Curbing Body-Shop Scams

A comatose driver rear-ends your Corolla on the 405, catapulting you and your beloved ride into a typical body shop, defined by the scent of acrylic paint, the screech of grinders on fenders and a symbiotic relationship with an insurance company.

Many body-shop mechanics and managers say that a relationship with an insurance company brings in more customers, who in turn get better deals on repairs. Critics charge that to keep costs low, insurers have begun to tell repair shops how to do their job, in some cases pushing them to use cheaper generic parts and to lower labor costs. In one large case, an Illinois jury fined State Farm $1.2 billion for forcing affiliated auto repair shops to use shoddy parts.

Now California state Sen. Jackie Speier (D-Hillsborough) is offering SB 1648 to address the problem. Though her bill would not prohibit insurance company affiliation with auto repair facilities, it would outlaw insurance company-owned auto repair chains. Such chains can present tough competition for independent shops.

There is nothing inherently wrong with insurance companies owning auto shops, so long as they don’t defraud consumers--something that independent auto shops have been known to do without prodding by insurance companies. Speier’s bill wouldn’t do anything to combat such rip-offs, nor would it address the real problem: insurers that use such phrases as “We guarantee the work at this shop” and “No adjuster necessary” to lure customers to preferred garages, a practice that saves the insurer money but may not offer customers the best repair.

The Senate passed the bill. The Assembly shouldn’t.

A better policy would be to encourage consumer choice in auto body repairs by keeping insurance companies from heavy-handedly directing customers to affiliated shops.

Here’s what makes sense: Insurers tell claimants that they are affiliated with a particular auto shop but lay off the subtle (or overt) coercion. Unpressured customers then take their chances, selecting either the insurance company-endorsed shop or an independent garage.

However, if lawmakers are really concerned about their constituents’ battered cars they will do something meaningful like giving the Bureau of Automotive Repair and the Department of Consumer Affairs the resources to aggressively crack down on auto shops--insurance company-affiliated or not--that negligently cut corners.