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Dilemma


Recently, I was speaking to a body shop owner. He was frustrated with how the insurance appraiser was handling an estimate, specifically the times and rates he was allowing for airbag replacement. It seems this appraiser was not allowing these times to be charged at mechanical rate ($55/hr), even though the price guides specifically indicated (M) next to each of the times stated. The appraiser maintained that these were body repair times ($42/hr), while the shop owner maintained these were mechanical rates and times.

POINT (Insurance Appraiser)

Why should an insurance company pay out more money to the same body technician for working inside the car on accident related damages than he does working outside the car doing the same? Isn’t the sensor a body component? The same question can be asked about the airbags themselves. They are all listed parts within the body repair estimating guide. The labor times and rates in these estimating systems are only guides, not gospel.

Every insurance company makes its own decision regarding labor rates and times, database preferences and allowable exceptions to these rules. Like a consumer, the buyer (Insurance Company) is entitled to determine what price they are willing to pay and if the retailer (body shop) doesn’t want to sell their services for that rate, then they don’t have to accept the job. Competitive pricing is fair business.

COUNTERPOINT (Body Shop)

When a vehicle goes to the dealership to have the airbag system reset, it gets sent to the mechanical department, not the body shop. The insurance company has no problem paying a dealer the full mechanical rate ($89.40/hr) to clear the light and reset the system. The trained technicians at these dealerships are schooled in restraint systems and are in the mechanical half of the shop, and therefore are entitled to mechanical rates.

How can an independent body shop be expected to have the same skills and equipment as a dealership’s mechanical shop? If a body shop is expected to repair these systems in-house and have the scanners to reset them, then why can’t they get paid the same rate as a dealership? If the body repairmen are expected to do the same work as a factory trained tech, then why should a body shop receive a lower rate than a dealerships?

Resolution

Everyone has their own guideline in determining what to charge. Body shop owners and the insurance company policy makers are both entitled to their own opinions, but these discrepancies need to be worked out BEFORE the job is done, not after. The estimate from the insurance company indicates what they are willing to pay. Once a shop accepts it, (barring supplemental damages) they are agreeing to it and the terms within it. If the prices and times don’t match, then the job shouldn’t be started until they do.

Print | posted on Monday, June 18, 2007 4:35 AM

Comments on this post

# Good mechanics are hard to beat

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