According to Parker, “Consumers have no problem with this assignment, and we have collected on every suit we filed.”
Parker’s independent collision repair facility has been in business since 1990 as a pro-consumer shop, contracting directly with the vehicle owner to make repairs rather than operating with DRPs. As such, the vehicle owner is responsible to pay for the entire cost of the repair, and Parker has his customers sign an assignment of proceeds form which allows him to collect any shortfall from the insurer on the consumer’s behalf.
The process begins with an insurance estimate using a visual overview of the damage and an estimating manual with estimates varying based on the manual used and how the damage appraiser follows the instructions in the back of the manual. At Parker’s, the shop follows up with their own estimate and communicates variances with the appraiser initially and also after a complete disassembly. Consumers sign an agreement to pay the full cost of the repair, and they also sign an assignment of proceeds which assigns to Parker the right to stand in their shoes and take the same lawful steps they could take, including suing the insurance company or at-fault driver, to collect the money owed to them under an insurance claim.
Throughout the repair process, Parker’s will notify the insurance company of any changes that increase the estimate. Parker’s bill is created based on the actual cost of the repair with itemized charges, and this final invoice can vary from the original and adjusted estimates. When the insurance company refuses to pay the variance, Parker must resort to legal recourse with the assistance of his attorney, Robert McClallen.
In the spring of 2016, Parker and McClallen successfully sued Commerce Insurance Company for shortpays on three vehicles. He was awarded double the cost of damages plus attorney fees per the Commerce policy, but due to the litigation taking place in small claims court, it was capped at $5,000. In 2015, after a three-year battle, Parker was victorious in a $53,000 assignment of proceeds lawsuit against Allstate on behalf of 70 consumers.
Parker believes that insurers are “responsible for paying the full, reasonable and necessary amount of the repairs because they chose to settle the claim in cash instead of completely replacing the damaged vehicle or repairing it themselves. They say that I won’t negotiate or give agreed prices. They try to make that sound negative---that they get to call the shots and I’m at fault because I won’t negotiate with them. The shops that do negotiate come up with an agreed price, which becomes the cost of repair; however, there is nothing in the policy that states that a negotiation or agreed price has anything to do with determining the cost of repair. It is not what they say it is; it’s a range.”
During the cases, McClallen pointed out that insurance companies do not repair vehicles – collision repair facilities are responsible for the safety of the repair.
The courts found no evidence to substantiate insurers’ claims that Parker’s invoices were unreasonable, awarding him the shortfall payment and prejudgment interest. In the Commerce lawsuit, the court also decided that Parker was entitled to double the damages and costs, plus reasonable attorney fees, but it was capped at $5,000 since the lawsuit was conducted in small claims court.
Despite his legal successes, Parker cautions that assignment of proceeds lawsuits require a lot of research and are not for the faint of heart. Shops interested in pursuing this route should engage an attorney who is familiar with the collision repair industry. Parker warned, “This isn’t something you can just jump into. A shop would have a lot of work to do prior to filing their first suit, but we’ve collected on every suit we’ve filed.”