For the collision repair industry, how to get paid can be a touchy subject—one auto body shop owner contacted for this story said airing his tactics might hurt business relationships.
Another source said it seemed unlikely that shop owners or managers with successful tactics would be willing to divulge them. And yet, the struggle to get paid is a daily occurrence, necessary work for any shop that strives to carry out complete and correct repairs.
A repairers best bet for full payment, say sources from various sectors in the industry, is documentation and clearly communicating it.
Jerry McNee, owner of Ultimate Collision Repair in Edison, N.J., and multi-term president of his state’s chapter of the Alliance of Auto Service Providers, says proper documentation is a topic into which he’s put much thought, and he doesn’t hesitate to share those thoughts.
McNee, who has more than four decades of experience in the industry, also says setting expectations and educating both insurers and his collision shop’s customers about what goes into proper repairs is crucial. He also says the industry plays a role in its own difficulties.
Lay out expectations.
Ultimate Collision Repair has numerous documents that insurers receive, which lay out its policies when it comes to repairs, OEM parts, its repair plans, and more.
“I want to present a business case to the insurance companies, documenting the estimate,” says McNee, whose shop does business through a handful of direct repair programs. He notes that not all insurance companies are the same, and that many are open to conversations, while others are not.
With the pandemic pulling appraisers out of shops and communications going online, McNee says he sees the change as an opportunity to clearly lay out his shop’s case, on a repair-by-repair basis.
Terms and conditions are everywhere in daily life, so he says it’s both logical and crucial to lay out his shop’s own terms and conditions in an agreement. McNee describes the agreement as “our company policies that need to be observed and followed.”
The internet has also made it easier to compile prevailing competitive prices, or PCP, and examples of operations previously paid for by insurers. McNee says he couples that information with his terms and agreements as back up for his estimates.
Of all that documentation, McNee says, “Here’s the facts, we’ve demonstrated, we’ve laid it all out that you and others are paying for it. We’re not the only one.”
Even with his case laid out, McNee says he can sometimes go back and forth with appraisers for weeks before moving up the chain of command and the company is open to negotiate. Then, there are the times that his approaches to insurers are flat out ignored.
Says McNee, that’s when it’s “even more of a reason that the customer needs to be involved.”
Jerry McNee, owner of Ultimate Collision Repair, says shop customers have options, many included in their policies, if they run into a wall over coverage of their repair with their insurer.
- The Appraisal Clause: Though McNee notes some insurers have removed the clause from their policies and diminished customers’ rights, the appraisal clause allows customers at loggerheads with insurers over required repairs to call in a third party appraiser to write a neutral estimate.
- Arbitration: The customer and insurance company enter into a legally binding procedure, outside a court of law with an arbitrator. McNee says he’s aware of the option, though he’s never had a customer go into arbitration.
Get customers involved.
When a repair is gummed up by an insurance company that’s gone incommunicado, McNee says he has a clear message for the customer concerned.
“‘It’s not my insurance company,” he says he tells them, “this is your company and this is what they’re doing to you!’”
Ron Reichen, president of Precision Body and Paint, which has three Oregon locations that gross $17 million, argues that customers are your best bet to get paid.
“You have to educate that customer,” says Reichen, pointing out he’s constantly coaching front office staffers on how to both explain and sell the value of a certified repair, and how if a customer’s insurance company isn’t up for one, “let them know they have a substandard insurer.”
The disappearance of adjusters, and others within insurance companies with whom shops may have a relationship, means you never know who’s looking at an estimate, Reichen says. That makes customers the most direct and effective way to put pressure on insurers.
Educating customers comes in handy when insurers create shortfalls, because, Reichen says, “We’ve already got that customer on our side.”
Another way customers can be helpful is their connection to their insurance agent, he says. In short, he says, explain to agents how the actions of their claims departments are jeopardizing relationships with clients.
Reichen says he knows of denied claims situations where an agent has reimbursed a customer who’d paid out of pocket to cover a shortfall.
How could OE certifications help shops?
As repairs continue to get more complicated, collision repair industry experts say following OE repair procedures is a must. What about OE certification, and could such programs help shops get paid?
Jerry McNee, owner of Ultimate Collision Repair, says that while he believes OE certifications are the way of the future, most adjusters aren’t trained or have the expertise to know their importance.
“Insurers say, ‘Why get certified? We’re not going to pay you anyways,’” he says. “‘It’s only a fender, what’s the difference?’”
Still, McNee says, educated customers will want a certified shop to repair their car, “Because they’ve done their homework and research to repair their vehicle correctly.”
Ron Reichen, president of Precision Body and Paint, which holds numerous OE certifications, says such programs could be tweaked to help shops more. One way is through parts restrictions, which he says give programs more teeth.
“You can’t get your car fixed somewhere else,” he says, “because they don’t have the parts.”
Change the status quo.
While setting expectations with insurers and leveraging customers is important on a case-by-case basis, McNee says the collision repair industry as a whole needs to work together to change the status quo.
“The body shops have done it to themselves over the years,” he says, noting huge disparities in labor rates between collision repairers and those doing mechanical repairs, while arguing that collision repair takes more equipment, training and skill. “If the truth hurts, so be it. We have the largest bark and the poorest bite.”
McNee says that while some shops are “stepping up to the plate,” more need to stand up for their customers and act as experts.
Change could also come in other forms, he says. For instance, if shops and insurers shared liability for repairs, carriers would be far more likely to press for by-the-book repairs to safely restore vehicles to pre-loss condition.
Also, says McNee, this would be improved by more shops knowing how to carry out those by-the-book repairs, by delving into repair procedures, getting up to speed on advanced driver-assistance calibrations, and all the advancements that have happened in the industry even in just the past five years.
“This is a continuous education and there doesn’t seem to be an end in sight,” he says. “Shops need to get involved and take control of their business. All liability lies solely with the shop.”
