As repairers watch new technology advance in the vehicles they repair, it becomes apparent that others who claim to be “interested parties” in the repair process also need to recognize these same advances. Questioning the need to test for potential problems in these complex systems seems to be a fool’s game given the frequency of DTCs not identified by dash code diagnostics. All vehicle manufacturers have established the baseline from which to begin the repair process within their engineering documentation. Whether or not the documentation indicates the testing is “required or recommended” should be left to the determination of the repair professional, the repairer. These decisions should be free from interference, but they’re not. After all, whose reputation is on the line?
Educate the policyholder
Conversations regarding the “need” to follow manufacturer required procedural steps — well, these should have ended long ago. However, the need for insurers to continue to control costs plagues the repair industry. As this need for their control continues to grow, so does the friction. So, what can we do about this?
Maybe it’s time for repairers to look closely at the insurance policy and learn about what the policyholder is entitled to so that they can leverage that information in discussions with their customer. Understanding the policy entitlements would help you educate the consumer on what they can expect when the repairer is faced with the inevitable “We don’t pay for that” or “Skippy’s down the road doesn’t charge for that.” The repairer needs to take control and help point out when the insurer is, in some cases, not completely representing the steps in the repair processes and help the customer understand that they have the power in the claim process. Denials are something that insurers must take seriously, even partial denials. These should be provided to the customer in writing and should give the specific details: where the exclusion is found in the policy, the page number, the paragraph, and line for which the denial is made.
Why is this so important? An insurer owes for everything that the policy declarations page and accompanying details identify unless specifically excluded. The declaration page includes vehicle coverages and the deductible. The policy contains limits of liability, exclusions and “what we pay for in the event of a loss,” but most folks who buy a policy don’t read the fine print — the details about the who, where, what, when and why of the policy. These are the things that the repairer can help the customer look into in order to develop questions concerning claim handling and what they are entitled to.
The vehicle must be fixed correctly. Why there is any reluctance on the part of anyone to pay the repairer the proper amount for the repair is the great unknown. Cheaper doesn’t mean correct, cheaper doesn’t mean adequate, cheaper certainly doesn’t mean better. Cheaper just means saving money for the insurer. It does mean that the repairer is not paid adequately for what is required to fix the vehicle, which leaves the repairer subsidizing billion-dollar companies. Why? Because the repair professional, in most cases, will not leave the vehicle in an “unrepaired state,” meaning putting the customer in an unsafe vehicle. This positioning doesn’t do anything to get the repairer properly paid for repairing the vehicle correctly unless the customer is charged directly for the items omitted from the insurer’s estimate or arm-twisted away from the repairer by the typical “we don’t pay for that.”
Policy definitions
So, what can the repairer help the customer to understand? Learn about the policy and point out where the customer has areas that they can question. Here are some examples:
Actual Cash Value — ACV
Actual cash value (ACV) is a term used by car insurance companies to describe the reasonable amount that an individual’s car is worth minus any depreciation. This term is typically used if an accident takes place resulting in a complete loss. Most car insurance companies will gather information about your vehicle and its condition and offer you a settlement. In many cases, it is far less than you would receive if your car were sold on the open market.
Like kind and quality
Like kind and quality refers to a condition in property insurance policies that states that the insurer would cover the cost of repairing or replacing a covered loss with property similar to the original in composition and quality
Material composition
“The nature of something's ingredients or constituents; the way in which a whole or mixture is made up” (specific to the original composition and quality).
With these definitions, some thoughts come to mind. If the insurer owes actual cash value, how can they take away part of the actual cash value specifically meant to indemnify the insured for their vehicle for additional fees, i.e. storage or any other charges in the event of a total loss? The policy the insured pays for indicates insurers owe ACV minus preexisting damage and deductible. Not ACV minus additional charges, especially if the insurer causes handling delays. Charges that result from delays caused by the insurer such as the addition of supplemental damage identified by the repairer because of deficiencies on insurer’s original estimate that now make the vehicle an “economic total loss” (as determined by the insurer). Supplements that typically take weeks to resolve and often are a “take it or leave it” position by the insurer.
