1. THE RIGHT TO CHOOSE
By North Carolina Insurance Regulation, every vehicle owner has the right to have their vehicle repaired at the shop of their choice. An insurance carrier CANNOT require the owner to use a shop which is “preferred” by the insurer, or even to use the shop submitting the low estimate. The low estimate may not be the right estimate. This does not mean that the insurer must pay whatever is charged by the shop chosen by the vehicle owner. The insurer is obligated to pay the reasonable cost of restoring the damaged vehicle to its pre-crash condition. (But see Right #2)
Shops which are “preferred” by an insurer generally have agreed to the terms of a Direct Repair Program (“DRP”), such as State Farm’s Select Service program, or Nationwide’s Blue Ribbon program. DRP’s are based on agreements prepared and promoted by the insurer, under which the insurer receives favorable treatment from the participating shops (such as parts or labor discounts, agreements to use repair parts or repair methods specified by the insurer, and acceptance of insurer-reduced repair times) in return for the insurer’s recommendation of the shop to insureds and claimants needing repairs. Such agreements cause the risk that the participating shop will regard the insurer who sends it a high volume of business as its “customer”, rather than the owner of the vehicle. In fact, the shop’s only customer is the vehicle owner, who should be able to rely on the shop to properly repair his or her vehicle, and to defend against insurer attempts to require cheap repairs that do not fully restore the vehicle to pre-crash condition.
Insurers require DRP shops to offer extended, nationwide warranties of their work, and encourage the use of DRP shops through such warranties. This is usually stated as
”we will guaranty the repairs for as long as you own the car if you use one of our preferred shops, but we offer no warranty on repairs if you choose a non-preferred shop.” But what good is an extended warranty if the quality of the repair is unsatisfactory? Harry’s warranty is three years/36,000 miles, or (on mechanical and electrical replacement parts) such shorter warranty as is given by the supplier of the part.
2. THE RIGHT TO A QUALITY REPAIR
A vehicle owner is entitled to have his or her vehicle returned to its pre-crash condition or as close to it as is possible within the limitations of the repair process, unless limited by the terms of his or her insurance policy.
If the damage to your vehicle was the fault of the other driver, his or her legal obligation (under negligence law) is to return your vehicle to its pre-crash condition. Under this standard, a newer vehicle should be repaired using new, OEM (original equipment manufacturer, such as Ford parts for a Ford), while an older vehicle might justify use of used repair parts where appropriate. The insurer’s role is simply to pay the cost of repair and rental car cost on behalf of their insured, and you pay no part of the repair cost (the deductible). On the other hand, if the damage to your vehicle was your fault, the insurer’s repair obligation is set forth in your insurance policy, which may require the use of used, reconditioned or aftermarket (non-OEM parts usually made in Asia) parts even on newer vehicles. In addition, you must pay the deductible amount specified in you policy, usually $250 or $500. This is a significant difference not often recognized by the owners of vehicles damaged due to the fault of the other driver.
If your vehicle was damaged due to the fault of the other driver, but his insurance company is not willing to pay for a proper repair, you have the right to submit a claim under your own insurance policy, have the vehicle repaired properly, and let your insurance company claim against the other driver’s company. If you choose this option, you will have to pay your deductible amount, but you will be reimbursed when your insurance company collects the full cost of the repair from the other driver’s insurance company.
3. THE RIGHT TO UNDERSTAND & AUTHORIZE REPAIRS
Vehicle owners are entitled to a detailed estimate showing the repairs to be made to their vehicle and an explanation of that estimate, including disclosure of any non-OEM parts to be used in the repair. The vehicle owner and the insurance company paying for the repairs must both consent to the repairs before work begins; the owner’s consent is usually given by signing a copy of the estimate to be used as the basis for the work. Furthermore, the owner should be advised of and consent to any significant change in the repairs to be made. Even with this approval right, the vehicle owner must rely on the shop he or she chooses to carry out a quality repair, making the choice of repair shop the vehicle owner’s most important decision in the repair process.
4. THE RIGHT TO PROMPT CLAIM HANDLING
Every owner of a vehicle with damage covered by insurance has the right to expect prompt handling of his or her claim. Insurers are regulated by the state insurance commissioner under regulations requiring reasonable promptness in handling claims.
Threatened delay in handling a claim is another tactic used by insurers to direct vehicle owners to the insurer’s “preferred” shops. This is usually stated as “If you take your car to our preferred shop, they can write the estimate and start work immediately. But if you don’t use our preferred shop, we can’t send an adjuster to look at your car until …….”. This delay usually disappears when the owner responds, “I want my car fixed at Harry’s Body & Fender, and they can start work Monday. I’m dropping my car off Monday, and I’ll need a rental car from Monday until the repairs are complete. So you need to send an adjuster to Harry’s as soon as possible after Monday morning to see the vehicle.”
Any vehicle owner who receives poor or delayed claim handling should register a complaint with the North Carolina Insurance Commission. This can now be done online at www.ncdoi.com . It is only through the receipt of such complaints that the Insurance Commission becomes aware of poor claims handling and can require improvement. And insurers usually respond to such complaints with corrective action.
5. THE VEHICLE OWNER’S TOTAL LOSS RIGHTS
By North Carolina regulation, when the collision damage to a vehicle reaches 75% of the vehicle’s retail value, the responsible insurer is required to declare a total loss and pay the owner the full retail value of the vehicle. The owner, in return, transfers title to the insurer, which sells the vehicle to a salvage yard. The insurer usually pays for a rental vehicle for a few days to allow the owner to locate and purchase a replacement vehicle.
There are occasions, especially with older vehicles, where the damage that causes a total loss is not significant to the operation of the vehicle because of the vehicle’s lower value. In such cases, the vehicle owner (and only the owner) has the right to retain the vehicle. In that event, the insurer pays the retail value of the vehicle less the salvage value that it would have received by selling the vehicle. However, the vehicle bears a “salvage” title once it has been declared a total loss, which reduces the market value of the vehicle.
Thank you to Harry's Body and Fender for providing us with this information.