Getting Your Car Repaired: Tricks Insurance Companies Use to Save Money on Your Claim

The largest cost outlay that an insurance company has during the life of a policy is the cost incurred when a claim is reported. As a result, most insurance companies look at the repair process as a prime area to save money. They do so by instructing repair facilities to use aftermarket or recycled parts, paying lower amounts for labor and or material rates, and/or directing claimants to direct repair program shops.

One way that insurance companies save money is with the use of aftermarket parts on your vehicle repair. Most of the time it is tough to convince an insurance company to not use these parts since it is usually ambiguously written into your policy and the insurance adjuster assigned to your file is usually rated on the quantity that they use. There are ways to deal with it; one is to speak with the adjuster’s supervisor, or manager about the issue. Sometimes they will do it, but most of the time they will not. If you are a long time policyholder, use that as an arguing point and they are usually a bit more inclined to do it since they want to retain you as a happy policyholder. You’ve been loyal and they have made a good amount of premium off of you, so it is in their best interest to keep you happy.

Another option is using the adverse carrier if you are not liable for the accident. You may want to do this because you are not a party to the policy contract they have with their insured, you are simply a claimant against the insurance company who is the financial indemnifier. With them you have a better argument to not use aftermarket parts or recycled parts since you are not bound by their policy contract. Most adverse carriers will resist and state that they are liable to return the car to previous condition and as long as the parts are of like kind, quality and design, they will try to use them. There are two main ways to fight this, one is to argue and insist on only OEM (Original Equipment Manufacturer) usage, the second is allowing them to use the parts and then complain about any issues with the part. In most states, an insurance company is required to warranty any aftermarket or recycled parts that they direct a repair facility to use. If you find issues with the aftermarket or recycled part, request the insurance company replace it with a part from the manufacture per their guarantee.
 
Direct repair facilities are another way insurers are able to reduce their repair costs. This type of reduction can be both positive and negative. The insurance company saves money on your claim by contracting with a shop to do work for them at a lower cost by doing the same work for a lower billable rate, giving a parts discount, and/or a lower paint and/or labor cost. Depending on the reputation and ability of the shop, this may not make a difference. If you are considering using this type of program, do your homework. Check the shop, find out what their work product is like, look at the cars currently being worked on and almost completed, or completed. Are you seeing obvious issues such as parts put on incorrectly or painted the wrong color, if so, this might not be the shop for you? Is the shop and it's technicians I-car gold or platinum certified, and/or are they ASE certified ? Therefore, check out the shop you are being directed to use since the lower cost is not an issue if the repairs are done correctly and you are happy. If they are not done correctly, ask your insurance company to make it right and, if they don’t, take it to another shop and request the insurance company pay for the proper repairs. Most all direct repair programs provide a guarantee on the repairs, and this is where you receive the most benefit because your repairs will be warrantied by the shop and the insurance company. In addition, if there are any unresolved issues, you might be able to complain to any state regulatory agency that regulates auto insurance and ask for assistance.

The prior examples are the most common ways that insurance companies save money on your vehicle repairs. Hopefully next time you are dealing with an insurance company you will have better insight into what you can do to help yourself. In the end, if you have an issue with an insurance company, check with your state department of insurance and see if they have a consumer assistance program or office that can assist you.