For collision repair shops, working with insurance companies on claims can be contentious and stressful.
Billy Walkowiak is the founder and president of Collision Safety Consultants, a team of independent appraisers specializing in vehicle diminished value, total loss assessments and pre-purchase and post-collision repair inspections.
He joined The Collision Vision podcast, hosted by Cole Strandberg and driven by Autobody News, to talk about negotiating with insurance companies, using the right to appraisal clause, the importance of documentation and ensuring shops do right by the consumer.
Common Challenges in Dealing with Insurance Companies
“I would say the No. 1 issue is ignorance,” Walkowiak said. “Ignorance on the part of the consumer, ignorance on the part of the adjuster. And believe it or not, ignorance on the shop.”
Educating all parties is important. “It seems like no one understands exactly what's going on unless they've had some type of class,” he said.
Walkowiak said he has met shop owners who don’t know the difference between a first-party and third-party claim and how that affects the customer’s rights.
“A first-party claim is when you're dealing with your own insurance company, who has a contractual obligation to work on your behalf,” Walkowiak said. “They have to be fair and equitable. If they're not, that opens them up to unfair and deceptive trade practices, bad faith claims, etc.”
A third-party claim, on the other hand, is when the customer’s vehicle is damaged by another person, whose insurance company handles the claim. In that case, the insurance company is trying to protect its own customer by minimizing the amount the insurer has to pay.
“When you try and fight a third-party carrier, you're beating your head against a wall and all you're going to get is a headache,” Walkowiak said.
“I have to explain that to consumers and shops every day, all day long,” he said. “The reason you pay insurance is to be protected. You don't pay insurance to pay someone else off.”
Walkowiak said collision repair associations are doing a better job of educating its shop members on topics like contract law.
Repair Appraisal Clause
Appraisal clauses -- which are not included in every policy -- allow a customer to challenge their insurance company on repair costs. Walkowiak said that benefits not only the customer, but the shop as well.
If an insurer writes an estimate of $10,000, but the shop says it will cost $15,000, the shop has to ask for the remaining $5,000 from the customer to fully complete the repair – unless the customer has an insurance policy with an appraisal clause.
In that case, an independent appraiser, like Collision Safety Consultants, is hired by the insurance company, and they negotiate the claim.
“We call that leveling the playing field,” Walkowiak said.
Walkowiak got into independent appraising thanks to his father-in-law, who co-owned a shop in Belmont, NC. He suggested Walkowiak could help customers dealing with total loss and diminished value claims, as well as post-repair inspections.
“I liked it because I was helping consumers overcome the shortfall between them and an insurance company,” Walkowiak said.
Collision Safety Consultants started with diminished value claims. The company then started doing post-repair inspections.
“We were checking other body shops’ work to make sure that it was done properly and safely,” Walkowiak said. “I was the bad guy. You can imagine what I was known as, and it sure wasn't a sweetheart.”
Collision Safety Consultants handles shops found to be in the wrong differently, depending on the circumstances.
“If they cheated somebody or committed fraud, all bets are off. We were taking them to the mat. You get no mercy,” Walkowiak said.
But if it was found to be a matter of a tech who took a shortcut, or a new manager who didn’t know a process yet, the appraisal company would take another approach.
“We would educate them,” Walkowiak said. “Catching them doing something bad was probably the best thing that ever happened to them, because we showed them how they could make more money doing it properly.”
From Body Shop Adversary to Asset
Strandberg pointed out Collision Safety Consultants seems to have morphed into an asset for body shops, as it often helps shops get paid for what they believe is a proper estimate.
Walkowiak said shops certified to work on premium brands, like Tesla, Jaguar and Mercedes-Benz, have the most challenges, as insurers don’t want to pay for higher labor rates. He said that can almost be considered the insurance company’s violation of the contractual obligation between the customer and the shop.
“When you take your car into the shop, that contract is between the vehicle owner and the shop. The insurance company doesn't come into play,” Walkowiak said. “Now the insurance company says they're not going to pay the consumer.
