You were heading to the Nascar Hall of Fame on Martin Luther King Jr. Boulevard in Charlotte, North Carolina when another driver rear-ended you. You
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Often, the property damage aspect of a collision is overlooked, with more time and attention focused on the personal injury portion of the claim. In many ways, repair shops and insurance companies count on this, as it allows them to prioritize profits over proper repairs.
Repair shops know that the vast majority of consumers will never find out about faulty repairs. Even if they do, it will be difficult, if not impossible, for the repair shop to be found liable for these poor repair services. This mindset, which is prevalent throughout the repair industry, encourages corner-cutting on repairs and can lead to fraud cases.
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Call the accident lawyers at our firm at (800) 351-3008 if you believe you have experienced auto repair fraud.
The Insurance-Body Shop Relationship
Issue 1: Who is Inspecting the Vehicle & Where?
After a collision takes place, the vehicle will generally be taken home, to a tow yard, or a repair shop. At that point, an adjuster is contacted and will usually come to the vehicle to do an initial inspection and damage estimate.
It’s important to know where the vehicle’s initial inspection/estimate was done. If it was anywhere other than a repair shop, then chances are it is not really complete. This is because any inspection performed at a residence or a tow yard is limited, and no internal assessment has likely occurred.
At a residence or tow yard, conditions will rarely allow an adjuster to see everything they need to see to give an accurate estimate. For instance, there is no lift to put the vehicle on to see underneath it. More importantly, the vehicle needs to be taken apart (a.k.a. a tear-down) to perform a precise estimate to see what cannot be seen from only an exterior visual inspection. Even at a body shop, a tear-down will not occur until the insurer or consumer has given the shop the go-ahead to start repairs.
Why This Matters
Even though many estimates are given prior to the car being taken apart, it is amazing how many insurance companies end up paying the same amount as the pre-tear-down estimate by the completion of the repairs. If the damage to the vehicle was moderate or more significant, this is often a red flag that something isn’t right. That’s because it is almost impossible to fully repair moderate or greater damage without supplements in most instances.
Therefore, a final bill that is the same as the estimate means only one of three things:
- The body shop never fully inspected and diagnosed the vehicle of all damages and required repairs
- The estimator is so skilled that they were able to estimate unseen damage accurately
- The vehicle was torn down, and additional repairs were done without a supplement.
Unless the damage to the vehicle is very minor, the third option is generally the most common.
When the final repair bill is the same as the pre-tear down estimate, it usually indicates that the body shop is either not performing necessary repairs or performing repairs outside of the invoice.
Why is This Happening?
Most repair shops that engage in this kind of behavior know better than to bite the hand that feeds them. Nearly every insurance company has direct repair programs (DRPs). Different insurers will use other names to identify these providers (e.g., “Blue Ribbon,” “Preferred,” etc.), but they all function in the same manner. The insurance company steers its customers to a particular DRP. In exchange, the insurer gets repairs performed at lower set rates and other provisions agreed to according to a DRP agreement between an insurer and a body shop.
So why would a body shop perform some repairs that are not included on the invoice? They do it to keep the insurance companies happy to ensure that the DRP referrals continue. From the vantage point of the body shop, it is more profitable for them to do some repairs “off the books” to keep the insurance company happy. So in the short term, body shops are happy to take a slight loss on repairs since they know that it will provide them with more business from the insurer in the long run.
How Does This Affect the Repair?
Within the repair industry, technicians are most commonly paid on commission or “flat rate.” This means a technician is paid a preset number of hours, based on the time provided in a database to perform a task. Regardless of how long it takes the technician to complete the job, they will only be paid according to the pre-established database time. A real-life example is when a bumper cover has a database listing of 1.8 units or hours. The technician is paid 1.8 times his hourly salary if it takes him 1.0 hours or 3.0 hours.
If, for example, the technician is getting paid $200 for a particular repair, what incentive does he have to put in any amount of time greater than the bare minimum? The answer is that he doesn’t have any motivation other than complete the repairs as quickly as possible and move on to the next repair. The real incentive is to complete as many repairs as possible as quickly as possible.
