Short pays have become such a routine part of collision repair that many shops barely blink when an insurer’s check lands short of the final invoice. But while the industry has long accepted this as part of doing business, attorney Sean Preston says the industry shouldn't have to and, worse yet, accepting short pays is slowly strangling the entire collision repair ecosystem.
Preston, founder of Coverall Law and longtime corporate counsel serving Fortune 500 companies, now devotes his practice exclusively to small and medium-sized businesses. After relocating to Massachusetts several years ago, he became deeply involved in the collision repair space and alarmed by what he saw.
“This is an industry that’s been chewed on and chewed on for decades,” he says. “And we’ve got to move quick because the insurance companies are getting ready to swallow.”
His perspective is rooted in both law and economics. With most collision repairs paid for by a handful of national insurers, Preston says the market has entered what economists call a monopsony, which is essentially a reverse monopoly.
“In a monopsony, with only a few payers, they are able to artificially keep the price down,” he says. “That’s exactly what we see in reimbursement rates.”
The impacts are cascading, with programs closing, shops shuttering, reduced labor pipelines, consolidation and razor-thin margins that make it nearly impossible for technicians to one day buy the independent shops they work in.
And in many ways, Preston says it all ties back to short pays.
The Problem
The first step to solving short pays, Preston argues, is understanding what they actually are. And it’s not simply the gap between the insurer’s estimate and the shop’s invoice.
“I wouldn’t say it's anytime the insurance payment is less than your final invoice,” he says. “A short pay is any time the insurer has paid less than they are legally obligated to pay on a claim.”
That distinction is key. Insurers commonly push a narrative that shops overcharge, telling customers that shops are prone to bill for unnecessary procedures, sewing doubt before the repair even begins. That framing, Preston says, isn’t a simple misunderstanding; it’s a strategy.
“The first party that can successfully frame what the argument is about has already won,” he explains. “They’re positioning themselves to win before the consumer even understands the issue.”
Preston says the real issue is much simpler than insurers portray it.
“Insurers must pay for any parts and procedures required to return the vehicle to its pre-accident condition,” he says. “That’s what a valid claim requires.”
But shops, afraid of upsetting customers or losing business, often avoid pushing back, even as their margins shrink to the point where profitability is no longer a guarantee.
“When you work on painfully small margins, any mistake puts that job in the red,” Preston says. “No other industry survives like that.”
The Solution
As with any systemic problem, there’s no one-size-fits-all fix. But Preston says there are a few steps shops can follow to combat insurance companies, and the process should begin far earlier than most expect.
The first step, which Preston admits sounds a bit counterintuitive but says is often the most effective path, is customer pay.
Preston admits this sounds counterintuitive, but insists it is often the most effective path.
“Customer pay wins by a nose,” Preston says. “The insurer would far and away rather reimburse the customer than pay the shop.”
Shops fear backlash from customers, but Preston says those fears are largely unfounded.
“Shops are right to be nervous. But they are pleasantly surprised to find customers are understanding and happy to do it.”
Still, customers need support. That’s where Preston recommends creating what he calls a “super bill,” which is a package empowering customers to secure reimbursement.
A super bill should include a paid-in-full invoice, supporting documentation such as OEM procedures or best practices, and evidence such as before-and-after photos that show why repairs were needed.
With these three components, customers have what they need to secure what they are legally entitled to receive by justifying the repairs to insurers.
The second step is to hold the vehicle.
“The vehicle is your collateral,” Preston says. “Your bill needs to be paid.”
Many shops fear replevin actions, but Preston argues those fears typically stem from bad or incomplete paperwork. At Coverall Law, Preston says everything starts with strong terms and conditions.
“Every dollar that comes through the shop represents unlimited liability,” he says. “Shops have the right and responsibility to own the terms and conditions of every dollar.”
State laws vary, and Preston emphasizes that forms must be compliant with local regulations. Simple missteps like failing to document whether a customer was offered their replaced parts can expose a shop to liability.
The third step is to get an assignment of rights. Shops do not have a direct legal relationship with insurers unless they’re DRPs, which means that assignments are traditionally obtained after the fact. Preston believes that model is outdated and risky, and his firm integrates an assignment of rights into the intake paperwork for every repair.
This allows shops to stand in the customer’s shoes, pursue underpayments and bundle claims for litigation.
Bundling is especially critical. Instead of suing for $600 or $1,200 at a time, which are amounts too small for most attorneys, shops can bundle 10 to 15 claims and pursue $20,000+ in damages.
This approach simplifies litigation, too. Instead of debating everything under the sun, Preston focuses each case narrowly, homing in on blend time, paint and materials, total loss fees, posted labor rates or OEM safety procedures.
“Judges don’t understand this industry,” Preston says. “Keeping it simple prevents them from splitting the baby.”
The Aftermath
Fittingly, Preston says shops that adopt this three-step system see three major changes. The first comes from their customers.
“Shops are often shocked at how willing customers are to pay and pursue reimbursement, especially when educated,” Preston says.
The second comes from making insurers’ obligations clearer legally. Once a customer pays a bill, that puts insurers on the clock.
“They trigger unfair claims practice laws,” Preston says. “The insurer must reimburse them within a reasonable time.”
Liability increases when insurers drag their feet, creating additional leverage for the customer.
The third comes in the form of making litigation more manageable.
Simple, bundled cases begin reshaping legal precedent. Preston says the goal is to “repaint the legal landscape state by state” so shops can simply get paid without shifting the burden to customers.
The Takeaway
Though short pays have been an issue for far too long, Preston says shops have the power to reframe the conversation.
Instead of arguing about required vs. recommended procedures, he suggests politely challenging the insurer’s authority by asking them to show in their policy where they don’t owe for a specific repair. That becomes a lot easier when shops implement a “super bill” system.
Most importantly, though, Preston says shops need to play the role of educator with their customers. In addition to helping them understand why short pays happen, he also encourages shops to implement simple, neutral phrasing into conversations such as “everything on this repair plan returns your vehicle to its pre‑accident condition” and “we’ve seen insurers be more agreeable paying customers directly.”
Short pays are difficult to navigate, and Preston recommends bringing in legal support early.
“As soon as you’re considering opening for business,” Preston says. “These issues start long before a short pay shows up.”
Short pays may feel like a cost of doing business, but Preston believes the industry can reverse decades of economic pressure if shops stop playing defense.
“You're doing a solid for the insurance company by repairing that vehicle,” he says. “Everything you do that returns the vehicle to its prior condition is owed. Period.”
About the Author
Noah Brown
Noah Brown is a freelance writer and former senior digital editor for 10 Missions Media, where he facilitated multimedia production several of the company's publications.