Can $145 change an industry?
Anyone outside the Cleveland metropolitan area probably did not hear about the broken eight-inch water pipe at Cleveland Browns Stadium back in July. In short, a pipe burst during a weekend concert and spilled an estimated 50,000 gallons of water into parts of the 70,000-seat stadium. One local TV station reported that up to eight inches of water sat inside the stadium overnight, although they didn't say specifically where. In order for the pre-season opener to take place Aug. 11, the pipe had to be repaired, carpet would have to be removed from the locker rooms, and other cleanup and repair steps would have to be taken.
One small leak, one major headache for the professional football franchise.
This month's cover story "Small claims, big statement" highlights a minor chink in the insurance-industry plumbing that could turn into a flood of sorts for insurers. Shops are turning to lawsuits in small claims courts to attack unpaid labor expenses that insurers are refusing to pay. Gene Crozat, president of three G&C Autobody locations in California's Sonoma County, says he has successfully pursued this strategy for several years — emerging victorious in some 300 cases.
In Florida, Edward Wieland of Gullotta's Auto Body near Englewood, Fla., filed his first small claim last spring. He alleges Allstate owes him $145.20 for a particular repair involving a third-party claimant. Although Gullotta's stated standard rate is $44 per hour, Allstate refused to pay more than $40 an hour. Wieland also asserts that Allstate actually wanted the customer to pay the difference. "It boggles my mind," he says. "She was stopped at a stop sign! If they're going to fight over $145, imagine what they're doing to other people across the country." Allstate is not commenting on the suit.
Crozat and Wieland have reached the tipping point where they simply don't care who they anger. They've decided what's best for their businesses and best for the vehicle owners is to fight. And in most of Crozat's cases he's fighting side-by-side with customers, encouraging them to file small claims suits and agreeing to appear as an expert witness. That alone should unsettle insurers.
Customers are not blaming Crozat for the higher expenses; they are siding with him in a David-versus-Goliath style fight. Even if these small claims seem minor, the united front of shops and consumers could be monumental because if there is one thing insurers fear, it's getting a bad rep in the eyes of the motoring, premium-paying public. Crozat has realized that judges are sympathetic toward consumers, especially when those consumers have not done anything wrong.
The success or failure of these small cases could have a major impact on the industry if other shops around the nation take a similar tact to extract their pound of flesh from the insurers. However, shops and consumers need to be prepared for insurers to drop in new language in policies that could swing such rulings in their favor. Insurers simply won't accept a landslide of rulings against them. And that's what they could face if shops nationwide take a similar approach.
Shops will need to decide for themselves if it's best to take what insurers are giving them or to pound on weak piping, grab an oar and start paddling.
