Let’s be frank, sadly, in almost every business one can find unethical people, behavior, and practices. Or what is also known as the “gray areas” -to put it nicely- where abuses and fraud can happen or have happened. Unfortunately, the collision repair industry has been famous for unethical behavior. Of course, not everyone has this reputation. It’s only a small segment of dishonest shops, unprofessional insurance representatives, and unethical customers.
So what are some of the examples that body shops, insurance companies, and clients should steer clear from? I’ll explain a few below.
Collision Shops’ Unethical Behavior
A Slide of Hand
If a collision repair shop is being paid to replace damaged parts, but repairs them or installs lower cost salvage or aftermarket parts when new original equipment manufacturer (OEM) parts are specified on the damage report; it is deceiving both the customers and the insurance company. A body shop is required to follow the specified repair plan on the report. Of course there is nothing wrong with repairing parts when it doesn’t affect the quality of repair or safety of the vehicle, but it is only ok if all parties are informed and approve.
Customers’ Unethical Behavior
Bullying Body Shops
Some customers expect body shops to help them save their deductible. For example, the repair is estimated at $800 but the customer wants the shop to estimate cost of $1,000 to repair, that way they don’t have to paying the $200 deductible. Insurance companies are aware of these types of frauds involving excess labor times, changing replacements to repairs, or purchasing salvage/aftermarket parts instead of OEM.
Treating Insurance Companies Like a Personal Piggybank
Customers might pressure the collision repair shop to repair damages not related to the crash but want them included on the estimate. As a form of an all-expense-paid opportunity to return their vehicle to its like-new condition. Insurance companies are very careful when assessing a damage and do not include unrelated repairs.
Pressuring for a Total Loss, to Get a Total Win
When a vehicle has what seems like major damage, the customer might pressure the insurance company or body shop to declare a vehicle a total loss, even though it can be repaired for much less than the total price. In this case, the customer plans to turn a total loss into an opportunity to finance a new car purchase.
Double dipping is when a customer tries to collect two insurance claims for the same damage. For example, a vehicle receives minor damage on a panel and the owner settles with the insurance, but doesn’t get the car repaired. Several months later, the car is involved in a more serious crash on that same panel. The car gets an estimate and repaired but part of the repair cost is for the initial damage from the first minor crash.
Insurance Companies’ Unethical Behavior
Profiting from Uninformed Customers
A customer has the right to take his/her vehicle wherever he/she wishes as long as the shop is able to do the job correctly. The customer is only obligated to notify their insurance company and tell them where the vehicle can be examined by the adjuster. But even though it’s against the law, insurance companies still insist customers take their car to what they refer to as a “preferred” collision repair center. Pressuring clients to do business with a DRP (Direct Repair Program) shop is illegal.
Short Changing Body Shops
Insurance companies determine an area’s prevailing rate by calculating the median rate most shops in the area are charging. But the median rate is not necessarily the true average rate and can be manipulated through selective sampling. Surveys, median figures, and averages don’t take into account important differences between individual shops. Collision centers in expensive areas, that employe qualified people, and have state-of-the-art equipment will obviously charge more per hour than shops with unqualified personnel, poorly equipped shop in an inexpensive area.
Insurance companies might call certain repair operations “prevailing practices” even though they know the work requires time and is required in order to return the vehicle to its preaccident condition. For example, vacuuming up broken glass from a vehicle, it’s time consuming and it’s labor, which should be paid as such. But, if some shops don’t charge for this work due to lack of knowledge, forgetfulness, or fear of confrontation, the insurance company might deem this as a prevailing practice and refuse to pay any collision center for this type of work.
Asking for Discounts
Insurance companies might also ask for discounts on parts. These discounts can cut the body shop’s profit margin by a huge percent. For example, most parts are sold to collision centers at a 25% discount, but insurance companies ask for a 10% discount. So if the retail price is $100 for a part, the shop pays $75 and the insurance company pays the shop $90. That is a 40% drop, the shop’s profit goes from $25 to $15. If several shops allow these discounts this can also turn into a prevailing practice.
What To Do?
Communication and cooperation are key between all parties involved. Again, not all collision repair shops, clients, and insurance companies engage in unethical behavior. They are a minority. So everyone involved needs to be informed, communicate, and cooperate.
Customers need to know what parts they are getting. Customers need to ask to see what work was done and shown the new parts, this gives peace of mind. Customers should take their vehicle to the shop they want and not feel pressured by their insurance company.
Collision shops should reject working with customers who bully, are deceitful to their own insurance company, and those who consider the insurance company as their own personal piggy-bank. Shops should not be forced to grant insurance companies discounts, low rates, or work for free.
Should I include something else? Let me know in the comments below. Thanks for taking the time to read my blog. If there is something you want me to write about let me know, I will do my best to write about it. If you ever need any professional collision repair and you live in the Van Nuys or Los Angeles area give me a call or text me 818.793.7728.
-Jaider, West Coast Body and Paint owner
“My car came back to me like nothing ever happened! Beautiful work. I no longer have to cringe/wince every time I look at my bumper!”
-Chelsea S. 2/18/1
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