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Reply to State Farm Only Pays Body Shop Directly?     
Old 06-23-2012, 10:54 AM   #1
New Member
Join Date: Jun 2012
State: kthelen is an Insurance Agent from Minnesota
State Farm Only Pays Body Shop Directly? State Farm Only Pays Body Shop Directly?
Hello all!

A friend recently got into a fender-bender. She has full coverage with State Farm. An adjuster came out and determined the cost of repairs (a reasonable amount). But when it came time to talk about payment, the adjuster claimed a check would only be issued to her body shop of choice, and not to her directly.

I have a fairly well equipped private shop, where I restore projects and repair vehicles for my own purposes (it is not a commercial body or repair shop).

I've been through this before a couple of times in the past, with family and friends in similar situations. I would look at the adjuster's estimate, call and argue if anything was overlooked, etc. Then the insurance company would pay the policyholder directly, and I could proceed to perform the work on the policyholder's behalf.

Without extolling the virtues of using an established commercial shop or otherwise knocking this (both she and I are well aware of the pros/cons), can anyone answer me these two questions:

1) Is it normal for State Farm to refuse issuing a check to the policyholder - and if so, does she have any easy recourse (i.e., not involving suing anyone)?

2) Failing that, what qualifications are required for State Farm to consider one's bodywork operation worthy of issuing payment to?

Thanks in advance for any help you can provide....

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Old 06-23-2012, 11:17 AM   #2
Join Date: Mar 2007
State: djs is an Insurance Agent from California
djs is a member of 5000 posts Super VIP club
State Farm Only Pays Body Shop Directly? Re: State Farm Only Pays Body Shop Directly?
Can't help with question 2, but the first one is pretty easy.

The reason State Farm won't issue the check directly to the policy holder is that there is a lienholder on the vehicle. The lienholder requires that the repairs be done. It might surprise you to learn (probably not) that if checks are made out to the policy holder, they will frequently cash the check and plan on doing the repairs later, which may or may not ever happen.

So, they either do 2 party checks (lienholder and policy holder) or make the check out to the body shop.

The policy holder usually has the right to determine what body shop they use.

The only way I know of around this is to get a two party check (policy holder and lienholder), do the work, then have the lienholder sign off on the check. No guarantees they will though.

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Old 06-23-2012, 09:58 PM   #3
New Member
Join Date: Jan 2011
State: DawnPatrol is an Insurance Agent from Undisclosed Location
State Farm Only Pays Body Shop Directly? Re: State Farm Only Pays Body Shop Directly?
So Cal SF Agent here...
DJ is absolutely correct on #1 if there is a lien...

If the body shop is a preferred repair vendor with SF the check is made out to the shop.

If the client is not getting the vehicle repaired at a preferred shop, AND there is no lien they CAN have the check made out to themselves.

And if that non-preferred shop does a bad job SF will not guarantee the work, the client has to battle the non-preferred shop themselves
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Old 06-25-2012, 11:46 PM   #4
Super Genius
Join Date: Aug 2011
State: FullAuto is an Insurance Agent from Oklahoma
State Farm Only Pays Body Shop Directly? Re: State Farm Only Pays Body Shop Directly?
The check can be made out to the lien holder and the named insured as a two party check if the NI wants to use a shop that doesn't qualify to be paid directly or NI wants to do the repair themselves. They have a threshold up to which they'll pay the NI directly. It may vary by region but it's $2500 net here.

For question #2, a tax ID number can do depending on the claim rep. To survey with State Farm about rates, there is a list of criteria mainly equipment based, but just to do a repair, you'd be surprised what passes for a shop. There are plenty of old men in barns behind their houses that are "shops".
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