This is a frequent situation that repairers encounter, and then after the delays take place, the insurers want to “mitigate” the storage bill and not pay for charges incurred during the assessment of the vehicle—delays which the repairer has nothing to do with. This means keeping the repairer from collecting what is owed to them by “insurers” for the use of the repairer’s space while problems with the claim were resolved and then ultimately “settled” even if the customer doesn’t agree. The most infuriating part is the cause. Typically, delays are due to the original insurance estimate being woefully incomplete driven by the need to “save money” for whatever reason, or on purpose (again the “the shop down the street doesn’t charge for that”). Insurers really need to spend more time on improving both the estimating and vehicle assessment knowledge and skills of their staff. Instead, it seems that the time is spent finding, teaching or directing ways to circumvent the OEM repair requirements, if they did there could be a significant improvement in insurer created estimates and repair process knowledge and a significant reduction in total repair or total loss cycletime.
Aftermarket parts
Another glaring issue is the use of aftermarket parts on new vehicles. A recent example is a vehicle with 716 miles on the odometer for which the estimate showed an aftermarket part for every part that had an aftermarket option. The interesting fact was that the customer didn’t have an insurance policy specifying aftermarket part use. So, this was a conscious decision by the adjuster and insurer to use these on their customer’s car. In cases like this, it is important to share information about these parts with your customer. Why is this being done? Because of all the price matching that is being done by the OEMs. The list price is the list price. The repairer shouldn’t have to reduce their parts margins because of a parts game played by the insurers. Another fact, in this case, was the lack of use of certified aftermarket parts was a limited consideration. Aftermarket part certification is another topic for another day.
About the aftermarket parts: the math doesn’t support the fact that these are “like kind and quality.” There is a significant difference between original OEM engineering math used to construct the tooling for OEM parts and reformulated “average” math taken from measuring multiple parts used in the aftermarket tooling construction. The counterfeit parts can be close but will never be the “same.” Added to this is the fact that the material composition of the metal or plastic typically isn’t identical to the OEM formulation. This in and of itself should be a determining factor for not using them, but it isn’t. The fit and overall inferior quality to the OEM should be. Putting one’s self in the position of the consumer, this vehicle could potentially be financed for 5 or more years. The customer is then paying for parts that likely won’t last or perform properly through the life of the financing. How is that making the customer “whole” again? In the case of a lease, there could also be issues when the vehicle is turned in at the end of the lease. If during the inspection of the vehicle aftermarket parts are identified, there can be additional issues for the customer. Again, the policy language comes into play. Since the leased vehicle is considered an “owned vehicle” by the policy, where is the customer left with the differences that the dealer identifies?
What if?
As the industry becomes more OEM certification centric, what will happen when the customer brings their vehicle into that OEM affiliated “certified” location? Will the staff follow the OEM processes, or will they “wing it” because of insurance company programs or influence? When it comes to parts and many other processes, the OEMs have explicit positions and position statements on the use of non-OEM and used parts. How will that be handled with the customer? This is where the “what if” becomes a real concern. The customer chooses the OEM affiliated shop to ensure that their vehicle is repaired to the OEM standard to ensure that the vehicle is fixed as specified by the OEM. The repairer is “required” to follow the OEM repair processes to the letter.
But then there is intervention by a third party who says that the vehicle doesn’t have to be repaired “that way.” They push the issues relative to when they will pay for a scan and what they will pay for. For the repairer, the choice may become to fix the vehicle correctly, which is the logical choice, but who is responsible for the price differences? Fix it incorrectly to satisfy the insurer pricing, which is foolish, opens the store up to liability and doesn’t make the customer “whole,” or fix it correctly and provide the insurance company significant discounts with the store losing money on every job.
Two of the three options benefit the insurer and only one benefits the repairer. But the repairer option protects the customer. What would happen if the “what if” was changed to “educate the consumer” by providing detail regarding what the repair procedures are, and when the repairer is being directed to do something which may not provide an adequate or OEM identified repair? Additionally, what are the customer’s rights in the event of a loss, and what are the insurer's duties in the event of a loss?
The repairer needs to be protected for the cost of the repair as well. Having the customer sign a document that indicates the customer will be responsible for any repairs not covered by the insurer is a good start. Using similar wording to that used in the medical field, like "there may be tests, procedures or other charges that may not be covered by your insurer. In the event these are not covered, the “patient” [customer] will be responsible for the charges." This should be an important signature section of the repair authorization. Of course, the repairer will do their best to get the items paid for, but the repairer can only subsidize the insurer so far.
It’s time to change the paradigm. It’s time to get the ball rolling in the repairer’s direction when it comes to being compensated properly for what they do. “What if” the repairer finally got paid for everything they do?
