Collision Damage Steering

Steering is the directing of damaged vehicles to specific body shops for repair by an insurance company.

Before discussing the "hows" of steering it is necessary to review why steering exists.

MONEY!

Insurance companies choose to direct consumers in an effort to save money.

Body shops enter into a contract with insurance companies to receive additional work and therefore make money.

This arrangement is commonly referred to as a Direct Repair Program (DRP), although each insurance company has its own personal name for them. By design, poor quality repairs are not a desired result of what insurers are looking to receive? No, but they have no profit in receiving quality repairs either.

It is often argued that discounts are not a component of the DRP model. However, parts discounts, use of imitation parts and used parts are normally a part of the contract. With very finite targets of usage defined, monitored and scored. Future participation for a repair shop may hinge on maintaining desired imitation and used parts usage percentages.

Labor rates can be discounted by $2, $4 an hour or more with some companies receiving a discount of $28 or more. Yes in an industry that by and large has not yet cracked the $50 per hour mark for body and refinish labor rates, some shops may still be accepting work for less than $20 an hour for some companies. One major insurance company actually has a clause in its agreement/contract that the shop will repair vehicles for them at the lowest rate that they charge to any insurance company, fleet account or individual.

Paint and material caps can also be included in the contract between insurer and shop. What this means is that the normal method of charging for material is overridden at a set amount. When this cap is met, the shop is then expected to absorb the additional cost of materials in the repair.

Other considerations shops may provide for an insurance company include, but are not limited to, free evaluations and free storage for total loss vehicles. It is often agreed that the insurers’ repairs are given preferential treatment. This last clause has led to insurers holding shops responsible for delivery times. If the repair takes longer than the mandatory time the repair shop would then be liable for the cost of the rental car.

The consumer is told that the insurer “warranties” the repairs. However, closer inspection of both the insurance/body shop contract and the customer warranty finds that the warranty will be the shop’s responsibility.

Consumers need to question how they will benefit from the relationship of the insurance company and body shop. How will substandard parts, discounted labor, paint & material caps and time repair guarantees produce high quality repairs to their vehicles?

Radio Show

Thank you all for listening and a special thanks to those that participated by calling in and emailing.

Jeff a shop owner from Chicago calling in about liability insurance problems.

Peggy from Chicago calling in with her previous steering experience.

Mike calling in about how to protect themselves from insurance buy backs.

Kevin from Chicago, a previous client of mine who was kind enough to share what he had learned working with me in the past. What a marvelous consolation of the entire process. Kevin, if you are reading this I would appreciate your forwarding your email, entering it here in the comment section or both.

Dennis and Mike Orton from Missouri that emailed in. Dennis with a question about the National Motor Vehicle Title Information System that was the subject of an earlier blog. Mike's question was more legal in nature, but a wonderful question.

Participating on the show was much fun for me and while the time didn't allow the moderator to develop those questions as deep as they could have, I will answer them here in the near future.

Mike Harbor, the moderator of the show, has asked me to be back on soon and I will be looking forward to participating again in the future. I will let you know when I am scheduled to appear again.

Crashtalk Radio

I will be a guest of Mike Stroud on CrashTalk Radio, a show for consumers to learn about collision repair.

Saturday, December 13, 2008
11:00 AM – 12:00 Noon
http://www.am1090seattle.com/ “Listen Live” button top left
Phone in #: 1-877-753-1090
e-mail: crashtalkshow@gmail.com


Potential topics for discussion:

Diminished Value
Poor Quality Repairs
Insurance Steering/DRP
Insurance Buy Backs
Rebuilt Titles
Certified Cars
National Motor Vehicle Title Information System
Total Loss Vehicles
Appraisal Clause
Consumer Fraud – purchase of previous repair w/out disclosure


If you have questions about any of the above topics, or anything else collision oriented that may be on your mind, email them anytime or call in.

Hope you will tune in and enjoy the show.

Ten Worst Insurance Companies

It was recently brought to my attention that on July 9, 2008, The American Association for Justice (AAJ), an association of Trial Lawyers, offered its list of “The 10 Worst Insurance Companies.”

Allstate was selected as the worst insurance company in America. This is no surprise that a company that has been the subject of a book written by David J. Berardinelli. The title of his book is “From Good Hands To Boxing Gloves.” Originally released as a handbook for Personal Injury attorneys and now a hardcover book that documents Allstate’s claim handling process is a very interesting read in either version.

The complete ten were in order:

1. Allstate
2. Unum
3. AIG
4. State Farm
5. Conseco
6. WellPoint
7. Farmers
8. United Health
9. Torchmark
10. Liberty Mutual

Many will recognize several of these companies as relating to auto insurance while others represent health, life and disability insurance. We have heard for years what health insurance companies will do to us with regard to our bodies, so why would we ever be surprised by what they do to us with regard to our property?

The AAJ repeats one constant throughout its report. That one constant is industry wide greed. It reports financial wealth beyond what normal people could ever fathom while producing profits over policy holders rights. This industry uses a method of Deny, Delay and Defend.

This method has been exploited in From Good Hands to Boxing Gloves, as well as Vulture Culture: Dirty Deals, Unpaid Claims, and the Coming Collapse of the Insurance Industry a book by Eric D. Gerst. Further evidence has been the portrayal of insurance companies in movies such as Rainmaker and A Civil Action. Both movies were adapted from books, Rainmaker was written by John Grisham and A Civil Action by Jonathon Harr. Even a cartoon movie, The Incredibles, takes a shot at insurance company behavior when the hero works as an insurance adjuster and is reprimanded for paying claims.

What the AJJ doesn’t disclose is a Ten Best Insurance Company list. I am not certain that one exists. How about it readers, any suggestions as to who belongs on a 10 best or comments on the 10 worst list? Share positive or negative claim experiences.

To read the AJJ report: “The 10 Worst Insurance Companies.”

Certified Used Cars

You think “I’m going to buy a Factory Certified Used Car so I don’t need to have it inspected by an independent inspector.” Not so fast. That Certified Used Car may have had a 100+ point inspection or something comparable, but it may not have a complete warranty.

It is fact that prior accident damage history, no matter how severe, will not eliminate it from “Certified” status. However, accident damage history will void the warranty were ever applicable. Meaning if the passenger’s fender was damaged and repaired, the factory paint and rust through warranty is void on the passenger’s fender. The more severe the damage the more of the “Certified” warranty is voided. If the repairs included replacement of the air conditioning condenser with an aftermarket condenser (editor’s note; an aftermarket part is a part made by someone other than the Original Equipment Manufacturer [OEM]) the entire air conditioning system is at risk. Likewise if the radiator is replaced with an aftermarket unit the cooling system in its entirety is at risk. The greater the amount of damage and repair a vehicle has sustained, the greater the risk of lost warranty.

Frame damage is not one of the points listed on the Factory checklists at last check.

Certified Used Cars are marketed as “almost as good as new.” As a result purchasers take that for granted, do not look closely enough at them and pay a premium for them, often higher than top dollar. However, when they have a prior collision damage/repair history that has not been disclosed, consumers are over paying. You should always have a professional inspect your potential purchase to protect your pocketbook and safety.

Additional information is available at MSN Money's article "Are Certified Autos Worth the cost?";