A New Way to Handle Insurance Short-Pays for Auto Collision Repair Facilities
The Old Way: Just Cave to the Insurance Companies and Take Whatever They Decide to Give You.
Imagine this: you decide to get a quote from Geico for auto insurance. Geico says, "$1,400 for 6 months". You say, "Start the policy, but because Progressive and Allstate charge only $1,230, I'll just send you a check for $1,230." Geico would correctly say, "Nope, it's $1,400." Now, imagine that you say, "Look, I'm only approving $1,230 because that's the competitive market rate in this area. I'll send you the check in the mail." You send the check and Geico accepts it and starts the policy. Do you still owe the $170? You sure do, and if you don't pay it, Geico will simply cancel your policy and leave you unprotected if an accident happens.
Now, let's say you charge $1,400 for your work and Geico says, "I'm only paying $1,230 because other shops in your area will accept that amount." This sounds just like the situation above, right? Do you say, "Nope, my rate is $1,230 and its based on my own supply, demand, overhead expenses, and desire to make profits?" Many collision repair shops do not. They simply cave, adjust their own invoice, and take whatever they get. Even worse, at the insurance company's request, some shops even fail to follow the OEM specs and leave their customers with a potentially unsafe vehicle.
Basically, if your estimate is higher than theirs, they may owe you money.
The Fight Against Insurance Short-Pays
While working as an attorney with auto collision repair businesses, I became increasingly aware that auto repair facilities suffer at the hands of insurance companies in a unique way. Insurance companies, knowing the difficulties involved in recovering payment in Texas, simply pay whatever amount they please.
Many collision repair facilities believe that just because the insurance adjuster "approves" or "authorizes" a certain amount, that's all they are entitled to receive. But, take a look at your insurance check and paperwork. Does it say anywhere that you are releasing all your claims by accepting their check? Go ahead, look.
Some collision repair facilities know that they are entitled to their full rate and that it's not fair that they have to cave to the insurer. But, before I started this company, many repair facilities simply had no reasonable course of action against insurance companies for underpayments and were forced to simply accept the loss.
It is very difficult and time-consuming to pursue payment, especially for people who are not familiar with the legal system. "Texas is not a direct sue state," one insurance attorney volunteered to me. Of course, I'm well aware of the fact that an insurance company generally cannot be sued directly. Many steps need to be taken, and many hoops need to be jumped through, to receive payments from insurance companies through the legal system. Insurance companies know this.
Even worse than simply losing revenue, many auto repair facilities are forced to cut corners by making repairs that are inconsistent with the OEM specs, thereby exposing themselves to incredible legal liability if anything goes wrong later. Everyone knows that "the insurance company made me do it" will not be an excuse if you cut corners and someone dies or gets hurt because of shoddy repairs.
The Solution to Insurance Short-Pays in the Auto Repair Industry
Before starting this company, I represented only companies that reached out to me for representation in individual cases. Deciding that there must be a better way to deal with the issue of insurance underpayment in the collision repair industry, I spoke to several auto repair shop owners, attended the Houston Auto Body Association Fall Conference, and read auto repair magazines to gain insight into the industry. One of the biggest problems I noticed was that the insurance companies simply slashed the labor rates by a large percentage in order to pay auto body shops less than their fair labor rates.
I've been able to help auto repair businesses recover lost revenue by pursuing payment from insurance companies! However, this was still a long and uncertain process; a better solution was needed to suit the needs of auto repair facilities who did not want to go to court and wait years to get paid.
Because this is a new way of dealing with short-pays, some collision repair companies start slow will have questions about the process. That's okay! We are here to answer questions. We will help you get paid for insurance claims that are up to 2 years old.
Basically, if your estimate is higher than theirs, you may be leaving money on the table.
-- Leroy B. Scott, PhD, Esq.