Get All the Repairs Your Insurance Company Has Paid For
The standard Massachusetts automobile policy provides that, when a vehicle suffers accidental damage caused by a collision, the insurance company will pay the cost to repair the auto or any of its parts up to the actual cash value of the auto at the time of the collision. Essentially, the insurance company must pay for repairs to return the vehicle to its pre-accident condition. The insurance company’s appraiser appraises the damage to the vehicle, negotiates with the shop concerning the repairs and the cost and pays for them. The shop then performs the repairs and the vehicle is returned to the insured in its pre-accident condition.
Sounds simple, right? Unfortunately, there are some unscrupulous shops that do not perform all of the repairs agreed upon with the insurance company. And often, an agent’s customer, the consumer, is none the wiser. The vehicle may look shiny and bright but integral parts of the vehicle, many which may impact its safety, operation or longevity, may not have been replaced or repaired as required because the repair shop pocketed the savings.
The Attorney General has issued auto repair regulations to stop shady repair practices
Below are some tips that independent agents can share with their insureds who may be victimized by and fail to get all of the repairs that their insurance company has paid for on their behalf. The issue of unfair and deceptive auto repair practices is serious enough that the Massachusetts Attorney General has issued a set of regulations under the Unfair and Deceptive Business Act, General Laws Chapter 93A, regulating disclosures to both businesses and consumers dealing with auto repair shops. These regulations are found at 940 Code of Massachusetts Regulations 5.05. (940 CMR).
1 The Insured Should Think Twice before Signing a Repair Shop Waiver. Under Massachusetts law, a repair shop does not need to inform the customer of the specific repairs to be performed and their price if the customer signs a waiver under Massachusetts regulation 940 CMR 5.05(3)(d), stating: “I understand that I have the right to know before authorizing any repairs what the repairs to my car will be and what their cost will be. You need not obtain approval from me for repairs or inform me prior to performing repairs what the repairs are or their cost, if the total amount for repairs does not exceed $ ____________.” Unscrupulous shops have used this loophole to divert the insurance payment to themselves, by setting an artificially high waiver amount, and then claim that the customer’s waiver allowed them not to perform all of the repairs paid for by the insurer. For a more detailed discussion see the links at the end of this article.
2 The Insured Should Ask About “Posted Charges”. Although a repair shop cannot charge a customer for repairs, storage or estimates without first informing the customer about those charges, the customer is considered to be informed if the charges are “displayed in a clear and conspicuous manner on the premises of the repair shop.” 940 CMR 5.05(3)(b). Often these charges are all just listed on an 8 ½” x 11” sheet of paper posted somewhere in the shop amidst many other postings and signs. Such signs may list charges that are not covered by insurance. Insureds should ask for a copy of the posted charges so that they can review them and ask their insurance agent if they have questions about what is covered. For more information about excessive charges by repair shops. See the links at the end of this article
3 The Insured Should Get a Written Estimate Prior to Authorizing Repairs. Unless an insured has signed a waiver or has implicitly agreed to posted charges, the shop cannot charge them for any repairs unless they have received written authorization signed by the insured listing the specific repairs to be performed and the total price to be paid for such repairs including parts and labor. 940 CMR 5.03(3). The insured should not sign vague repair authorizations such as, “Repair as Agreed with Customer” or “Repair Per Estimate” when no estimate is attached. Also, an insured should not sign an authorization that states, “Repair Per Repair Shop’s Estimate” if it differs from the insurance company estimate unless the insured actually wants the shop to perform repairs that differ from the insurance company’s estimate, e.g., The insured decided that they would rather have the shop put new tires on their vehicle rather than repair the dent from the accident. If that is the case, prior to any repairs, the insured should get an estimate from the shop listing exactly what repairs will be performed and the total cost. However, in that case, if the insured does not have all the repairs performed to return their vehicle to its pre-accident condition, they should notify their insurance company since under the law their insurer is required to decrease the vehicle actual cash value by the cost of the undone repairs.
4 The Insured Should Authorize Repairs per the Insurance Company’s Estimate. Once the insurance company has completed its inspection of the damage to an insured’s vehicle, it will provide the insured an estimate listing the repairs to be performed and the cost. This is the amount the company will pay, less any deductible owed. An insured, if they agree with the insurers estimate, should authorize in writing their repair shop to repair their vehicle per the insurance company estimate. If the shop then fails to perform those repairs, the insured will have recourse under the Attorney General’s regulations against the shop.
5 The Insured Should Compare the Repair Shop’s Final Bill with the Insurance Company Estimate. Under Massachusetts law, upon completion of the repair work, the repair shop must provide the insured with a final bill including the following information: itemizing the repairs performed; listing the parts supplied by name, number and price charged; if the part supplied was not new, listing whether it was used, reconditioned or rebuilt; the number of hours of labor charged and the rate per hour; and the total amount charged for parts and labor. 940 CMR 5.05(9). Although a final bill stating that certain repairs have been completed doesn’t guarantee they have been completed, most shops are loathe to write up a false bill. The insured should check to be sure the shop’s bill contains all of the required information and that it matches the insurance company estimate.
6 The Insured Should Ask to Inspect Parts That Were Replaced. If the estimate requires the replacement of damaged parts, under Massachusetts law, the insured has the right to inspect the damaged parts. 940 CMR 5.05(4)(b). Some unscrupulous shops will try to repair rather than replace a damaged part or may not even repair it at all leaving the damaged part untouched. If the insurance company has paid for the damaged part to be replaced with a new or reconditioned part, prior to the repairs, the insured should tell the shop that they would like to see the damaged parts (as is their legal right) upon the completion of the repairs. This may provide some assurance that that the parts were removed from the vehicle and replaced.
7 The Insured Should Request Shop to Remedy Any Problems. If the insured notices problems with their vehicle after the repairs, they have the right to bring it back to the shop for a prompt remedy. At no charge to themselves, the shop must promptly correct any repairs that were “not performed in a good and workmanlike manner in accordance with accepted trade standards.” 940 CMR 5.05(8).
8 If The Insured Suspects Fraud, They Should Notify Their Insurance Company. If the agent or the insured suspect that a repair shop has not completed all of the repairs paid for by the insurance company, the insured should contact the insurer and request a reinspection. The insurer’s appraiser can reinspect the vehicle to determine whether all of the repairs contained on its estimate, and which were necessary to return the vehicle to its pre-accident condition have been performed.
9 The Insured Should Read and Save all Repair Paperwork. Although it’s a nuisance to read the repair paperwork, this advice could allow insureds to stop problems before they start. Also, the insured should save a copy of all paperwork associated with their claim and auto repair. If a problem does arise, such paperwork will be essential if the insured learns that repairs were not done and legal action is necessary.
Many of the problems listed above can be avoided if insureds use repair shop identified by an agent’s carriers as a “preferred shop”. The benefits of a preferred shop will be discussed in a future article on AgencyChecklists.
In the meantime, here are related articles by Kara Larzelere that the reader may be interested in:
Kara Larzelere
Attorney | ForbesGallagher
Kara Larzelere joined ForbesGallagher in 1994 and concentrates her practice in insurance and corporate matters. She advises insurance companies and insurance agencies on a variety of matters of concern including issues of regulatory compliance, insurance coverage, liability, employment law, organizational structure and acquisitions.
In addition, she has briefed over a dozen appeals before the Massachusetts Appeals Court and the Massachusetts Supreme Judicial Court on varied issues including fiduciary duty law, consumer protection, and indemnification.
Get in touch with Kara via the link below:
