Some Things Just Ain't Right
Consumer Beware: Some Things Just Ain’t Right!
It seems like every day I am hearing about less than ethical behavior as well as downright egregious activities by some insurance companies.
Claims people are constantly trying to mitigate and reduce claims expenses…and when feasible they should. After all, we all pay insurance and we all want the premiums to be kept as low as possible. Higher claims costs result in higher premiums and as far as I’m concerned, their already too high. However, containing claims costs at the expense of others just ain’t right! One prime example is a bad situation that’s gotten worse is regarding total loss settlement practices.
Here’s one scenario:
The consumer gets into a collision and the insurer inspects it and writes a low ball estimate in the hopes that:
- The vehicle owner takes the settlement and doesn’t get the vehicle repaired, or
- The vehicle owner goes to a low-quality repairer who will try to repair it for the insurer’s low-ball estimate (rather than lose the job due to it being totaled)
However, when a vehicle owner wants their vehicle repaired and they go to a quality conscience repairer who prepares their own assessment, the insurer is faced with the option to either provide for a quality repair or to deem the vehicle to be a total loss. Of course the most economic choice is the one that is often taken…and in most instances, it abides by state laws and regulations regarding economic thresholds whereas a vehicle must be deemed a total loss.
Once determined to be a total loss, some insurers attempt to have the vehicle removed from the repairer to stop storage charges and have it moved to a storage free holding area such as a salvage yard or auto auction facility. This is of course prudent and I support it…but wait…what about making a total loss settlement offer to the vehicle owner for the replacement of their vehicle? Shouldn’t that take place first!?
The conversation between the claims rep and the vehicle owner often goes something like this:
Mr./Ms. vehicle owner, after reviewing your damages and the cost to repair, we have determined your vehicle, to be a total loss and we need to have you release the vehicle from the shop so we can move it for safe keeping and to stop the ongoing storage charges. Once you do please call me so I can arrange a service to pick it up and move it. This will avoid you from having to pay for further storage charges out of pocket, and by the way, we’ll need you to sign over your vehicle’s title so we can initiate the required paperwork and steps for settlement. Once we get it moved, and secure the title, we’ll evaluate the vehicle’s value and be able to make you an offer for the pre-loss replacement value of your vehicle.
At this point a wary consumer should be thinking…”wait a minute here…if someone came to me and said:
“Hey, I’d like to buy your car. Would you consider selling it to me?” and I say:
“Well, yeah, I would consider selling it.” And the buyer then states: “Great, give me the keys and sign over your title, and I’m going to take it and in a week or two I’ll let you know how much I’m willing to pay you for your car”.
Who in their right mind would agree to such an idea?
Well, it happens far more often than one would think simply because consumers have a belief that the insurers have to do things properly or they will get into trouble. After all, someone has to be overseeing insurers making sure they do things properly, right?
Let’s continue on: So, like a good neighbor, the customer trusts the insurer and authorizes the release of their vehicle from the body shop to stop storage charges. After all, what could possibly go wrong?
The insurer then makes payment to the shop for their billing for services rendered (tow pay-out, labor, storage, gate fee, administrative activities, retrieval of customer’s license plate(s), and personal belongings, etc.) and have the vehicle picked up and relocated to a storage-free facility for “safe keeping” (where they may move it around the yard with a fork-lift!.
Sometime later, the insurer provides the consumer with their offer for the pre-loss replacement value of the vehicle of which the vehicle owner finds to be considerably lower than they had anticipated. The vehicle owner raises their concerns and the insurer sends them a multi-page valuation report supporting their offer with quotes and comparables.
They then advise the customer they have until the next day to accept the settlement offer or they will no longer have a rental car! This leaves the vehicle owner no time to check out the comparables provided in the insurer’s valuation to see if they exist, have been sold, or if they are even similar to their vehicle, let alone the time to shop around for a replacement.
