I’ve always said to ‘write our own estimate.’ But recently, something came to my attention from an insurance rep and then I checked with my attorney: If the check has the shop’s name on it, my attorney said that makes the adjuster’s estimate a contract and all the methods, procedures and parts choices are to be followed. What’s your understanding of this? — Steve Dillon, Steve’s Auto Body, St. Benedict, Pa.

Steve asks a great question, and my first instinct is to say: That’s bunk. But since I’m not a lawyer, I thought it wise to get some legal advice before spouting off. So I posed the question to three attorneys who specialize in collision repair issues.

QUESTION: If the check has the shop’s name on it, does this make the adjuster’s estimate a contract — meaning all methods/procedures/parts choices are to be followed?

Erica Eversman, chief counsel for Vehicle Information Systems, Bath, Ohio: “NO. The
contract for repair is with the vehicle owner and the legal obligations rest with the shop. In fact, I think it’s a breach of consumer protection obligations owed to the vehicle owner if a shop does not prepare its own estimate. … I cannot reiterate this enough: Body shops need to stop thinking of themselves as order takers and remember that they’re diagnosticians, just as much as doctors are — that they’re professionals.

“To the extent we’re talking about a first-party repair, the shop has not stated it ‘agrees’ to accept only this amount by accepting a check the insurer chose to issue in the shop’s name. There’s always the argument that there’s an implied agreement to that effect, but that means the insurer has to prove it had a ‘meeting of the minds’ with the shop and that this is all the insurer would be obliged to pay. Given the fact that the signed contract of repair is with the insured/car owner, it becomes much more difficult for the insurer to assert it had a contract with the shop (for the same repair) that overrides the contract the shop has with the insured – and for which the insurer has a contractual duty to pay/indemnify the insured.

“To avoid a lot of these issues, it’s easiest if shops (better still if a shop association does it) develop a form letter to send to the insurer stating that any acceptance or cashing of a check made payable to the shop does not constitute an ‘agreed repair price.’ Every shop also should conspicuously post the same notice. In the third-party context, there’s less of an issue because the repairer and insurer have no ability to compromise the third-party’s rights to fully recover for the damages caused by the insured’s negligence.”

James Castleman, partner in the law firm Paster, Rice & Castleman, Quincy, Mass.: “The current law in Massachusetts, and I believe in most states, is that the shop can make whatever contract it wants with the customer and it doesn’t matter whose name is on the insurance check. Generally, the insurer is required to pay for the loss, and the insured or claimant can make whatever deal he wants with his repair shop, provided the shop isn’t contractually required to do things a certain way (if it’s a direct-repair shop for an insurer).

“I have to hedge because I don’t know Pennsylvania law. … Often, the third-party carrier issues a check indicating that negotiation of the check (cashing, depositing, or endorsing and delivering the check to another party — a ‘holder’) constitutes acceptance of that amount as payment in full. While acceptance of the check may not mean you agree to do the work the way the insurer wrote it, it may well mean you’ve accepted that amount as full and final payment of the claim, without the ability to seek more money.

Sometimes, it’s possible to avoid this by crossing off language on the check that says ‘payment in full’ and then negotiating it, but the courts are split on this issue. Various state laws may limit an insurer’s ability to be able to engage in such ‘take it or leave it’ tactics, but this varies from state to state. In my experience, it’s also common that insurers will, in fact, pay legitimate supplements after someone cashes a ‘payment in full’ check, but under the law of most states, they may not be required to.

“After all of this explanation, I have to decline to give a definitive answer, since I don’t know Pennsylvania laws.”

Patrick McGuire, owner of the Law Offices of Patrick McGuire, Chicago: “I would suggest that he ask the attorney whether his opinion is based on case law or some other authority and to provide a copy of that authority. My approach to these matters, at least under Illinois law, is that a shop can contract with a consumer to perform some, all or even more repairs to a vehicle than are listed on an insurance company’s estimate so long as the method, scope and type of parts used are disclosed and agreed to by the customer. The best way to do that is for a shop to prepare its own estimate/work order and to have the consumer authorize the repairs listed on that estimate. It’s my opinion that a shop that doesn’t prepare its own estimate leaves itself open to all types of claims for breach of contract and fraud.”

Don’t poke out an eye just yet. Even though it may seem that each attorney gave a different answer, if you look closely, they basically all said the same thing: Unless there’s some weird law in your state mandating otherwise, a check with the shop’s name does not make the adjuster’s estimate a contract.

Remember, YOU are the repair expert. As such, you should be writing your own estimates, not simply waiting for adjusters to hand you theirs. And if ever you’re tempted to simply use the insurer’s estimate, think about what an adjuster said to Washington shop owner Dick Strom: “If you work exactly off my estimate, we won’t be responsible for the poor quality of your work.”

Georgina K. Carson, editor

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