Are Insurers Steering Drivers Wrong on Auto Body Shops?
Although most insurers don’t grant individuals the freedom to choose elite doctors for their health care, motorists still have the unusual luxury of hiring any body shop they want if their vehicles get wrecked.
But, as with trends in health care, auto insurers are increasingly attempting to direct their customers to garages that are part of a network in an effort to lower costs while still offering competent repairs.
It doesn’t always work quite so well. Allegations have surfaced that the insurance industry jawbones these preferred shops into providing marginally adequate repairs, using substandard, non-original parts and skimping on labor.
Indeed, the California Department of Insurance is preparing new regulations that will reinforce the insurance industry’s legal obligation to give customers the freedom to choose their repair shops. The new regulations could be issued this summer.
California law states: “No insurer shall require that an automobile be repaired at a specific repair shop or direct, suggest or recommend that an automobile be repaired at a specific shop” unless the customer requests it, is informed of his or her rights in writing and the insurer stands behind the repairs.
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The insurance industry, however, says it can reap significant costs savings--and pass them along to policyholders--by establishing recommended shops.
“These shops are recognized as having trained technicians and the equipment to repair cars properly,” said Ken Zion, owner of Automotive Collision Consultants, a Long Beach accident investigation firm. “On the whole, it’s a quality deal. The insurers contain their costs, because they don’t have to have their people inspect every job.”
But shops that aren’t in the programs intensely dislike the arrangement, Zion adds. The competition is hot to get these contracts, and many top-quality shops are left out.
State Farm Insurance, the largest auto underwriter in California, already has a program, known as “service first,” in which customers can choose to have their repairs estimated and vehicle fixed without an inspection by a State Farm adjuster, spokesman Dave Hurst said.
State Farm is careful to make clear that it is not requiring customers to go to the selected garages in its program, Hurst said. The company also maintains a list of recommended garages outside its service-first program, which it provides customers on request.
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The Department of Insurance, however, has received complaints from motorists across the state who say they were pushed into taking their vehicles to specific garages that did poor-quality repairs.
A lawsuit filed last year in Los Angeles Superior Court, for example, charges that Clarendon National Insurance Co. forced one of its customers, Paul Butler, to use a body shop 60 miles from his home.
The suit contends that Clarendon “intentionally and deliberately allocates insufficient funds to its direct-repair facilities . . . using poor-quality aftermarket parts.” The suit claims that the $6,300 of repairs to Butler’s truck during a period of eight weeks were “shoddy, unsafe and substandard.”
An attorney for Clarendon said the company does not comment about ongoing litigation, but added that the practice of using preferred body garages provides consumers with good service at competitive prices.
“This is not a small problem,” said Robert F. Brennan, the Glendale attorney representing Butler. “The insurance industry has repair shops over the barrel. Insurers are ripping off their own customers.”
Ralph Vartabedian cannot answer mail personally but responds in this column to automotive questions of general interest. Write to Your Wheels, Business Section, Los Angeles Times, Times Mirror Square, Los Angeles, CA 90053. Via e-mail: ralph.vartabedian@latimes.com.
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