Picture this: you get in an accident, and your 2012 Porsche Cayenne needs repair. You call the insurance company and it refers, or steers, you to a local body shop. They call it their “preferred” shop, leading you to believe that somehow it has some special criteria that will offer you a better repair. Truth is, insurance companies prefer those shops because they will accept a certain low or discounted repair rate, agree to use a certain percentage of alternative parts, and provide other discounted or free services while repairing your vehicle. Sounds like a deal, right? Wrong.
First, steering you to a certain shop is illegal. As the vehicle owner, you have a right to choose where you want your vehicle’s repairs to be completed. Secondly, you will get what you pay for. It’s common knowledge that in any area of service you don’t necessarily get positive results through a lower rate. You’ll see why below.
As a vehicle owner, you pay insurance each month, quarterly or annually. The type of vehicle, your credit score, your age, your zip code, and the age of the vehicle, among other factors, determines whether you pay a higher or lower premium. Naturally, a 2012 Porsche Cayenne will be more expensive to insure and repair than a 2005 Honda Civic. However, in the event of an accident, the two automobiles are suddenly viewed as equal in the eyes of an insurance company. Regardless of your vehicle’s actual worth or the amount you pay each month for insurance premiums, both the Porsche and the Honda Civic will be estimated at the same flat repair rate by an insurer as if the two vehicles were the same, assuming the repairs are identical and require the same level of repair expertise.
At first this seems like a great deal. No hassle and cheap repair fees. However, being a conscious consumer, this should raise a red flag. How could a new vehicle worth $100,000 dollars and high insurance premiums be able to be repaired at the same rate as one that is worth $7,500 dollars and much less to insure?
If you think it shouldn’t you’re correct. You don’t pay the same price for regular gas as you do premium, do you? It all boils down to quality and the expectation that premium fuel will deliver better results.
What these insurance companies don’t tell you, is that by doing business with their contract body shops, you often don’t receive the quality you deserve or expect. Contract shops are most often times under contract to lessen the severity rate of the claim, meaning they may use inferior parts, cheap body repair strategies and paint materials, and sometimes simply ignore damage that should be repaired. They do this to satisfy their customer, the insurance company! Doesn’t make sense does it?
To add to the list, contract shops also often have an obligation to their partnered insurance company to use a certain percentage of second rate parts (used, re-manufactured aftermarket, etc.) each month. The usage of these parts are encouraged even though there is a great risk of them malfunctioning down the road, not fitting properly or not performing correctly in the event of another accident.
If the contract body shops don’t comply with these insurance guidelines, they could be placed on probation and eventually dismissed altogether. Because of this, many shops will go to great lengths to make sure they are not receiving a slap on the wrist for using too many new parts or charging for necessary repair procedures that their insurance partners have deemed unnecessary.
For these insurance companies, it does not matter that the consumer doesn’t receive OEM (original equipment manufacturer) parts or a high quality, safe repair. They are profit-seeking organizations that feel the need to be in control by saving time and money. This eventually leads to them making a profit at your expense, which could possibly produce bad or unsafe repairs to your vehicle. Insurance companies will often say they didn’t tell the shop to make an unsafe repair, while the body shop simply defends the unsafe repair by saying “the insurance company didn’t pay us to fix it right!”
So, moral of the story for all of you concerned drivers: be wary of flat rate prices offered by insurance companies at their choice (“preferred” or “contract”) body shops. Just because it’s cheaper, doesn’t mean it’s better. You’re dealing with your vehicle’s value and safety; therefore, it should be your choice, not theirs. Taking control of the situation and choosing a body shop that does not contract with insurance companies will most likely benefit you and your vehicle.