So, the vehicle owner, feeling they have no choice as they need to purchase a vehicle to enable them to get their life back in order (get to and from work, get the kids to and from school, get groceries etc.) so they begrudgingly accept the insurer’s low-ball settlement and then plead to keep the rental car for a few more days to secure a replacement vehicle.
The insurer reluctantly allows them 3-more days of rental and then issues their “full and final settlement” payment to the vehicle owner …the only problem is, the vehicle owner finds the amount far less than they had agreed to accept. They are told that the insurer has deducted the amount that was paid to the body shop for charges the insurer didn’t believe they should pay for!?
So, now the consumer is left with less settlement and has only a couple days of rental.
When complaining to the insurer, the insurer responds with:
Unfortunately for you, your chosen body shop overcharged you for their services. No other shops charge for these types of charges or charge such high rates as they do. We only owe for what is reasonable and customary in the market area. This shop is known for overcharging and if you had asked us early on we could have referred a dozen shops who wouldn’t charge you for such charges. You need to go see your shop to try and get your money back!
I know that some reading this have likely experienced something similar and some likely ended up feeling bad and paid their customer “to make it right”!?
Those who did more or less admitted they overcharged and tried to take unfair advantage of the insurer. That is the belief the customer will ultimately walk away with and the shop will not only never see this customer again…they’ll likely never see anyone this customer knows!
Why are insurers often successful in such activities that harm consumers and repairers?
Because consumers are not being made aware of such issues and concerns or being edified as to how to protect themselves, Who other than the collision repairers knows what is going on and who is in a better position to help them? The insurers surely won’t help, their insurance agent won’t help, most consumers will not seek legal counsel, and quite frankly, most attorneys are unaware of such activities taking place, and as such, are of little help and quite often provide poor advice in such matters.
Today, quality oriented repairers need to understand that they cannot serve two masters. They will either fully serve their community members and neighbors, or they will serve the insurance industry and their efforts to profit at the loss of others. Quality oriented repairers need to learn to edify their customers in their time of need so they can know the facts and be in a position to protect themselves and their family’s personal safety and economic wellbeing through receiving proper repairs with proper procedures, parts and materials and restoring their vehicle to its pre-loss condition to the very best of reasonable human ability.
Insurers are banking (literally) on the fact that many repairers don’t wish to expose the ugly side of the collision repair industry to their customers. After all, the customer comes to a body shop to fix their problems, not cause more right!?
Yes, they come to the repairer to put their lives back together and to do it properly and thoroughly and believe it or not, they expect the expert repairer to protect them just as they expect the best from their doctor, surgeon, dentist, pharmacists, banker, accountant, attorney and other professionals who have a profound fiduciary responsibility to their patients and clients.
To do less and to not help them in their time of need is simply unacceptable. Your community members deserve your very best, and if you are not being totally honest and transparent with them regarding the repair of their vehicle and sharing your knowledge regarding the less than ethical practices of some insurers.
You are failing them, and you are failing your profession and the collision repair industry at large.
Consider this: What if every quality oriented collision repairer in the country started to expose to their customers when insurers fail to act their best interest?
Can you imagine how fast positive change would come and how quickly the industry would change for the better?
You don’t have to wait for the industry to make change across the nation. You can effect change in your community today and truly become “The Only One’” and for very good reason and enjoy extremely positive results.
I have dozens of body shops that I have and continue to coach and consult over the years that have learned to “Do The Right Things, In The Right Way, and For The Right Reasons and are extremely busy with business derived from referrals of satisfied customers. And these repairers are making profits they never dreamed possible and most of all have their pride restored and truly loving what they do and how they are now doing it. And this is being done without incurring unnecessary liabilities.
Want proof? I encourage you to visit the following link and read what others are saying about the ADE they received and how it helped them regain the joy of being in the business of collision repair:
If you want more, let me know.
Remember, if you are not having fun in what you are doing, you’re likely doing something wrong!