Why Do Bodyshops Accept Lower Estimates from Insurance Company?

[OldGeorge1950]

I got 3 estimate from 3 local bodyshops. $3212, 3437 and $3508. I told them that I wanted to fix the big dent on my fender with my own money, without going through insurance. (slipped on icy road and into a trash can)

Way too much money, so I ended up filing a claim with my insurancecompany. The adjuster gave me an estimate of $1590. My deductible was $500, so I received a check for only $1090.

I went back to the thid shop($3508) because I liked how nice their repaired cars looked. I spoke with the same guy who did the $3500 estimate. Showed him the estimate and check from the insurance company. He said "okay, when can you drop you car off?" I was surprised to say the least. I asked him if they would really do the EXACT SAME repair for the $1590 on the insurance company's estimate. He said yes.

Is this legal and moral? Or is this just like hospitals charging you a lot less if you have health insurance?

I originally figured that the estimate was pretty close, since all three shops came within about $300 of each other.... Had I been offered the $1590 price, I would obviously have chosen to pay it myself... oh well.

 

[BlockO]

insurance companies have a lot more negotiating leverage vs. an individual because they can send repeat business to the body shops who tend to be "yes men". An individual can't send repeat business to a body shop without wrecking another vehicle.

but to settle for half or less than half is kind of surprising. I'll bet there is a lot of competition with other body shops in your area.

 

[xrac]

The body shop needed the work.

 

[BlockO]

The body shop needed the work.

Yep. Plus they know if they turn down the job, another body shop down the street will take it.

 

[xrac]

The price you were quoted is retail but the price the insurance got was wholesale.

 

[VolAgent]

The price you were quoted is retail but the price the insurance got was wholesale.

Interesting, I don't believe that is allowed here. They have to post their labor rates for all to see, and it is what it is. I guess they could try to mark up the parts, but I would think a competitor would undercut them if so.

 

[xrac]

Interesting, I don't believe that is allowed here. They have to post their labor rates for all to see, and it is what it is. I guess they could try to mark up the parts, but I would think a competitor would undercut them if so.

Maybe the insurance company has a 40% off coupon. Without the estimates it is hard to tell. Maybe the insurance company's quote was for used or after market parts and the original estimate was for OEM. I know a guy who will do much cheaper body work if you pay him CASH. No checks and no credit cards. He is fighting through a divorce and trying to hide money from the X.

 

[Milkman1265]

maybe they are banking on supplemental checks, but i never seen an estimate that far apart.

Maybe the shops themselves are charging 300/hr labor rates.

OEM parts should be relatively the same and i think the insurance company quotes 75/hr

You can compare the adjuster's report and see.

Also the rates can be the shop doing the FULL repair, whereas the insurance company is quoting only what is needed.

I've been quoted repaint & refinish skin, instead of replace door entirely etc...

 

[INSUREGEEK]

Body shop manager here:

The insurance estimate is simply the starting point for the repair. If you want me to fix your car, I will fix your car. I will also make sure the insurance company pays me what they owe me....that the repair is done to my high standards...and that you are fully informed about the repair process.

Some companies like to quote the absolute cheapest non-certified aftermarket or used parts they can find. Many adjusters have never fixed a car, so they grossly underestimate repair times. Sometimes the damage is just hard to evaluate until the repair has begun. Most companies only include damage they can actually see, whereas I might write something I can't see, but I know I'm going to need.

It is easier for me to negotiate that estimate back toward mine when I actually have your car in the shop and the repair started. At that point, especially if the insurance is paying for a rental car, they become much more flexible because the'll be in a hurry for me to get it done, and they know I'll hold it hostage until I get paid. It can be a bit of a game with some companies.

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One last thought -

When you come in saying you're going to pay out of pocket for a repair I try to give you a worst-case scenario. The last thing I want is for you to think it's something you can pay for, then later find out it's not. At that point it's pretty hard to change your mind about turning in an insurance claim.

 

[unic.consulting]

Body shop manager here:

The insurance estimate is simply the starting point for the repair. If you want me to fix your car, I will fix your car. I will also make sure the insurance company pays me what they owe me....that the repair is done to my high standards...and that you are fully informed about the repair process.

Some companies like to quote the absolute cheapest non-certified aftermarket or used parts they can find. Many adjusters have never fixed a car, so they grossly underestimate repair times. Sometimes the damage is just hard to evaluate until the repair has begun. Most companies only include damage they can actually see, whereas I might write something I can't see, but I know I'm going to need.

It is easier for me to negotiate that estimate back toward mine when I actually have your car in the shop and the repair started. At that point, especially if the insurance is paying for a rental car, they become much more flexible because the'll be in a hurry for me to get it done, and they know I'll hold it hostage until I get paid. It can be a bit of a game with some companies.

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One last thought -

When you come in saying you're going to pay out of pocket for a repair I try to give you a worst-case scenario. The last thing I want is for you to think it's something you can pay for, then later find out it's not. At that point it's pretty hard to change your mind about turning in an insurance claim.

Thanks for the great response. This makes a lot of sense on all parts. I was going to say that the body shop can get more out of the insurance company if they feel the rate is too low, but they can't if they don't get the car in in the first place, but you covered it well.