Auto Insurance Claims: waiving deductibles, life time warranty, junk cars


Question
Why is it when insurance companies tell their customers "If you take it to X body shop we will discount your deductible X amount of dollars,"? I understand they have the "right" but is it legal? what about the times when the insurance estimate is in MAJOR need of a supplement and they (the insurance company) know this? Also do the adjusters receive compensation for increasing the likelihood of keeping the work at their DRP shop?

Answer
Hello,

Insurance companies low ball the prices paid to the repair shops that want to be direct repair. These shops are commonly abused with the threat of no more insurance work, they have to offer free storage on countless junk cars. With the rates carriers pay their DRP, the insurance company can work with your deductible. (It really sucks and we were drp for about 20 carriere. The use the "volume" argument. I am real glad we do not go through that abuse any longer.

To my knowledge, as for what carriers do and is it legal as it relates to supplying the insured with a list of vendors, the answer is yes. All this is legal. They are not forcing you to go to any of the shops on the drp list. All they do is give you a list of shops that will work directly on the claim. The nice thing for us when our shop was drp, is that we wrote our own estimates and almost never did we need to wait for an adjuster for approval. This way if you use one of the shops on the list, your car will be repaired quickly. Using the vendors on the list will give you a life time warranty on the repairs. Other shops have to wait for authorization and need the claims adjuster's approval to repair vehicle. In most states you have the right to take the car to any one of your choice.


To my knowledge based on my experience, training and background of over 20 years, adjusters are not to receive anything and taking anything of value, can be a fireable offense.

However, in the real world, I know many body shops that gave presents, on an ongoing basis to the adjusters such as booze, gift certificates to stores and even tickets to sporting events and yes, I never saw an adjuster turn down anything. I probably got less work than others for our shop refusing to give bribes. If our work product or our customer satisfaction was not the reason they did business with us, oh well.



Being drp could give a shop a great amount of business, but from my experience over the years as a DRP, we were told how much we would be paid for each job. Say the going rate is $40 per hour on body work. They might say, we want your rate to be $32 per hour if you want to be in the program. It got so bad at one point that State Farm was telling us where we had to get stereos and we could mark them up 10% when other shops got the standard $20%. We were supposed to guaranty for life and when one of these stereo's failed, we were responsible for all the shipping and we had to eat the labor.

I was not singling out State Farm, I just remember that instance right now. All the carriers pulled this crap. It is very difficult being DRP, because you could get dropped from the list at any time for any reason.

As I said, it is a wonderful feeling not beholding to these carriers. Now I get to pick on them because thier "forensic" experts are fraudulent that will say or write anything to implicate the insured in the theft of their vehicle there by, supporting the denial of the claim. These insurance "forensic" goofs can never support their convoluted opinions with any type of fact.

At least I no longer feel like the carriers are my bosses.