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CERTIFIED COLLISION
REPAIRS
Certified (to Factory Specifications)
Repairs:
For many good reasons that
benefit both the customer and corporate, OEM's want their vehicles
repaired to factory specifications.
Government's primary
function is public safety. Federal law states; Used car buyers and repaired
car owners want safety and value for their money.
Insurance companies sell
policies that will pay to restore a damaged vehicle to pre-loss condition
(factory specifications).
Then why are not all vehicles
repaired to factory specifications?
Insurance companies
don't pay enough to restore collision-damaged vehicles to pre-loss
condition. They control costs (and the collision repair industry) using
three major tools:
What defines certified repairs
is; what is necessary to restore a vehicle to pre-loss condition. The term
pre-loss condition is an oxymoron if it means a post-repair physical
condition. A damaged and repaired car cannot be an undamaged and not
repaired car. What is necessary to restore a vehicle to pre-loss condition
is a repair that is equal to the manufacturers' specifications for
replacing and repairing as they relate to function, appearance, safety,
and warranty.
Every new vehicle is a vehicle
built to factory specifications. Every collision-damaged vehicle was a
vehicle built to factory specifications less any wear or tear or
depreciation. Thus, pre-loss condition is a vehicle restored to factory
specifications less any wear or tear or depreciation. Because wear and
tear and depreciation are not considered in insurance contracts, then
repaired to pre-loss condition can be defined as repaired to factory
specifications.
The insurance industry sells
contracts (policies) to drivers that will replace or repair their vehicle
if they have a collision accident. The standard for replacement is an
equivalent vehicle or the actual cash value of an equivalent vehicle. The
standard for repair is like kind and quality, and pre-loss condition.
At the time of repair there
are two separate contracts. The first is the contract between the customer
and their insurance company, which says they will pay the cost to restore
the vehicle to a pre-loss condition, less any deductible. The insurance
company could elect to repair the vehicle under the contract, but usually
avoids this option because it must also accept liability for the repair.
The second contract is between
the customer and the repair dealer. The customer and the repair dealer can
contract to repair the car to any standard the customer requests, and the
dealer is willing to supply, from pulling the fender off the tire, to
repairing damage and sending the car to Maaco for a complete paint, to
pre-loss value, to concourse restoration of the entire vehicle.
Because the insurance industry
has not defined these two contracts to the customer, the customer assumes
that the contract with the repair dealer is one that will restore their
car to a pre-loss condition. The insurance industry denies customers
billions of dollars in claims settlements each year by paying what is
ordinary and customary to repairs cars, but not ordinary and customary to
restore their vehicle to pre-loss condition (factory specifications). When
writing an estimate for insurance, it should be based on a standard of
repair to restore the vehicle’s claim damage to factory specifications.
Certified means verified; so
what standards can be verified? Guarantee Manufacturer's
specifications Repair procedures
Verified means documented. You
are the repair professional; you know what is necessary, so you write it
down. Copy the manufacturer’s specification etc., take pictures, copy
invoices, and put them in the file. Certified. Now if somebody questions
your repairs, you get an independent 3rd party to check out your repairs.
It will be quite simple, as he will have your documentation.
Tools Needed for Certified
Repairs:
Copies of the 5 levels of
repair.
The ability to document the
repair.
See: http://www.genuineflmservice.com/default.asp?page=B7b5
Procedures, materials, parts,
equipment, training, specifications to restore a car to factory
specifications. Independent 3rd party to verify.
How do certified repairs help
counter the insurance companies’ tools for not paying for pre-loss
condition?
Buy offering certified repairs
the repair dealer establishes two very important benchmarks. One is the
prevailing rate for certified repairs (repaired to factory
specifications), and the other is what is ordinary and customary
(procedures) to repair to a pre-loss condition. Keep in mind the repair
dealer does not have to certify the repair if he is not paid to certify
the repair.
The practice of steering can
be greatly reduced by offering to certify another repair dealer's work
after the repairs. If the car does not certify you can offer re-repair
which is not prevailing or ordinary and customary, and thus would require
a higher labor rate, or even time and materials billing. If the car does
certify then you have real competition. However, they better have done the
job for less money, otherwise the insurance company has liability for
contractual interference.
