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Mike Parker says he went to the school of hard knocks.

Parker owns Parker’s Classic Auto Works in Rutland, Vt., a shop that, despite its name, does a fair amount of modern collision work. He says his shop had been losing payment arguments with insurers, and consistently getting underpaid.

Those arguments prompted Parker to use a series of legal forms to reduce legal liabilities and get paid for all of his shop’s repair work.

He discovered the legal forms at a Coalition for Collision Repair Excellence (CCRE) seminar, at which attorneys and other collision repair shop owners talked about their importance. “Whoa, have I been missing the boat on some of these things,” he recalls thinking.

After returning from the seminar, Parker hired an attorney to draft a few simple forms that helped him get paid, prevent legal snags, and track problems with some insurers. For example, he sued Nationwide Insurance for breach of contract, and won in a day-and-a-half-long jury trial.
“That was because of the contract, the assignment of proceeds form, and all of the knowledge I learned from the CCRE,” he says.

He is hardly alone. Parker, along with Steve Behrendt of Crawford’s Auto Center in Pennsylvania, Tony Lombardozzi, president of the CCRE, attorney Rob McClallen of McClallen and Bloomer in Vermont, and Ron Reichen, owner of Precision Body & Paint in Beaverton, Ore. shed some light on how a variety of legal forms can help your shop get paid for its work. The forms can also protect you in court should you decide to sue, and prevent insurer disputes over charges for repairs.

“Without (the work authorization) you can’t do anything. You can’t go to court, you can’t do anything.”
—Tony Lombardozzi, president,
Coalition for Collision Repair Excellence

Ultimately, these forms protect you legally, keep your bottom line healthy, and help you keep customers happy.

Work Authorization. Without this form, any customer could decide not to pay for their repair, and no shop could legally prove that the customer owes the shop money. It’s one of the most basic forms every shop should have customers sign. “Without that, you can’t do anything,” Lombardozzi says. “You can’t go to court, you can’t do anything.”
The work authorization form is also important because it creates a contract. When there is a contract, the insurance company cannot tell the customer to go elsewhere. That would be an interference with the contract, Parker says.

Repair Contract. The repair contract is similar to the work authorization form, but the contract allows a shop owner to get more specific.

The contract, as McClallen says, “cements the idea with the vehicle owner that I’m the guy that’s repairing it.” It spells out the repair process by explaining what specifically is being repaired and what type of parts will be used. It also explains taxes and fees that may be applied during the repair process.

The contract puts the power in the customer’s hands because the insurance company has a contractual obligation with the policy owner, he says. It also builds a bond between the car owner and the shop, because in signing the contract the shop owner can explain to the vehicle owner why they are using certain parts or procedures. And when that customer has more information, if an insurance company disagrees with the part or procedure being used, the customer is more likely to win an argument with the insurance company than the repairer, Reichen says. Ultimately this means the shop is more likely to get paid for its work.

“Never put on a piece of paper what you’re not prepared to defend in court. It better represent exactly what was done.”
—Tony Lombardozzi, president,
Coalition for Collision Repair Excellence

Repairers are often reluctant to ask customers to sign a contract, industry leaders and shop owners say. But as Lombardozzi puts it, “everything you do today—even if you go out to buy a piece of furniture—you sign a contract. Why are we so different?”

In seven years of using contracts, only two customers refused to sign, he says.

Assignment of Proceeds. This is one nearly everyone agrees shops need to have. The form lets shops collect payments from the insurance company. If they don’t get what they’re owed, repairers have a right to take legal action and reap the rest of what’s due, as long as they use the assignment of proceeds form in the repair process.

Many shop owners who use this form when they decide to sue are successful in court, as well.

“That’s the biggest one shops need to have,” McClallen says.

Supplement Agreement. Much like the work authorization form and the repair contract, the supplement agreement spells out that the supplement has been approved. Create a separate agreement for each one.

OEM Policies. Reichen keeps OEM policies on letterhead and educates appraisers about what absolutely must be done in order for a repair to be done properly.

For example, at Reichen’s shop, they repair Porsches and other high-end vehicles. Porsche says that only superficial paint flaws can be repaired, and anything beyond that must be replaced. “I have the liability and the documentation from the manufacturer,” Reichen says. “It alleviates that discussion.”

Many of these policies can be found through ALLDATA and the Society of Collision Repair Specialists, he says.

Final Invoice. Lombardozzi says that, like a contract, the final invoice is important because it shows exactly what was done to the car. It’s one thing to say up front what you’re going to do to repair a vehicle, but it’s another matter when the repair is complete.

The final invoice shows every last detail of all the work that was done. This helps in dealing with the customer, as well as if you find yourself in court and have to prove the work that was completed.

Lombardozzi warns collision shop owners that the final invoice must be accurate.

“Here’s what I tell everybody: Never put on a piece of paper what you’re not prepared to defend in court,” he says. “It better represent exactly what was done. If you use the LCS system—the lie, cheat and steal system—you’re going to get in trouble.

“Once you lose your credibility in court, you will never win again. Judges speak to other judges.” 

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