“What I'm doing is helping the consumer. I'm not actually helping the body shop now,” he said. “It helps the body shop because they get paid and the consumer feels better about the body shop, and that they don't have to pay out-of-pocket money.
“But my goal is to make a consumer whole. And in that process, the body shop gets made whole without the consumer getting injured,” Walkowiak said.
Negotiating with Insurance Companies
Strandberg asked if there are any best practices shops can deploy to negotiate with insurers to get fair compensation.
“Documentation, documentation, documentation, documentation,” Walkowiak said.
He recommended taking photos of every step of the process and printing them out, along with the written OEM repair procedures.
“You're talking 80, 90 pictures. It's a little cost of ink, but there is no question. Was it done?” Walkowiak said.
When an insurance company then says it won’t pay for a part of the process, the independent appraiser can point out where the OEM repair procedures called for it.
Insurance companies also challenge labor rates, but Walkowiak said his company fights for higher rates charged by shops that invest in the equipment and training to justify them.
The real key is to be a superior negotiator, Walkowiak said.
“I'm a hell of a negotiator,” he said. “Either people like me, they loathe me or they respect me. Any three of those pretty much gives me what I want.”
Perserverance pays off. Walkowiak suggested going up an insurance company’s chain of command. “Insurance company managers hate to get phone calls,” he said.
Some shop owners and customers believe lodging complaints about an insurance company with their state’s Department of Insurance doesn’t do anything, but if the same company is reported repeatedly, the managers will eventually make concessions.
“They're going to come around and say if every consumer is filing a complaint about Jim the adjuster, because Jim doesn't want to pay for everything, then eventually Jim's going to get pulled away from that shop,” Walkowiak said.
Strandberg asked about the best approach when trying to negotiate payment with an insurance company.
“I used to come in like a bulldog. Now I'm pretty much nice to everybody, and until someone disrespects me or says something that I can't live with, I'm still nice,” Walkowiak said. “When it comes to negotiating, just be nice, be polite, be respectful and see what they got. Feel everything out.”
He said there are cases where the issue is more of a clash of personalities rather than a question of procedure.
If there’s “bad blood” between an insurance company and a shop, and the insurer is challenging a repair estimate, Walkowiak said the first option is to check to see if the customer’s policy has the appraisal clause.
If not, the next step is to ask the insurance company management to assign a new appraiser or adjuster.
Or, Walkowiak said, the shop could have a sit-down with the insurance company employee to try to clear the air.
Proper Repairs vs. Full Payment
Walkowiak said it is more important to complete every step of a repair procedure than it is to make concessions so the insurance company payment covers it, as improper repairs can cause serious injury or death in a future collision.
“Any shop that performs a repair on a vehicle is liable. Doesn't matter what the insurance company wrote. Doesn't matter what the insurance company said. Ultimately, liability falls on the shop owner,” Walkowiak said.
Every customer needs to be educated from the first consultation that their insurance company might tell them the shop charges for things no other shop does, and then how to challenge it.
Walkowiak said customers should be taught to ask which shops charge less, and then ask if those are DRP shops that make concessions so the insurer sends them business.
“I've seen it in multiple shops that are doing it this way, and they set that customer up and prepare them, and then they'll go, ‘Oh man, that adjuster said exactly what you told me they were going to say before they said it,’” Walkowiak said. “That stops the insurance companies telling the consumer that the shop is overcharging for stuff.”
Key Takeaways
Never trust the person that owes you money to determine how much money they owe you. Walkowiak said that is his company’s tagline.
Do your homework. Use resources like I-CAR, ALLDATA and OEM1stop.com to research OEM procedures and get those documented in the repair process, so there's less pushback when the estimate is sent.
Protect the consumer. That consumer is going to tell others, and it's going to build your business. You're going to do a better, safer, complete repair without your customer being out of pocket money.
Abby Andrews