You had the green light, but the other driver just wasn’t paying attention. Screeching brakes, time seems to slow down, and then the horrible sound of the impact.
When you least expect it, you have been involved in a car accident. You have escaped injury and must deal with the damage to your vehicle, get a rental and try to return to your normal day. However, you don’t know the process for making the insurance claim. You have the other driver’s 800 number to his insurance company. It’s his fault; he should pay for the costs and your rental car. His company has a nice TV commercial that makes everything look easy and stress free and the overwhelming question “Will my car be the same?” after the repairs.
You call and go through the interview of every detail about you and the accident. When you’re asked about the selection of an auto body shop, they have a suggestion about where they can refer you. This shop will start work on your car today, and the insurance company will guarantee the work for the life of the vehicle. Everything sounds good, and you don’t have any experience with accidents. Of course, you agree.
The auto insurance coverage system we have today is optimized around revenue and profits — not safety and quality. The willingness of the insurance companies to compromise on the quality of the repair results in a loss of value for your vehicle. This is known as “diminished value”. Why does your car experience a loss of value, even though the insurance company tells you their shop will restore it to its pre-accident condition?
The auto body shop the insurance company recommended has a written agreement to perform under the guidelines of the insurance company to control costs. The common term for this agreement is DRP: Direct Repair Program. This DRP places the shop is a position of disadvantage to perform quality work.
I have read almost every DRP agreement from all insurance companies. I agreed and signed some of these agreements as a shop owner or manager. I have been subject to the insurance company’s management review meetings about the performance metrics of my shop. A key evaluation tool that insurance companies use to measure the shop’s performance is called a “severity percentage”. The higher my severity percentage, the fewer referrals I will get from the insurance company.
The severity percentage is a nationally calculated number that is based on an average of all claims paid in a 30-day period. For example, if we repaired 21 vehicles in that period from Allstate for a total cost of $68,334.00, our severity score is $3,254.00. Allstate claims the average should not be more than $2300.00 per claim. In order to remain in good standing with Allstate, we are required to lower our average amount by $954.00 or risk the loss of Allstate referrals and/or our DRP agreement.
The problem with this system is that it does not take the true severity of accidents into consideration. Nor does it allow for adjustments based on the value of a car. It is simply more expensive to get parts for a luxury vehicle than it is for an average car.
So, where does the $954.00 come from? One of the main ways that most shops try to stay within the recommended severity score is by repairing cars with LKQ (like kind and quality) parts (from a junk yard) or aftermarket (imitation) parts.
It’s Your Car and It’s Your Choice!
You are the consumer and have paid your premiums. Think of your insurance policy as a bank account. You put money in and you wanted security to be able to take money out. You can’t control everything, so focus on what you can impact to get a fair and safe settlement.
Start with the following:
- Ask if the shop has any agreement with the insurance company paying the repairs. If yes, consider Collision Monitoring
- Find out what happens if the adjuster will not cover the costs deemed necessary
- Get involved and require notice of any changes
- Notify shop manager about post repair inspection
- Determine what type of parts will replace the damaged parts
- Require that the judgment to repair or replace a part will be with your agreement
- Confirm shop equipment specific to the model of your vehicle
- Inquire as to the experience level of the staff for each department
- Require a tour of business to inspect other jobs and ask questions
- Require a scheduled completion date
- Arrange for a quality and safety inspection
Awareness of all the above takes a shift in your thinking. It’s your car and your responsibility to keep you and your family safe. Make that shift, and you’re poised for a successful collision repair!
Visit diminishedvalueca.com to find more information about this topic.
