The Ohio attorney’s presentation covered the contracts that collision repair shop owners are party to, some without realizing their implications.
“It is extremely important that you have a written contract, which differs from a signed repair order,” Eversman said. “I’m a huge advocate of written contracts. In a direct repair program (DRP) relationship a contract exists before an accident even happens.
“An insurance company always acts as though a shop has duties to it,” Eversman continued. However, a body shop has no contract with an insurance company, unless of course, it is under a direct repair contract in which there may be concessions in terms of charges for parts, labor and sublet fees.
“You are the professional,” she said. “It is your professional judgment. Insurance companies do not fix cars.”
Eversman related the Hibbs vs. Allstate case, in which a California appeals court ruled in favor of the insurance company who provided their policyholder with the option to pay for damages to or repair an insured vehicle. According to reports on the case, an insurer satisfies its contractual obligation by electing to repair damages even though the policyholder may have refused to authorize repairs. The appellate court also held that an insurer can be liable in bad faith if it pays for repairs not authorized by the insured and subsequently recovers from the tortfeasor in its subrogation.
Eversman covered the options an insurance company has to pay a claim. An insurer satisfied their obligations under their policy in its election to repair a damaged vehicle as opposed to tendering the costs of a repair to its policyholder. Eversman said, “Its election has to be obvious.”
Parese presented a segment focused on the assignment of proceeds, which has become an effective tool for body shop operators. Parese said that in an assignment of proceeds a shop is essentially saying, “I won’t sue you for what you owe me and I’ll release your car without payment, [under the condition] a customer promises to release the assignor from claims assignee had against assignor…I’m allowing the assignor to stand in the shoes of the assignee.”
“There needs to be consideration and a valid assignment must have clear evidence of intent, description of subject matter of the assignment," Parese said. "It must be clear and unequivocal and must be noticed by the obligor. The consideration could be the fact you let them take their car without payment in full.