So in our bumper cover example, the same technician may be able to complete the bumper cover and two other repairs within the 1.8 hours he was allotted for repairing the bumper cover. This results in an environment where speed of repairs is encouraged over the quality of repairs. This also keeps insurance companies happy, as they keep rental rates down by shortening the time for repairs. The only party that doesn’t win with this arrangement is the consumer. With this type of incentive for technicians, it is no wonder why so many repairs are of such poor quality.
Issue 2: Who is Performing the Repairs?
How do you choose a body shop? This is probably the single most significant decision you will make regarding a collision property damage claim.
Unfortunately, there is no simple answer or advice as to how to pick a good repair shop. Even word of mouth can be misleading unless the person referring a shop to you knows vehicles well enough to guarantee that they weren’t also the victim of poor or omitted repairs. Let’s face it; vehicle owners will never discover the majority of shoddy repairs. The best advice is to go to a shop that is not on an insurer’s DRP list. Ask the insurance company for a list of their direct repair shops and then cross those off the list. From there, it can be a good idea to look for body shops that are certified by I-CAR or the manufacturer, though even many of those shops still turn out poor-quality repairs.
The DRP Sales Pitch vs. the DRP Reality
The insurance company will often tell claimants, “You can take your vehicle anywhere you want to get it repaired. However, we cannot promise you we will pay for all of the repairs unless you go to one of our direct repair shops, in which case we warranty the work and promise to pay the entire bill. The reason we cannot promise otherwise is some body shops overcharge for their work, and we will only pay market rate.”
At that point, the claimant thinks to themselves, “Gee, the insurance company is in the business, and they must know who the best is, and if they are guaranteeing the work and covering the bill, it is a no-brainer.”
Of course, most vehicle owners fail to realize that their interests and the insurance company’s interests don’t align with each other. The consumer thinks he’s getting a guarantee on his repair. What he doesn’t realize is that virtually every shop guarantees their repairs, so why does the insurance guarantee even matter? The answer is that it doesn’t.
Again, the basis of the DRP relationship is that the body shops benefit by getting more business and the insurance companies benefit by getting more control over the repairs performed and the costs of those repairs. This relationship creates a constant conflict of interest between body shops and consumers. As a result, DRP shops should be avoided whenever possible.
In North Carolina, an insurance company is required to “total loss” any vehicle that has incurred damages exceeding 75% of its pre-accident value. In South Carolina, a vehicle will be a total loss if the repair cost plus the salvage value is greater than the vehicle’s actual cash value. If the vehicle is totaled, the insurance company generally has to pay out the maximum amount on the claim possible, and the body shop doesn’t get to perform or get paid for any repairs. This is a lose-lose situation for the insurance company and the body shop. Therefore, body shops have a huge incentive to artificially keep repair estimates below the total loss threshold. After all, it is more profitable to perform a sub-par repair with some costs eaten internally than not to perform the repair at all.
This incentive to avoid a total loss creates a vicious cycle where the consumer again loses. The process begins with the estimate. The initial estimate is not intended to be accurate but is instead intended to provide a general road map to what will need to be repaired. The idea is that supplements will be used to find later-needed repairs. For collisions greater than the most minimal of contact, an initial estimate will almost always have to be supplemented. Once supplements begin to be added, the body shop must be careful not to let that amount creep over the 75% (NC) or actual value (SC) threshold. Otherwise, if they cross that threshold, the repairs must stop, and the car must be totaled. As you can imagine, insurers are not happy to have to pay the cost of the total loss in addition to the repairs costs, so body shops avoid this outcome at all costs.
