“Body shops in your area have recently started billing for items used in the repair of vehicles, such as masking tape, rubbing compounds, sandpaper, razor blades, paint mixing cups, and gloves. It has become customary that these items be included in the ‘Paint/Materials’ line on the estimate. It is the opinion of GuideOne Elite Insurance Company that these items are the cost of doing business and are accounted for in our estimate. We recognize it is your decision to have your vehicle repaired at the shop of your choice and we will do our best to negotiate these items off the shop estimate but, be advised, if we are unable to do so, we will not issue payment for these items which may appear on the shop estimate as ‘Repair Materials’ or ‘Shop Materials.’” (GuideOne estimate disclaimer to one of their policy holders)
Bright Minds In and Around the Collision Industry Speak Out
“The collision industry looks at their colleagues as competitors: if they changed that around there could be some forward thinking on to change. It’s funny that when I got into the collision business there were some large shops that fought and won for compensation for their work. Then the ‘weeny’ boys (me included) ran to get DRPs. In my case I knew that if I lost any of my DRPs, especially if I lost a large one, I was done. That’s what happened to the guy who bought my shop. He didn’t do the service and lost two large DRPs, and folded.” (southwest former shop owner)
“Let’s forget about trying to buy a wrecked car for more than anyone else in the entire world thinks its worth, and then try to sell the parts for less than anyone else thinks they are worth, and hope to end up with more money in the bank than we were loaned in the first place.” (Paul Davis —A Plus Parts & Salvage)
“Try this test: For one month, write every repair job that goes through your shop using your true posted rate. Do the math if you have to, or at least call five car dealers and ask what their mechanical rate is. Then add 35% to that, because the body shop is at least 35% more costly to run than any mechanical shop. Average the rates and write every sheet using that rate. Put down every P-page item you need, right down to a fee for parts disposal. Charge for every liability you accept by doing a repair. Use a paint calculator, and include a mark-up amount you need. Keep a running total on every job. After a month you’ll find you are leaving about 30–50% of your current total sales on the table. Just so you don’t upset your insurance partner too much, when you bill the job back into the insurance number the way you have been doing for years, write off the rest as a discount. Take a one-item line discount to balance out the debacle.
“If you’re going to give it away and lose money, you might as well know how much it is you’re losing. Tell your customer it’s a “courtesy discount” so they know the value of what you’re giving away (and so will your insurance “partner”). Or call it a concession. But know what it is: a lot of lost profit, never to be recovered. After a month, you’ll see a pattern of the numbers that (attorney Bruce) Cornblum speaks of. Then maybe, just maybe, you’ll reach out and ask for help. There is a better way, and it does include a secure future for your business and you family.” (New York State Auto Collision Technicians Assn. president and long time shop owner Mike Orso quoted in 1/30/08 CrashNetwork)
“(Attorney Erica) Eversman and (shop owner Wade) Ebert emphasized that an estimate is not a piece of real estate. If a collision repairer is negotiating with an (insurance) appraiser, without the car owner’s knowledge, the repairer and the appraiser may be engaging in the unlicensed practice of law. ‘The insurer is obligated to pay the true value of loss,’ said Eversman. ‘Negotiating stuff should never be happening. Does the insurance company only owe what it can negotiate?’ asked Eversman. ‘Engaging in this behavior may be the unauthorized practice of law.’” (quoted from Sheila Loftus’ 2007 article titled Underwriting Estimates Is Consumer Fraud)
“In every DRP ‘agreement’ I’ve ever read… the insurer doesn’t have any obligations to (the shop). Read through (these DRP 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.” (from an article written by attorney Erica Eversman)
“I am very concerned and disappointed that there just doesn’t seem to be any (repairer) organization that isn’t afraid to endorse positions ‘solely’ for the good of the repairer. I quit SCRS. I wanted to get involved with CIC but, with the news that they would not go forward with their findings on ‘low-balling’ under a CIC banner, I just can’t get excited about a commitment. I attended the Saturday morning breakfast panel at NACE last weekend and had to leave (for some reason we can’t even whisper why claims nationally are down anywhere from 14–20%). It was brought up twice in the 40 minutes or so that I listened. Anyone in this business with a pulse knows why: Vehicle owners don’t insure their cars for loss any more, just for catastrophic loss as their own economic situation defines it.
“Insurers have simply scared people from actually using the product they spend millions of dollars on marketing to get them to purchase. Why does this have to be treated like some dirty little secret by those who have been negatively impacted by it. Whose sacred toes are we afraid to step on, and what’s in it for those who have circled the proverbial wagons? CCRE, (www.theccre.com) seems different on the outside at least, and I would like to get additional information.” (comment from Midwest collision repairer)
“The ‘easier way’ that some (shops) fell for and grew out of the 1990s and early 2000s, will surely prove to be the failure of many (shops). We were not an industry comfortable with paying to promote business, i.e., advertising. So it was easier (for shops) to give up an incentive for a discount. There was always hope it could be made up somewhere else, such as in volume or creative estimate writing. But it has proven, by the number of shops that have folded, that it can’t be made up in volume or creative estimate writing. It’s not all poorly run businesses either. Its simply poor business decisions… I would once have called it ignorance. But today I call it predatory pricing. Sooner or later a shop supporting insurer suppression is going to be brought in as a co-conspirator for unfair business practices.” (shop owner comment from Jan 08 CRASHNetwork)
“You guys are fighting for a good cause. I don’t know you personally, never will. But you should be proud of what you are doing with this Coalition for Collision Repair Excellence (CCRE). If more people were not so chicken****, this industry would be in a lot better shape.” (anonymous letter sent to CCRE member, www.theccre.com)
“What are you trying to do?... mess up insurers’ final stab at the collision industry? Sooner or later all the shops that are out there doing direct repair work will be out of business, so lets just keep doing our thing and let them die in peace. Maybe we need a Hospice for DRPs!” (East coast shop owner comment)
“I don’t necessarily disagree with DRPs, but over the past two years insurers have taken what I used to call a partnership and turned it into a dictatorship. This has knocked off many medium-sized shops like myself, and pushed work to conglomerates that can transfer work from one facility to another to get work out ASAP in order to save rental money on behalf of the insurer. No question, this is a business move. But insurers have gone far beyond this in regards to repairing versus replacing, stopping clear in the middle of panels, and so on.” (shop owner comment from Jan 08 CRASHNetwork)