FIVE MOST COMMON STICKING POINTS
After an accident, you might think it would be obvious what’s wrong with your vehicle and what repairs are necessary. But as it turns out auto insurance companies and repair shops routinely disagree over repairs. What do insurance companies and repair shops disagree about?
Here are the five most common sticking points, according to insurance and auto repair officials.
1. Whether a part can be repaired or needs to be replaced.
For instance, an insurer might want the body shop to try repairing a part and the repair technician’s experience tells him it would be better if the part in question were to be replaced.
Some items are safety related and without question should never be repaired, while others are more cosmetic and in the interest of preserving a working relationship the shop attempts to repair the part before the adjuster will approve a replacement part.
2. What kind of replacement parts to use
Used / Salvaged & Recycled Parts
Sometimes an insurer will not pay for a new part from the original manufacturer, insisting a used part, a reconditioned part or the cheaper “aftermarket” version is good enough.
At this time, there is no generally accepted process in place for the repair industry to regulate the quality or suitability of salvage or recycled parts. As vehicle construction technologies evolve, decisions on which parts to use and how to use them become more complex.
While the insurance industry has required the use of recycled or reconditioned parts for decades, generally the auto makers do not support their use.
Aftermarket Parts Use
An aftermarket part when referred to in regards to the repair of an automobile is a part that is made to replicate that of the original manufacturer, but is made by a third party company.
The reason auto insurance companies will use a non-OEM part is simply because the cost is usually much lower than purchasing it from the manufacturer.
Consumers should be aware of the difference in the types of parts available for use in a vehicle's repair. Unfortunately, aftermarket parts are not crash tested and in most cases do not return a vehicle to its pre accident condition or meet OEM repair recommendations. With state regulations spotty, car insurance companies have broad discretion in deciding whether OEM or generic parts are used in a particular car repair.
However, the final choice is yours and if the insurer wants to use non-OEM parts you may have to pay the difference in cost.
Aftermarket collision parts are often referred to on your estimate with these names or abbreviations
- A/M Aftermarket / Automotive replacement parts
- QRP Quality Replacement Parts
- CP Competitive Parts
Hidden Costs of Low Quality Parts
- Labor: The amount of time it takes a technician to work on repairing cars using OEM parts versus aftermarket parts is a big difference. When OEM parts are used, there is a guarantee to fix the repairs faster, knowing that the OE parts will fit the first time. Repairing vehicles with aftermarket parts proves to take more time because the technician will often have to make adjustments to the non-OE parts in order to get the parts to fit correctly.
- Returns: Many times, when aftermarket parts are used for repairs, they need to be returned. When using non-OEM parts, you are not guaranteed that the part will fit or work the way you assume it will. As a result, the shop then has to return the part and wait for another one. This could happen multiple times during a repair. The 2015 Body Shop Business shop profile survey stated, "Certified AM parts are returned 29% of the time, compared to 6% for OE parts," almost 5 times more often.
- Customer Feedback: The points listed above are the main reasons why using aftermarket parts on repairs can affect shops’ relationships with customers. For auto body shops, low-quality parts disturb operations, produce a lower-quality repair, can result in the repair taking longer to get completed, and can lead to bad online reviews that will diminish future sales.
3. Variable repair times
Bodywork requires a great deal of skill with the repair process being very detailed and broken into several labor operations.
The main goal when repairing a damaged body panel is getting the part to blend perfectly with the rest of the car so that it looks like no damage was ever sustained while still being more cost effective than replacing the damaged part.
The insurance company will always elect to repair first replace last. However, more often than not it is the auto body and paint shop technicians who should decide what is best on a car by car basis.
For instance an insurance company might estimate a dent in a quarter panel should be repaired in four hours, while the repair technician will need eight to maintain a quality repair.
Each extra hour is more labor cost, every four hours of labor adds another day to the overall repair time and each extra day costs the insurance company another day of rental if covered on you policy.
Your insurance adjuster is highly focused on micro managing these costs.
4. The labor rate
Insurance carriers pressure repair shops to concede to what is referred to as the prevailing labor rate which is always far below their posted door rates. The prevailing rate is the minimum wage rate paid per labor hour on the estimate for body repair, paint repair, frame repair and mechanical repair. These rates can change over time but very little, in fact body and paint labor have increased only a few dollars in the past decade.
State insurance regulations regarding unfair or deceptive claims handling practices typically require an insurer to pay its insured an amount that’s “fair and reasonable” for a partial loss to a vehicle.
The question is always, “What constitutes ‘fair and reasonable?’” Courts have declared “There’s no one set reasonable charge. It’s a range of prices. It’s not just one number.”
Archer Collision Center’s Posted Labor Rates
5. Estimate errors
For many reasons, including the insurance companies’ penchant for underpaying claims based on their initial inspections of damaged vehicles, supplements are a growing problem in the business of repairing auto body damage.
It’s not unusual to have two, three and even four supplements to a job being processed under the traditional claims settlement system. With a few exceptions, every insurer-written sheet requires a supplement before actual repairs can begin.
Necessary supplements can be parts price changes, minor hidden damage, et cetera. The unnecessary ones are ones in which the claims could and should have been written correctly the first time.
Large supplements add an unnecessary layer onto the claims process thereby delaying the car and resulting in bad customer satisfaction, added rental car expenses and more.