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- Written By: Cathy Rogers
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2003-2012 Conjecture Corporation
Some auto insurance companies use a direct repair program to provide repairs for their policy holders. In a direct repair program, a collision shop and an auto insurance company complete a contract to provide repairs for the insurance company's claimants. First used in the late 1970s, the direct repair program concept increased in the late 80s and early 90s.
This is how a direct repair program works: You are involved in an accident and contact your auto insurance company, or the insurer of the at-fault driver. The auto insurance company then refers you to a network of conveniently located repair facilities that offer a limited lifetime warranty on the repairs to your vehicle. The service might also offer on-site rental car arrangements. Because the insurance company and the collision shop handle all the details and paperwork, you do not have to do so.
The collision shop and the auto insurer determine the specific provisions of a direct repair program. The advantage to the collision specialist is the steady stream of referrals. A collision shop might participate in one, or several, insurance companies' direct repair programs.
Although a direct repair program can generate additional paperwork for a body shop, it can also prevent delays. When an additional part is needed for a repair, the shop does not have to stop working on a vehicle to wait for an insurance adjuster to re-evaluate the situation. Insurance companies promote the advantages of a direct repair program to their customers as convenience, warranties on repair work, and the freedom from estimates and other paperwork details.
Some direct repair program contracts between insurance companies and collision specialists require the repairer to write all estimates using aftermarket or salvage parts. Other details can assign the responsibility of any non-essential repairs to the customer. Some contracts also require the collision shop to shoulder all liability for repairs performed and indemnify the insurer from any lawsuit the customer might bring.
In some states in the U.S., legislation requires that insurers must admit any qualified collision repair shop into their direct repair program. This prevents insurance companies from limiting the number of automotive body repair businesses or locations with which they have direct repair programs. In these instances, any automobile body repair business or location that meets objective criteria can participate in an insurer's direct repair program.
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anon166291
Post 6 |
Everything posted is false, get your facts straight before you post. Anon5316, to say shops that participate in direct repair programs are not reputable is the same as saying you actually understand the insurance industry, and both are incorrect.
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anon58165
Post 5 |
Herein hides the lie. All repair shops offer warranties. They handle the entire repair process! For the love of God in heaven people, when has an insurance company ever done anything except watch their bottom line? Go to a reputable shop that your family and friends have used. Do not trust your insurance company! |
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anon20017
Post 4 |
The basic concept of Direct Repair Programs - streamlining the collision repair experience for the customer, the shop, and the insurance company - in and of itself is a wonderful concept, however the concept has eroded and the driving force now is money, money, money! It is the greed of the insurance companies, who through intimidation of the customer (the insured) and manipulation of the repairer, have driven the change. The insurer does not care how the vehicle is repaired - they just want it done as cheaply as possible. You're probably wondering why an insurance company would not care about the quality of the repair when the potential for liability exists. The DRP contracts they have with the repairer take care of that little issue...the contracts put the full liability back on the repair facility. Now your next question is probably, "Why do repair facilities sign these contracts?" The answer to this is: The insurance companies can make you or break you! If you're not part of the DRP program the insurance company will work hard to make sure that their insured does not bring their vehicle to you. Incentives are offered by the insurance company to the claims representative for KPI's that indicate a high success rate in getting the insured to go to a DRP and keeping them away from a non-DRP. Intimidation tactics such as, "that shop is not on our preferred list" or "we can't guarantee that shop's work" or "if you go to that shop, you may have out-of-pocket expenses because they may charge you more" work quite well in coaxing the customer to the DRP facility. (Keep in mind - the insurance company prefers the DRP because the insurance company saves money). Oh, I forgot to mention...the insurance company saves money by including in the contract a clause that requires a variety of concessions such as reduced labor rates, reduced paint rates, reduced body shop supply rates, etc. Again, you might ask, "Why does a shop agree to give these concessions?" There is a fear that if a shop doesn't sign the DRP contract there will be a loss of potential customers (due to steering by the insurance company) and also, the repairer is "hoping" that maybe, just maybe his sales will increase since the insurance company will "steer" work his way. Again, this is a false hope because many insurance companies will give DRP status to most of the shops in a particular market area thus guaranteeing for them (the insurer) reduced rates across the board. Pretty nifty isn't it? |
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magnumpi
Post 3 |
In the early 90's Allstate was one of the most abusive companies to deal with. I ran a GM body shop and the only customers I got from Allstate were those that bought cars from us. All the other work went to an independent a mile down the road. Most major insurance companies are more concerned with CSI than cutting shop estimates, or mandating how repairs are completed. There are still a few of the very large carriers that like it their way but how much negative press can a company stand before they are no longer the giant on the block. Run properly with good oversight a DRP can add benefit to the customer, the shop, and yes the carrier. It has to be a 3 way win or someone is getting hosed. |
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BodyMan007
Post 2 |
"Some direct repair program contracts between insurance companies and collision specialists require the repairer to write all estimates using aftermarket or salvage parts"
Your insurance company does not make a distinction between which aftermarket or salvage products can be used safely on a car. They only distinguish by price.
Using an aftermarket or salvage fender is usually not a big deal but an insurance company will use aftermarket structural pieces that don't meet manufacturer standards and salvaged suspension components. they have even been known to require that vehicles be cut in half and an entirely salvaged vehicle half be welded up adn repainted to create a new car.
Some things you just can't get out of a junkyard and insurance companies fail to realize this. |
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anon5316
Post 1 |
Direct Repair Is a way for insurance companies to make more money. When have you ever heard of an insurance company trying to make your life easier? They direct their customers to a body shop willing to do a job at a largely discounted rate. These discounts force the direct repair body shop to cut corners in order to make a profit. These cut corners result in a poor quality repair. Direct Repair is a way for insurance companies to make more money. don't fall for it, bring your vehicle to a reputable body shop. |
