When a driver files an auto insurance claim with a carrier, a major component of the claim documentation comes from the repair shop’s estimate. The insurer can choose to pay the auto insurance claim based on the estimate, but this happy ending rarely occurs. Insurers strive to keep claim costs as low as possible, while repair shops strive to make as much money from each job as they can. These cross purposes often lead to conflict between the insurer and the repair shop, with the driver caught in the middle.
Carriers, Shops Negotiate Auto Insurance Claims
Many repair shops depend on insurance carriers for the bulk of their income. Likewise, insurance carriers depend on reputable repair shops to conduct the required work for their policy holders. The repair shops and insurance providers often negotiate the terms of the auto insurance claim before the repairs can start. In some instances, the insurer will generate the estimate and ask the repair shop to follow through with the auto insurance claim based on the insurer’s numbers. Repair shops can contest the estimate and the parties can negotiate a final price for the work.
Part Selections Can Influence Auto Insurance Claims
Most auto repair experts agree that replacing worn or damaged parts with factory-new components ensures the safest and most reliable result. However, some insurers encourage repair shops to use “after-market” parts on an auto insurance claim. The after-market parts, which can either be previously used or made from different manufacturers, are often less expensive than factory-new parts. These parts keep auto insurance claim costs down, but they also be of lesser quality, which can compromise driver and passenger safety.
Auto Insurance Claim: Repair or Replace?
Since the insurers’ mission is to keep auto insurance claim costs low, they may call on the repair shop to repair a part, rather than replacement. Repair jobs are frequently both less expensive and less time-consuming than replacing the same part. The auto insurance claim may call for the repair shop to repair parts whenever possible, while minimizing or eliminating the need for replacement parts. The repair shop must determine if the vehicle will still be safe to operate without replacement parts.
Labor Costs Prompt Auto Insurance Claim Negotiations
Insurers and repair shops can also negotiate on the other major part of any auto insurance claim: labor costs. If the insurer receives an estimate from the repair shop, the insurer may dispute the shop’s listed labor costs. They may argue that the hourly labor cost, the number of hours quoted, or both, are out of line. In the reverse case, the repair shop can contend that the insurer’s labor estimates on the auto insurance claim are too low.
Source: USA Today
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NOTE: This blog post is a news story and is not an endorsement of Arguello Law Firm by any party mentioned herein.