Two Texas advocacy groups called the Texas Department of Insurance last week for not doing their job to protect consumers against insurance companies pushing collision shops to chop corners on car repairs.
In an episode of Texas Watch’s “In Conversation,” Executive Director Ware Wendell and Autobody Association of Texas President Burl Richards expressed their frustrations with insurance companies with regards to safe repairs, and noted it as being a nationwide issue. They agreed OEM procedures ought to always be followed. Richards said invoking the appraisal clause is a “very fair remedy” for shops to obtain repairs done safely but still get paid as well as to benefit consumers who feel like they’re being under-indemnified by eliminating lengthy and dear court battles.
“I repair the automobile and deliver… [it] to my customer and allow the appraisal clause follow its course,” Richards said. “I accept whatever both of these third-party, unbiased adjustors come up with. We typically discover that it’s extremely fair.”
When the clause is invoked, a contract between two third-party appraisers – one hired through the policyholder and the other by the insurance company – is created on which the repair cost or total loss settlement will be. Every state doesn't require insurers to achieve the clause within their policies, and those that do, don't all have the same total loss thresholds. Some states also only permit the appraisal for use on total loss settlements.
Wendell and Richards brought up the Seebachan v. John Eagle Collision case as an example of unsafe repairs. Experts for the plaintiffs said in Texas court papers that the harshness of the crash and Matthew and Marcia Seebachan Seebachans' injuries were the result of your body shop adhesive-bonding the Fit's roof throughout an $8,500 hail repair in 2012 for the prior who owns the vehicle. Honda OEM repair procedures call for the rooftop to be welded.
“We’re attempting to sound the alarm bell that you absolutely cannot fix every car standard the way you did back 20 years ago, even 10 years ago,” Richards said. “That’s why it’s so important that we get reimbursed properly so that you can pay the training [and] the gear that’s essential to make these repairs.”
Oftentimes, Wendell said, insurance providers break the rules and say collision damage isn’t that bad or desire to use aftermarket parts instead of OEM parts because they don’t wish to pay more for that length of time and parts necessary to follow OEM procedures. Richards added that it’s common for insurance adjusters, who have never repaired an automobile, to make decisions about how exactly repairs ought to be done.
“The maker may be the one which built the vehicle, designed the vehicle, crash-tested the car, engineered the vehicle,” Richards said. “Who easier to say how it’s repaired?”
Some aftermarket parts haven’t been crash-tested and don’t support impacts the way or aren’t made to fold on impact like OEM parts are, which can modify the timing of safety systems throughout a crash, like when the airbags deploy, he said.
Texas Watch intends to push a bill again that failed to allow it to be from last year’s session that Wendell said would’ve given consumers the ability to choose quality parts.
Prevailing rates were also covered within the video for which Richards said insurance policy language is outdated and requires to be changed to protect consumers. Prevailing minute rates are the rates insurance companies pay to shops for labor regardless of what the store rates are. Wendell said if shops aren’t receiving payment enough in labor they’re unable to invest in training their technicians and expensive equipment necessary “to complete the job the right way.”
“When insurers won’t pay the prevailing rate, the customer or the shop eats the price,” he said.
According to Richards, a lot of shops think that customers should spend the money for difference simply because they should’ve known what was in their insurance plan.
“Let’s be truthful, we don’t all read our policy,” Richards said. “From my perspective, a person shouldn’t need to pay the main difference over their deductible. That’s why they have insurance.”
He added that the prevailing rate policy language the Texas Department of Insurance uses is “upright an under-indemnification issue and nothing’s being done about it.” ABAT has filed many complaints with evidence over many years towards the TDI and got generic responses back that said the department doesn’t regulate body shop rates and what’s fair and reasonable, Richards said.
“We’d like the [Texas] Department of Insurance to complete its job and that we feel like this is actually right in the intersection of insurance and also the consumer because it is dependant on how much money the insurer is going to spend to make sure that that repair is performed the right way and it’s done the safe way,” Wendell said. “We want TDI to take action.”
On something, Wendell brought up that in Texas, consumers possess the right by law to consider their vehicles towards the shop of the choice for repairs, but they’re sometimes steered to certain shops by insurance companies. Richards asserted typically occurs when there's a direct repair program arrangement between shops and insurers where the insurance company will refer business towards the shop as long as they call the shots on the repairs.
“I’m not likely to say that each and every insurance provider repair program is the fact that way or maybe a store is on the program that necessarily they’re not repairing vehicles properly, however i can tell you predominantly when that shop runs into that agreement with this insurance company the insurance provider becomes the customer, not the customer,” Richards said. “They’re employed by the insurance company in line with the procedures or processes the insurance provider dictates, not the manufacturer.”