What about saving the
deductible? The next big thing for consumers is disclosure. Computers and
the World Wide Web have made doing business as a repair dealer very
different from the not too far past, and it is this technology that will
change it again. In the near future, access to vehicle histories will be
the de facto equivalent to seller disclosure. It is already the law that a
seller must disclose to a buyer any accident repair history. Because this
is the law, there are no privacy issues about department of motor vehicles
or insurance companies releasing accident histories to companies, like
CarFax, that provide such information when it becomes available. Right now
VIN history providers are pressing States and insurance companies for this
information. The State of CA has already allowed the DMV to start selling
accident information to CarFax.
What happens when a customer
gets a car repaired and then sells the car with the disclosure it had been
in an accident? The buyer discovers the car was not returned to pre-loss
condition and offers less money. We know that diminished value is both a
physical and a psychological phenomenon. The psychological state is a
devaluation based on the fear that there is hidden damage. The physical
state is the visible and/or detectable differences between a repaired and
an un-repaired car. The repair dealer, depending on his contract with the
customer, will likely be held accountable for the physical diminished
value.
The real benefit of certified
repairs will be to consumers. Not only will they be driving safer cars,
they will also be on the road with other safer cars. Because repairs to
their cars were certified, the diminished value on their used cars will be
much less when they sell. Buyers will not have the fear that there is
hidden damage, or safety defects, remaining after repairs.
What about repair dealer
equipment and training? When repair dealers get paid for pre-loss repairs,
they will be able to afford both the equipment and training necessary to
restore a car to factory specifications.
The repair dealer
gains:
marketing and
advertising tool. Consumer
education. Increased
profitability. Protection from future
liability. Reduced
steering. Establishing ordinary
and customary for pre-loss repair. Documented insurance
contract failures. Self
respect. Getting
Started.
When a customer comes into
your office for an estimate, you have them fill out the customer
information sheet and hand them the 6 levels of repair. You point out
which level you believe will restore the car to the manufacturer's
specifications and that you can certify. You can speak of CarFax and
disclosure, safety, warranty, two contracts, etc. Because they will have
documentation when their car is repaired to pre-loss condition, the
physical diminished value will be minimized. The vehicle will not only
look good, but will be safe and secure.
You write an estimate to
repair your customer's car with all the necessary parts, labor, and
materials required to complete the repairs to a certifiable condition. You
give them the blueprint for repair (estimate), the 6 levels of repair, and
have the customer present them to their carrier. Remember, you can
contract to repair the car to any level. When the insurance adjuster says
they cannot pay for this labor operation or that material, you create a
notice of deficiency or supplement type document, and explain you cannot
certify the repair to the customer because of these excluded items. Let
the customer deal with that contract (as they should), between them and
the insurance company, if they want certified repairs. What you have
established is what is ordinary and customary to repair a car to pre-loss
level, and if the vehicle owner declines a certified level, you have
documentation that reduces your liability. Should anything come down in
the future, you offered certified repairs but the customer declined.
How can it be
accomplished?
You do not need to join any
organization. You do not have any additional expense except for
documentation, which you should be doing anyway (job costing). You may
change your posted rate to your certified rate. You can repair cars to any
level the customer requests, you do not have to certify. You are the
professional; you use the procedures, equipment, etc. necessary to repair
a car to a condition that will restore its pre-loss condition. The only
thing you may not already have is a relationship with an independent 3rd
party who can verify your certification, or inspect steered customer's
cars. In fact, you have nothing to lose except your industry.
Have lunch with 2 of your colleagues and explain the
concept of certified repairs. Have each of them go to lunch with 2 of
their colleagues and explain certified repairs, and so on. In a couple of
weeks, every shop in your area will be aware of the concept.
Step by
Step
1. Educate
yourself.
2. Develop
company policies.
3. Create a set
of procedures.
4. Educate your
employees.
5. Educate your
customers.
6. Follow your
policies and procedures.
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CA Office 234 N. Irena St Ste 5 Redondo Beach, CA 90277 Phone: 800 762-2671 FAX: 310 241-0337 Email: rocco@roccos1.com |
"Request A Post Repair Inspection & A Diminished Value Assessment "