacement parts.

2. A vehicle that was initially written to be repaired was subsequently deemed to be a total loss and the parts that were acquired to perform the repair are now no longer needed.

Advertisement

In either of these situations, it would likely be the insurer that called for the initial parts acquisition, and in doing so, the repairer was promised a “mark-up” or “earned profit” in return for their ordering, checking in, ensuring the parts were correct upon delivery, and paying for and protecting the parts while in their care, custody and control – and doing so until the parts are delivered with the repaired vehicle.

Generally, because the insurer erred in their assessment and then decided the parts they had originally called for are no longer needed, they will often request that the repairer return the parts for credit, and the repairer will provide these additional services. But all too often, repairers fail to assess a fair and reasonable fee for this valued service.

Advertisement

What is a “fair and reasonable fee” for the return of acquired parts? I tell repairers to determine and use realistic monetary values that are easy to substantiate and are comparable to other similar services so as to remove any dispute as to fairness.

So, when returning parts, because the parts return process is the exact reverse process of their acquisition, it makes perfect sense that the same reward (mark-up, profit, etc.) be earned as would have been earned when obtaining them. If a repairer earned $X to acquire the parts on behalf of their customer, then, on behalf of the customer, the repairer should earn the same amount for their return handling.

Advertisement

Who would owe for such fees? It would, of course, be the customer who signed the repair authorization. After all, it’s their vehicle, their parts and their legal responsibility to pay for the services rendered.

If insurance were involved, it would likely be the insurer that would wish to have the parts returned and thus they would have to pay their customer or pay the repairer on their customer’s behalf for this valued service.

Keep in mind that the return of the parts is merely an additional service that the repairer may or may not elect to provide to their customer.

Advertisement

Should the customer or insurer decline to provide advance payment for the parts return fee and/or parts restocking fee and await their refund (only after the repairer receives it), then the repairer can merely charge for the procured parts in full and allow the procured parts to leave with the vehicle. No harm, no foul! The insurer and/or customer will then, of course, be free to return the parts themselves to avoid such added charges.

My company, Auto Damage Experts, has a parts return policy that we provide the repairers we consult/coach which explains the additional parts handling service in detail, along with the basis for charges and available options. For more information, visit the Auto Damage Experts webpage.

Advertisement
Click to comment
Connect
BodyShop Business