Why Insurers, Repair Shops Argue Over Car Insurance Claims

There are five common points of contention between repair shops and insurance companies.
Aubrey Cohen
By Aubrey Cohen 

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After an accident, you might file a car insurance claim and think it is obvious what’s wrong with your car and what repairs are necessary. But it turns out auto insurance companies and repair shops routinely disagree over repairs, and you should pay attention to such disputes.

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In many cases, insurance companies do not accept a body shop's estimate of what a repair will cost, industry officials said. In other cases, the insurer will generate the original estimate, and a repair shop might disagree.

“In either case, we work with shops to come to an agreed-upon price to repair the vehicle,” says Thomas Hambrick, assistant vice president of media and public relations at insurance company The Hartford. The Hartford has applied for a patent on an automated system to review such estimates.

Michael Barry, vice president of media relations for the industry group Insurance Information Institute, notes people can disagree on several variables, adding, “In most cases these are resolved after an amicable negotiation.”

It’s not in an insurance company’s interest to put an unsafe car back on the road, Barry says.

Points of contention over car insurance claims

What do insurance companies and repair shops disagree about? Here are the five most common sticking points, according to insurance and auto repair officials.

  • Whether a part can be fixed or needs to be replaced. For instance, a garage’s estimate might call for replacing a body panel, but an insurer might want the body shop to try repairing it first, says Dan Risley, president of the shop owners group Automotive Service Association.

  • What kind of replacement part to use. Sometimes an insurer will not pay for a part from the original manufacturer, insisting a used part or cheaper “aftermarket” version is good enough. Some high-end insurance policies guarantee use of original manufacturer parts.

  • How long repairs should take. A repair shop might estimate a dent in a door will take six hours to fix, but an insurance company will think the work should be done in four, Risley says. Each extra hour is more labor cost. And each extra day adds to the insurer’s bill for a rental car, if the policy pays for it.

  • The labor rate. A garage might have a per-hour cost that’s more than an insurer is willing to pay.

  • Whether there are errors in the estimate. An estimate might call for replacement of a part that isn’t damaged or omit something that does need repair.

Where you fit in

Disagreements tend to be resolved fairly quickly, Barry says. “It generally goes pretty smoothly, because the auto insurers and the auto body repair shops are going to be seeing one another again frequently,” he notes.

But such situations are considerably more rare for the rest of us, and we might also have opinions about how our cars should be fixed. Your influence will depend on your insurance policy and state regulations. For instance, the contract might spell out what kind of parts can be used.

Most states require repair shop estimates to identify where non-original parts would be used, and nine states require customer consent for the use of aftermarket crash-repair parts, at least in certain cases, according to the Insurance Information Institute.

So find out what your preferred auto shop thinks needs to be done, ask if there’s any disagreement from the insurance company and make your wishes known.

“I think the consumer has a vested interest in seeing that the process runs smoothly and that the car is returned to a state of good repair,” Barry says. “It’s a process that a consumer should watch closely.”

If you're in the market for auto coverage, try NerdWallet's car insurance comparison tool.

This article also appears on USA Today.

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