Quality Replacement Parts (QRP)
Like Kind and Quality Parts (LKQ)
Non-OEM parts - any parts not manufactured by or on behalf of the auto manufacturer - have been described as "imitations, "lumpy, kinky and queer," and "kinda like the parts your vehicle was built with" by repairers frustrated trying to make them fit.
The only truly Like Kind and Quality parts available are those OEM parts produced by or on behalf of the automobile's original manufacturer. No matter what insurers and manufacturers of imitation parts may insist, everything else is something less. The only reason the purveyors of imitation parts do the robust business they do in the U.S. is that insurer cost-cutting is driving their use; manufacturers of imitation parts have no incentive to improve the quality of these parts because they know insurers will force their use against the better judgment of nearly all shops. Were imitation parts forced to stand on their own merits, their manufacturers would have forced themselves out of business years ago, and conscientious shops wouldn't be fighting them today.
Cost-cutting over OEM pricing is the incentive for insurer insistence on using imitation parts. An excerpt from attorney Bruce Cornblum's Dictionary of Auto Body Repair Law points out: "A schedule included in the record in Berry v. State Farm revealed that from 1984 to 1994 State Farm saved a total of $1.25 billion dollars by using non-OEM parts." Interestingly, while visiting a collision shop in Wales, the owner told me insurers in that country write for OEM parts exclusively because insurer experiences there with specifying imitation parts have been so sour. Maybe this same experience will eventually trickle down to insurers in the U.S.
Apparently, having to admit they were wrong all along in their adamant promotion of the glories of imitation parts is too bitter a pill for insurers to swallow. It's tough for insurers to admit they were wrong in promoting/forcing use of imitations, but it's the right thing to do, and way overdue.
Usual and Customary
Apparently, insurers have taken this term from one they use in limiting medical billing - usual, customary and reasonable (UCR). According to Lawrence Gelb, CEO of CareCounsel, a company that assists employees in resolving insurance claims, "There is no regulation for determining what is usual and customary." A representative for American Health Insurance Plans stated, "Insurers use various methods in determining the UCR for any given procedure in any given market - one insurer's UCR may be different from another's UCR."
But Donald Palmisano, former president of the American Medical Association, hit the heart of the problem; "Insurance companies have so much power, they can tell physicians to take (their fee) or leave it." Insurers would tell us that usual and customary fees, rates or procedures are those charged for by others in the field.
But the usual and customary debate hits a wall when we question how any insurer who doesn't regularly and in an unintimidating manner survey all shops in any given area determine what is usual and customary for shops in that area? And what does so-called "usual and customary" have to do with reimbursement for services rendered? Not all shops do the same quality of work, use state-of-the-art tool and equipments, employ the same caliber of technicians, and the like. Other than for reasons of insurer cost-cutting, usual and customary amounts to nothing but bottom-of-the-barrel insurer economics.
"Reasonable & necessary" is the standard to which all collision repairs should be measured. Consumers don't benefit when the best service providers are not able to command a better rate for their better service. Nor do consumers benefit when the price of the product is the sole decision-making factor taken into account, without deference to other factors such as quality.
Direct Repair (DRP) contract
Attorney Erica Eversman, in her must-read article Examining DRP Contracts (June 06, BodyShop Business) states, "In every DRP agreement I've ever read… the insurer doesn't have any obligations to (the shop). Read through (these contracts) carefully and you'll find that (the shop is) the only party agreeing to give up something, and the insurer is the only party benefitting. There are no expressly-stated terms the insurer promises to fulfill… Yet, to be a valid, binding contract, both parties to the agreement have to give or get something. It's called 'consideration' in the legal world, and there must be mutuality of consideration - that is, both the insurer and the repair shop must benefit for any DRP arrangement to be called a contract."
Maybe shops doing DRP with insurers look at reduced-rate shop volume as the unstated benefit tradeoff in these contracts. But with DRPs comes loss of control of the participating shop. I have to laugh when a shop owner drugged on DRP tries to tell me he hasn't lost any control of his shop because of his DRP contracts. Would he see the light at the other end of the tunnel he's traveling through any better if his insurer "partners" with their one-sided "contracts" pulled the plug on him? I'm guessing he would begin to see how much control of his business he has squandered on worthless contracts.
And if insurers weren't able to totally flush him out of business, he just might be more inclined to set his course toward independence, as have so many fellow shop owners in the Coalition for Collision Repair Excellence (theCCRE). Education makes all the difference. The only contract shops should consider making is one they make with themselves to market their business effectively, conduct business honestly apart from insurer influence, and get educated. The CCRE is one association that can help.
Your guess is as good as mine on this term used in Safeco advertisements. In fact, it would appear to be that your guess is as good as Safeco's. After more than a month of emails back and forth between our office and Safeco reps, it became all too obvious that they had no idea what this ambiguous term was meant to imply. Does "consequential damages" mean damage as a result of the consequences? Maybe they meant "circumstantial damage" - damage resulting from the circumstances surrounding an accident, such as a door that doesn't have any damage to it, but needs to be blended, and belt and other moldings replaced because they were manufactured to not be removed without destroying the molding and/or its attaching clips.
Maybe Safeco is stating that they should not be responsible for paying for something that wasn't directly impacted by the accident, because it's circumstantial damage. I can hear shops countering insurer consequential damage denials by pointing out that shops wouldnt destroy molding clips if the vehicle had not been involved in an accident that the insurer had promised to indemnify when they accepted the insured's policy payment. Shops don't wreck cars, so pay up Mr. Insurer.
"Procedure Page Logic" once represented a logical approach to determining which procedures were and which weren't included in crash book times. But a growing number of insurers have transliterated it to "P&C (Pick & Choose) Page *****Logic."
Dick Strom, Modern Collision Rebuild, 9270 Miller Road, NE, Bainbridge Island, Washington 98110; (206) 842-3621; e- mail: email@example.com.