Taking a hard look at the true cost of scanning

Sept. 30, 2019
The insurers are under immense pressure from competition and quickly rising severity, so it is obvious why they seek situations where they don’t have to pay for scans. It’s understandable, but not necessarily a good excuse.

Over the years, our industry has experienced a number of significant changes — actually events — which have triggered major differences in how we repair collision-damaged vehicles. Some that come to mind include GM embracing uni-body construction, new substrates, DRPs, basecoat/clearcoat paint and automated parts procurement.

Typically, there is a topic introduction, public anxiety, training and new equipment, followed by a normalization of process and pricing. The exercise has usually taken a couple of years or so before there is less anxiety and a common normalization, including a typical methodology of pricing as well as a typical common pricing range used by repairers and insurers.

As we are experiencing one such industry change — the pre- and post-repair scanning of electronic systems — I am struck by how long we have been in flux without normalization. It has been about four years since the topic rose to the forefront of discussion within industry events and publications. Yet there are still immense differences in pricing, definition and process policy. The vehicle manufacturers have been relatively consistent in calling for scans in their repair procedures and over the last few years they’ve added clarity by issuing many position statements on the topic. Many are getting away from using terms such as “recommend” and instead using terms such as “require,” creating the impression that it is not simply a good suggestion, but instead part of the vehicle manufacturers’ repair procedure. Repairers have been slowly embracing scans and establishing procedures while making tool and vendor choices. Information providers studied the scanning process, including the use of various tools on various vehicles. They concluded that they are at this time unwilling to establish database times for scanning since the time required varies so much. They have come out with position statements stating this conclusion. While our industry segments all share in some dysfunction and hesitance, some of the major insurers stand out as the most inconsistent and unclear.

The insurers are under immense pressure from competition and quickly rising severity, so it is obvious why they seek situations where they don’t have to pay for scans. It’s understandable, but not necessarily a good excuse. Making the consumer whole after a loss is their legal and (at least should be) ethical obligation. Whatever the vehicle manufacturer instructs or recommends should be the standard. Becoming an amateur electronics engineer and developing one’s own standards should be considered a suspect policy. I would not want to defend such a policy in court.

As evidence, I call to your attention the position statement issued by State Farm last spring. It casts doubt on the validity of vehicle manufacturer position statements calling them “general in nature” and “not specific to a particular year, make, model, type of damage or even repair scenario.” Funny, don’t they come from the same people and sources who establish the repair procedures? Because they acknowledge common repair methodology among groups of their produced vehicles does their content become diminished and not necessarily to be trusted?

It states that “a post scan may not be necessary, or may be included in a calibration process. Calibration and related steps are considered separate from scan activities.” What? If a scan is included then how is it separate?

The statement mentions evaluating manufacturer position statements as well as when a scan is necessary on a “case-by-case basis, evaluating specific facts, vehicle equipment and damages specific to a particular loss.” OK, if I am an appraiser what does that mean? How much is enough equipment or which equipment? How much damage is enough?

Yet after casting doubt on position statements and when to scan that statement says, “Select Service repairers are expected to prepare estimates in accordance with these specific repair procedures.” Not case by case? The statement concludes by getting into pricing, stating that “.5 hours at mechanical rate is typically sufficient.” Then they state that if a vehicle can’t be scanned with an aftermarket scan tool that “scan operations can be completed remotely, using third-party vendors.” They describe how .5 hours of labor time can be added to the sublet fee. Under these two scenarios, the first with an aftermarket tool, and depending upon market labor rates, pre and post scans would run about $75-$150. The second scenario with the third-party involvement, again depending upon market labor rates, would run about $250-$325. That’s quite a dramatic difference in range. Where’s the common ground? How did we get into aftermarket tools verses third party and what about a shop who uses their own factory scan tool?

A new scanning position statement from Auto Owners Insurance was recently released. They state, “Regardless of whether an OEM has a position statement or not, if an automobile with onboard diagnostics is involved in a collision that requires intrusion into electrical, safety and/or driver assist systems...Auto Owners will include pre- and post-repair scan operations on the initial appraisal.”

Interesting. Since all 1996 and newer models include OBDII, it sounds like all would be included. They go on to establish their pricing philosophy, stating, “Auto Owners will pay 1 hour for the pre and 1 hour for the post scan at the shop’s mechanical rate.” They go on to elaborate that reimbursement of an invoice documenting a higher charge “is appropriate.” It’s quite a contrast from the State Farm position statement.

I believe that State Farm and Auto Owners should at the very least be commended for the courage to share their positions in document form. Most insurers in most situations only utilize verbal communications with shops, which lack the same validity and accountability of a document.

Anecdotally, I’ve run into other philosophies. One insurer I interact with refuses to pay for pre scans (with rare exception). Their area manager tells me that the pre scan is not necessary no matter what the vehicle manufacturer says and that the post scan can find all issues at the end of the repair. When I give some examples of finding issues early in the repair — such as deployed seat belts — that can expedite parts ordering and minimize delays, he tells me that he will gladly pay more rental cost to avoid the cost of pre scans.

Another very large insurer tells me that it is their company’s policy to only pay .5  hour at mechanical rate per scan. Their regional manager told me that it is in their policies. When I asked him to elaborate, he said the insured’s policy states that they only pay “prevailing rates.” When I asked for a definition, he told me that it is the lowest price any single repairer in a market would accept, though he said in practicality he tries to find a few shops. I asked, if I was in an area of 10 shops and one offered a lower price, is that one the “prevailing rate?” He said technically, yes. I find it ironic that despite their apparently endless marketing budget for cute ads, they are arguably the most frugal when it comes to covering costs for a safe and proper repair for their customer’s vehicles.

I also find it ironic that there is little discussion on what is included in a scan charge. Researching manufacturer repair procedures and/or position statements regarding scans? Connecting battery support (which may include removal of some interior components to access the battery)?  Researching diagnostic trouble codes (DTCs)? Clearing codes, in some cases selectively? Initializing modules?

Obviously pricing and policies on scanning can vary dramatically. What is the answer? Personally, I prefer a flat fee that encompasses pre and post scans including battery support and research and initializations. While imperfect because it doesn’t reflect the varying time for each scan, it does minimize friction. Like our typical paint and material calculation, which are similarly more of an average than precise for the job, it can work out for the shop to adequately cover costs, including labor and tools and education and much more, as well as provide a reasonable profit. It is a simplistic methodology. It removes the potential discussion and negotiation from each and every job, such as how long did it take, leading to discussions on tech competence and tool efficiency, which some pricing methodologies come with. There should not be such a wide range of pricing, especially taking into consideration those shops that use their own factory and/or aftermarket tools. Their costs are not dramatically less (assuming they use high quality tools with properly trained staff) than those who use remote or sublet solutions.

I think we should follow factory guidelines, including repair procedures and position statements. When in doubt we should err on the side of caution. Safety, especially for the consumer, should be our primary concern that guides our decisions.

About the Author

Darrell Amberson | Director, MSO relations

Darrell Amberson is the president of operations for LaMettry's Collision, a 10-location multi-shop operator in the Minneapolis area. Amberson has more than 40 years of collision industry experience, and served as chairman of the Collision Industry Conference for the 2021-2022 term as well as interim chairman for the first two CIC meetings of 2024.

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