Overcoming common insurer battles

Aug. 1, 2019
Getting properly compensated for repairs begins with communication and understanding.

As vehicles continue to advance with electrical components, safety features and new metal substrates, repair procedures will continue to become even more complex. These complexities create new and unique reimbursement needs, which can be difficult to be fully compensated for. It is easy for repairers to feel that we cannot receive fair compensation for what a repair requires. Many times, these items are things repairers would prefer not to do, as they add complexity, difficulty and liability to our already complex, difficult and litigation-prone jobs. Other times, simple and well-known items struggle to be reimbursed either partially or in some cases, entirely. In all cases, I have found the reason for improper reimbursement to usually be the same.

Payers seeking to control costs is normal for any individual or business. As collision center owners and managers, we want to control costs on materials, parts, labor, facilities and more. If you have ever reviewed a profit and loss statement and tried to figure out how to reduce loss, then you have tried to control costs. If you have ever negotiated price on a car or home, then you have tried to control costs. In all of these negotiations, data has to be shared in order to understand what is being asked, the value in what’s being asked for, and then to determine a fair price for both parties. The reason one house or car is worth more than the one right next to it are the features, quality, condition, etc. If these reasons are not well represented and understood, then the difference in price will not be accepted.

It is crucial for all successful collision repair centers to include everything that will be required to repair the vehicle during the estimating process. Parts that require replacement, labor required for repairs, and materials necessary to bring the vehicle to pre-loss condition, should all be included on the estimate. The cost of doing business is paying for insurance, lease payments, training, etc. The cost of doing business does not include any item or material that goes on a vehicle or any labor required to fix that vehicle. Non-included labor may include researching or purchasing subscriptions for repair procedures, scanning, diagnosing, etc. Paint materials should cover the liquids applied, as well as basic filler, sand paper and tape. The paint material calculation is out of convenience for all parties not out of any type of requirement. Paint materials do not include adhesives, foams, seam sealers, undercoatings, etc.

A proper estimate does not mean the negotiation is over. Proper estimating simply sets the asking price. You should not set the asking price for more than the value of the repairs. Setting an exorbitant price upfront will create distrust and lead to difficult negotiations. It is always easier to negotiate when the asking price can be reinforced with data and obvious value. Once the asking price is set, the next step is to present why the estimate delivers that value. What items make this repair more difficult than the vehicle being repaired next to it? How is the vehicle going to be fixed differently than the shop next door who quoted half the price? Why is the price being asked worth the amount be asked? If these questions cannot be answered, then the asking price is too high.

Justifying the price and showing the worth is a critical step in the estimating process. It is crucial to notate, document and illustrate everything you are asking for. Again, this helps to add value and reinforce the asking price. One way to do that is with multiple photos from different angles and distances. Great photos are of paramount importance for proper compensation when the person reviewing the claim is not present. A good exercise is to review a fellow co-worker’s photos and attempt to write an estimate from them. Then, have them do the same with photos you have taken. The repair hours and parts that you do not see in their photos may shock you. Doing this simple exercise demonstrates how difficult it is for insurers who aren’t in front of the car to fairly reimburse a claim.

Complex repairs require a multitude of materials for proper completion. These may include rivets, glues, unique welding wires, and much more. Ten years ago, these types of repairs were quite easy. As metal substrates have advanced, so too has the required repair methods. It can no longer be assumed how to properly replace something even if you just done so one a similar model. With these complex repairs the compensation is just as complex. Items that have never been included on an estimate now have to be. These items may not be common knowledge, especially to customers and insurance adjusters. It is not fair to expect anyone to accept a bill with items that they do not recognize. It is also not fair to expect people to pay for things they do not understand.

With new or rare items, it is critical to properly document and communicate why they have to be done and why they must be paid for. This documentation can be as simple as referring to repair procedures. It can also be something as time consuming as photographing each individual step. In any of these instances, education is supremely important for compensation. At one time, shops did not know there was a need to write for these additional steps or that they even had to be done at all. Until these new items become commonplace, do not alienate yourself by refusing to educate others. Always be willing to demonstrate, explain, and mentor those who are unaware in order to receive complete payment.

Base coat reduction is one battle that simply will not go away and is slightly different than those previously discussed because of the tendency to be extremely biased. That being said, utilizing a similar approach of educating can help overcome the battle. There are three sets of opinion on this. The first argues that it doesn’t take any less time to paint an edge than it does to paint the whole panel and thus, no reduction should be taken. The second argues that blend time is 50 percent of the basecoat time, which includes full clear, so therefore repairing an edge is not much different. The third is that of data and understanding. The first two are from a point of view from a seller who doesn’t want to explain why it’s worth more and the second is that of a purchaser who doesn’t want to pay any more than they have to. In order to understand the true value, it is crucial to know the difference between blending and painting a repaired panel.

The first difference is the preparation required for a blend is less than that for a repaired panel. Light DA sanding or scuffing provides the necessary preparation for proper adhesion. With a repaired panel, additional feathering of the damaged area is required (this does not include the application and blocking of primer as this is not included in refinishing). The repaired panel may require more time before it gets into the paint booth. The second and major difference occurs inside the booth, where a blend panel is substantially easier than a repaired panel. Blend panels already have the proper ground color and simply need a light application of the new mixed base coat to give the appearance of a perfect match. Depending on the color and paint manufacture, the number of coats on a blend panel is around half or less than half that that of a repaired area. A repaired area requires the application of sealer once it is ready for the paint booth. Sealer is not required at all on a blend panel. There is additional work to mix the sealer, spray the sealer, and then clean the spray gun. Once the application of the basecoat begins, additional coats of paint are required to get full coverage over the non-color matched sealer. These additional coats take additional time and material, both of which are covered with an increased base coat time. Once the panel is based, the clear coat time is similar and that time is understood and calculated. In essence, there are more steps to a repaired panel then a blend panel; thus, blending and refinishing after repairs cannot be compared and cannot be used in negotiating times.

What should definitely be negotiated in basecoat reduction is the difference in labor of a full area refinish and that of a partial area refinish. In refinish time, there are basically three items that make up the total basecoat time. First is the preparation required for cleaning, sanding, masking (first 36 inches). The second step is the sealer and the final step is the basecoat. The first step takes the same amount of time no matter how big or small the refinished area. The second step, or sealer, makes up 7 percent of the basecoat book time. Finally, the basecoat time which makes up 19 percent of the database basecoat time. These percentages are from MOTOR’s database. The combined time for base and sealer is 26 percent. An estimator should never eliminate 26 percent or more from the basecoat refinish time as anything more than 26 percent does not account for any application of paint on the panel at all. Tacking the panel between coats is also included in that 26 percent, as well as a few smaller steps. As a fair guide, 20 percent of the basecoat time should be the beginning of all basecoat reduction negotiations. If half of the panel is being painted, then 50 percent of the 20 percent would be a fair deduction. For example, if the panel has 2 hours of base coat time, 20 percent would be 0.4 hours and 50 percent of 0.4 is 0.2. Therefore, 0.2 hours would be a fair deduction on a 2-hour base coat time, plus full clear.

There are numerous other battles between repairers and payers and there are additional agreements that can be made. Agreements both verbal and written should be considered whenever negotiating. Some items are conceded for the benefit of the relationship and these cannot be covered in an article. Nothing is a guarantee, but proper data, patience, and an attitude of educate not alienate, will be beneficial for any collision repair facility.

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