Auto Insurance Claims: Insurance dilehma, preferred shop, preferred shops

Question
Hello,

I’m located in CA and was rear ended recently. The other driver’s insurance company has accepted full responsibility. I called my insurance company and they suggested that if I go through them, they would go “to bat” for me and make the process easier. State Farm is my insurance company and Farmer’s is the other driver.

So I opened a case with State Farm and they gave me a list of preferred auto body and I go get two estimates and they also sent out their own estimator. Their in-house estimator estimated $790 of damages and the preferred auto body they referred me to came in at $1,051 and $1,037, relatively close. That’s about a 33% difference/discount.

I intended to cash out so State Farm told me that quotes from their “preferred” shops were too high and if I decide to cash out they are not paying anymore. Same goes to if I take my car to another shop and if it costs more, they are not paying anything more. However, If I take the care to their preferred shop, they would negotiate and “probably” pay for the difference to get the car fixed.

Under CA law, they can’t steer us to a preferred shop but by coming in 33% low on their estimates and telling me that if I choose to take it to one that I choose would result in me coming out of pocket to fix it. And since I intend for a cash settlement, they have more leverage over me.

Doesn’t this violate the steering consumer to their preferred shop? If their preferred shops provided me with quotes that are 33% different from them, why won’t they admit that their estimator may have made a mistake? This to me is their work around for low balling a cash settlement and forcing people to use their “preferred” shop. How can they have preferred shops but at the same time tell me that the shop’s estimates are wrong and too high?

I also could go through Farmer’s and am considering it. What if Farmer’s estimate come in at $500? I might take State Farm’s estimate and choose to subrogate instead. But would Farmer deny State Farm’s attempt to recoup the money if they have a lower estimate themselves?

Your expertise and thoughts to approach this is appreciated. It’s only a few hundred dollars here but it’s the principal of thing whole process that is bothering me.

Answer
Hi Hung,

This is how insurance companies make money. They steal millions of dollars from people every year by low balling the small claims. In many cases when the damage is low the vehicle owner will not have the repairs done. The insurance company knows this and will low ball the estimate and then say that if the vehicle actually goes into a body shop for repair and it costs more they will negotiate with and pay the shop if more is needed.

The reason they can get away with it is that they know that you are not likely going to file a law suit over just a $300 to %$400 difference. Unfortunately, there is no other way to force them to pay other than going to court.

I hope this helps
Richard Hixenbaugh