PENNY WISE-POUND FOOLISH

Yes Virginia we are in a recession. Just shortly after Thanksgiving the top 3 news agencies reported that we are officially in a economic downturn. I'm sure this report isn't news to anyone, especially those in the body shop business. We have seen a steady decline in our business for the past 18 months, which very closely parallels the national economic trend. No, we are not looking for a bailout; in fact, I think that this adjustment is necessary. Businesses, both old and new are forced to redefine their purpose, set new standards and step up to the new economic realities. Those unable or unwilling to do this will very likely find themselves out of business.

The industry wide change is causing fear, both in the minds of body shop owners and potential clients. Shop owners are being placed in a precarious position. The Bureau of Automotive Repair, the agency who regulates the collision repair industry, states that estimates may only be written for damages that can be seen, ie, visual damages. This means, if a car was rear ended and the bumper was badly damaged, we would only be able to put a replacement bumper on the estimate, and not a bumper reinforcement, nor bumper brackets that may actually be needed to complete the repair and bring the vehicle back to pre-accident condition both esthetically and from a safety stand point.

The economy has forced customers to prioritize their spending and because of it, many are un-able or
un-willing to pay their deductible ranging from $100-$1000 dollars. Many customers are therefore making the decision to settle their claims with their insurance companies. The whole situation is a mess and it's both the consumer and the shop owners in the end, who loose. Insurance companies who cash out on claims, actually save money. Usually, the insurance company write an estimate and payout for the "visual damage" to the vehicle and once a payment has been accepted and the check has been cashed, it is considered full and final payment.

Unfortunately, customers who repair their vehicle at a later date, often become angry when the final repair estimate ends up costing much more than their deductible amount. In March a young woman brought her 2008 Toyota 4 runner in for an estimate for damage to the left quarter panel and rear bumper. The estimate we wrote was for $3304.12 of which she would have been responsible for her deductible of $250. The woman settled with her insurance company for $3054.12 and promptly cashed her check.

In October, just seven months later she decided to repair the vehicle; the new estimate, after we had an opportunity to remove the damaged parts and write a complete sheet was $3917.89, this included parts price increases, additional repairs to the inner structure, a bumper reinforcement and left bracket. The customer paid $863.77 more than her deductible. Our customer felt cheated both by her insurance company and by the body shop. The customer was explained the repair process and understood the fees involved before the repairs were started, even so, she felt that the body shop should absorb some or all of these additional fees.

I see this all of the time and usually agree to reduce our shop rate substantially to help out, but I think that consumers need to be aware of the situation. My advice to those who are considering settling a claim with an insurance company is to hold on to the check. If you have minor damage that you can live with that's one thing, but if you have considerable damage, it might be worth 1-3 hours of labor to have a body shop look for hidden damage and write a complete estimate. This process is called a tear down and usually cost between $66-200. If you decide at that point to repair the vehicle, most businesses will include this as part of the repair. If not, the knowledge gained can help in you negotiations with the insurance company.