QuestionHello, my question is I have a check for an amount that is made out to me and my lein holder. I have a shop that will do it for alot less than what the check was for.what happens to the diffrence? Do they send it back to me? Do they apply it to the car balance? cut a new check of what the amount is? I still have to take the pictures and I dont plan to sign the check until they send it back for security reasons.
AnswerLaws and insurance guidelines vary from state to state, but most insurance companies will make the check out to either the insured and the lien holder or the insured and the shop. As long as the lien holder's interest is being protected and the car is being properly repaired, it really doesn't matter.
Your situation brings up the question of the car being properly repaired. In 20 years, I've never seen a body shop take an estimate and then do the exact same job for less. They may repair the car for less, but it won't be the job that is on the estimate. I may write an estimate for a new door and a shop will instead, repair the door. I may write to blend the color into adjoining panels but the shop may choose to settle for a really good (or bad) color match instead. I may write to remove all moldings etc. to avoid overspray and insure good paint adhesion. The shop may choose to tape everything off instead. Just these three operations on an estimate could potentially cut the repair cost in half. It may look good to you on the day the car is delivered, but a professional will pick it out from 50 feet away. It will also stand out like a sore thumb in three years.
Such a practice is also a violation of the policy terms, is dishonest and illegal. In many cases it also fails to protect the lien holder as if the job is not done properly and the car were to be repossessed later, they would have to pay again to have the job done properly. Who do they turn to in such a case? The owner and shop whom were paid to have the car repaired according to the estimate.
Another scenario that I see every day is where the shop believes that they can repair the car for less, then gets into the job, finds hidden damage and requests a supplement from the insurance company. Once a supplement is requested, the entire estimate is legally open for scrutiny. The adjuster then discovers what has been done to cut corners and re-writes the estimate to match the work done. At that point, the shop will be asked to write a check to the insurance company. If they refuse to do so, the insurer can then start collection procedures against the shop and the insured.
These situations are most common when a shop is attempting to bury a high deductible for the insured. Keep in mind that an insurance policy is a contract. At the time of purchase, you agree to pay the first "x" amount per claim in order to receive a certain premium. You can elect to pay a higher premium in exchange for a lower or no deductible. Just as you expect the insurance company to live up to their end of the contract by paying the balance of the repair cost, they expect you to honor your end by paying the premium dollars and the deductible. If the insurance company is paying a shop to put a new door on a car, then they are owed a new door as the estimate is also a contract per se. The practice of shaving estimates to get around these agreements has become so commonplace that most folks don't even think about what they are actually doing. There is a mindset that "I've paid thousands of premium dollars and am owed something back". The thing folks forget is that they've already received something back, even if the claim is less than the premiums paid. The insurance company earned that premium by assuming a risk that the insured could never afford to take on their own.
Ok, off the soap box now.
There. Slid it under my desk until next time.
The easiest thing for you to do is have the a reputable shop repair the car according to the estimate. Have the check made out to yourself and that shop. Next in line is the scenario that you have now with the lien holder. If the lien holder is willing to accept a repair outside the guidelines of the estimate, than they should be entitled any difference in the total amount. Keep in mind that they will also want a final copy of the repair bill and the estimate. If they do not match, there could be a problem.
Good luck and I'd appreciate your feedback.