This creates the most significant problem when there is severe damage, such as to the vehicle’s frame. In many cases, severe frame damage will require that the entire frame be replaced instead of repaired. However, between the costs of the frame and the labor involved in taking the whole vehicle apart, a frame replacement will usually lead to a total loss. As a result, body shops will frequently try to do anything and everything to avoid replacing the frame. Some frames can be repaired, and some can’t. Framework requires some skill and precision and is not the type of repair that should be rushed. However, due to the incentive for technicians to complete jobs and avoid totaling out vehicles, the amount of time and attention required for framework is often insufficient. As a result, we frequently see cracked frames or have damage on them from frame repairs done improperly.
Ask any repair technician why manufacturers have repair standards, and the answer is always the same: safety. It would make sense that the safest way to repair a vehicle would be to follow the instructions from the company that manufactured the car.
Think about it. You have a vehicle with countless parts that are manufactured uniformly by each manufacturer. The welds and bolts are not just put on randomly. Each weld, bolt, etc., were carefully designed into the vehicle and placed with precision. So it is not hard to see why the same exactness should be expected following a repair. The only way to get it back to factory condition is to follow the manufacturer’s guidelines for the given repair. Without following the guidelines, it is nearly impossible for a technician to perform most repairs as the manufacturer intended. Despite this, you will be amazed at how many repair shops will admit that they did not use any manuals or guides during the repair of the vehicle in question! A repair shop that doesn’t even bother to look for manufacturer’s guidelines is essentially saying that they don’t bother worrying about how to repair the vehicle safely.
Finding Manufacturer Standards
Almost all repair shops of any size or volume will subscribe to one of the databases that are out there that have manufacturer guidelines. The most popular product on the market currently is ALLDATA. ALLDATA compiles repair information from manufacturers and stores it on their website. It is essentially a one-stop shop for repair manuals for all makes and models with continuing updates. ALLDATA offers a professional subscription fee for body shops and a consumer version that allows you to pay for guidelines for a single car for $27 for a one-year subscription. Of course, any mechanic or consumer can go straight to the manufacturer’s website to find much of this information.
Whether a vehicle is repaired correctly or not plays a major factor in how a car will respond if involved in a subsequent collision. If the guidelines aren’t followed, there is a solid chance that the vehicle will not react as the manufacturer intended it to. This could cause something as small as the side airbags to be delayed by a tenth of a second. However, that tenth of a second could be the difference between life and death in some collisions. The sad fact is that there are undoubtedly countless fatalities every year that are likely due to a prior repair job that was not done up to standards. The vehicle owner never discovers many poor or omitted repairs.
How to Determine if you Have a Case Worth Fighting Over
Most repair techs will tell you that a post-collision vehicle will never be exactly like it was prior to a collision. It’s just not possible. Additionally, some consumers will make a mountain out of a molehill when complaining about repair defects. The key to these cases is the safety aspect. Unfortunately, many of the safety-related repairs can’t be seen by a routine visual inspection.
The best approach is to have your vehicle taken for a post-collision inspection as quickly as possible after the repairs are complete. Have a second set of eyes look over the vehicle and see what they find. Generally, this will be the starting point of your case if there will be a case. It is good practice to have your post-collision inspector write a letter to the insurer stating what he found, especially if he has inspected the vehicle and deemed it to be unsafe.
Fighting Fraud With Civil Litigation
You’ve got a second opinion that has found either improper or omitted repairs, and you are willing to go through the litigation process however long it takes to resolve their claim. What now? Our Hickory auto repair fraud attorneys can start by preparing a demand that details your damages. However, it is our experience that this rarely works, as body shops are slow to admit any fault on their end. Instead, we can file a complaint and attempt to include as many facts and exhibits as possible. Documents such as the estimates and supplements and any communications between the vehicle owner and the body shop are beneficial. The second opinion from the other body shop should also be included.
Some of the most common causes of action include violations of Unfair and Deceptive Trade Practices statutes and fraud and other state-specific statutes. The causes of action depend on the facts of the case. At The Law Offices of Jason E. Taylor, our lawyers are experienced in working on cases regarding automotive repair fraud or similar dishonest tactics by repair shops. If you think you have been the victim of automotive repair fraud, we are ready to help.
Call our office today at (800) 351-3008 to discuss how you may be entitled to compensation.
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