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Here’s what California says auto body labor rate surveys should look like

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Business Practices | Insurance | Legal

After a review process dating back to 2012, the California Department of Insurance thinks it has a template for a fair standardized collision repair labor rate survey form auto insurers should use.

Repairers nationwide should review the terms and see if it seems like a fair format for California shops and for possible duplication in other states. The DOI plans a hearing April 21, and the agency will take public comments until 5 p.m. that day about the regulations. Learn more here.

California has proposed the measure to clarify and expand upon the 2002 requirement that any insurer conducting labor rate surveys in the state must disclose the results to the DOI.

About 14 companies currently survey California body shops. Despite the 2002 regulations, there’s been confusion and hundreds of complaints about insurers still shorting customers and shops on rates, according to the DOI.

Part of this stems from the fact that concepts like a geographic market and a labor rate were never defined, nor were survey questions, thereby muddying the data collected.

Below, find the text of a standardized survey the DOI says any insurers polling collision repair rates could use to receive a “rebuttable presumption” they were acting in good faith on labor rates. The DOI stresses in the proposed regulations and in its discussion of the rules that while it will collect the data and make the results of respondants available to the public, it’s not actually “approving” the surveys.

A market is now defined as the collision repairer in question and the nearest five shops to it. If the shop didn’t respond to the survey, the market becomes the nearest six shops who did. Shops must list their “posted” rate — no discounts applied. Essentially, the rate you charge folks who want auto body work or refinishing work done out-of-pocket.

If a shop’s posted rate is lower than the market survey rate (the higher of the mean or the “rate at or below which a simple majority of surveyed shops charge”), the insurer can opt to pay that rate, or vice versa. The rules don’t bar insurers and repairers from negotiating DRP rates (the shop just can’t put that rate on the survey) or lower or higher amounts.

On Friday, find a discussion of some of the specific terms and criteria picked by the state for the questionnaire and the survey methodology. (For example, the six-shop market area size.)

After a review process dating back to 2012, the California Department of Insurance thinks it has a template for a fair standardized collision repair labor rate survey form auto insurers should use. (Vepar5/iStock)

QUESTIONNAIRE FOR THE STANDARDIZED LABOR RATE SURVEY

To: (Auto Body Repair Facility) From: (Insurance Company name, address, telephone number, email address)

Instructions: We are conducting a survey of auto body repair labor rates for all auto body repair shops in your area. This questionnaire should be completed by an authorized representative of the auto body repair facility to which it is addressed and returned to [Insurance Company] at [insert address] no later than [insert due date]. If the information is not complete, the survey may be rejected.

FAILURE TO COMPLETE THIS QUESTIONNAIRE IN FULL MAY RESULT IN ITS EXCLUSION FROM THE AUTO BODY LABOR RATE SURVEY FILED WITH THE CALIFORNIA DEPARTMENT OF INSURANCE. HOWEVER, YOU ARE NOT REQUIRED TO COMPLETE THIS SURVEY. IF YOU CHOOSE NOT TO COMPLETE THIS SURVEY, OR IF YOUR SHOP IS NOT ELIGIBLE TO PARTICIPATE IN THIS SURVEY, PLEASE RETURN IT TO US FOR OUR RECORDS. IF YOU CHOOSE TO NOT COMPLETE THIS SURVEY, PLEASE CHECK THE FOLLOWING DECLINATION:

I DECLINE TO PARTICIPATE IN THIS SURVEY: ________

Question 1: The survey may only use labor rates of auto body repair shops registered with, or licensed by, the California Bureau of Automotive Repair to perform auto body collision repairs. Is your shop duly registered or licensed to perform auto body collision repairs by the California Bureau of Automotive Repair?

YES _______ NO__________

If you answered Yes to question 1, please provide your license number with the California Bureau of Automotive Repair _____________________.

If you answered No to question 1, stop here, proceed to declaration to complete your survey and return the survey questionnaire to us.

Question 2: We may only use labor rates in a survey reported by auto body repair shops that meet certain specific standards. Please confirm below whether you meet all of the following specific standards:

In order for a shop labor rate to be used in a survey it must:

  1. Meet all equipment requirements for auto body repair shops, as required by the Bureau of Automotive Repair and as described in California Code of Regulations, Title 16, Division 33, Chapter 1, Article 6, Section 3351.5, Equipment Requirements for Auto Body Repair Shops, and any amendments thereto;
  2. Have proof of garage keeper’s liability and workers’ compensation insurance or equivalent;
  3. Have electrical or hydraulic equipment capable of making simultaneous multiple body or structural pulls;
  4. Have a spray booth that meets current federal, state and local requirements;
  5. Have the ability to complete and verify four-wheel alignment through computer printout either from an in-house alignment system with at least one technician that is certified or qualified or utilize a qualified sublet provider;
  6. Have the ability to remove and reinstall frame, suspension, engine and drive train components or use a qualified sublet provider;
  7. Have the ability to evacuate, reclaim and recharge vehicles air conditioning system using EPA compliant in-house equipment and certified technicians or use a qualified sublet provider; and
  8. Subscribe to a provider of structural specifications with periodic updates covering the vehicle structure for the make, model, and year of the vehicle(s) being repaired and wheel alignment specifications for the make, model, and year of the vehicle(s) being repaired.

I confirm that this auto body repair shop meets all of the above standards:

YES _______ NO__________

If you answered NO to question 2, stop here, proceed to declaration to complete your survey and return this survey questionnaire to us.

Question 3: Hourly Rate Charged – Please indicate the hourly rate charged by your facility for non-direct repair program or other non-discounted auto body repair work for each category of repair identified below.

(a) Auto Body/Sheet Metal Labor Rate: ________per hour.

(b) Structural Labor Rate: _________ per hour.

(c) Frame Labor Rate: _________ per hour.

(d) Mechanical Labor Rate: ________ per hour.

(e) Refinish Labor Rate: _________ per hour.

(f) Aluminum Repair Labor Rate: _________ per hour.

Question 4: Does your repair shop have a contract or agreement with this insurer to perform repair work for a discounted rate or other considerations in exchange for referrals by the insurer?

YES _______ NO__________

If you answered YES to Question 4, you may not include discounted rates in your response to Question 3, above. Your response to Question 3 must only reflect the hourly rate charged by your facility for non-direct repair program or other non-discounted auto body repair work for each category of repair identified.

PLEASE MAKE A COPY OF THIS SIGNED AND COMPLETED QUESTIONNAIRE FOR YOUR RECORDS AND MAIL TO THE ADDRESS SHOWN ON THIS QUESTIONNAIRE

DECLARATION

By signing below, I declare that the information provided above is true and correct.

Signature: ________________________________ Date:

Print Name: _________________________________

Title:_____________________________________________________________

Telephone: _______________________________________________________

Email Address (optional):___________________________________________

Physical Address of Repair Shop:_________________________________________

Correction: Carriers wouldn’t have to use the California Department of Insurance’s labor rate survey template, but those who elected to do so could receive a “rebuttable presumption” they were acting in good faith on labor rates. The article has been updated to reflect this.More information:

Auto body labor rate surveys: Initial statement of reasons

California Department of Insurance, March 4, 2016

Auto body labor rate surveys: Text of regulation

California Department of Insurance, March 4, 2016

Auto body labor rate surveys: Notice of proposed regulatory action

California Department of Insurance, March 4, 2016

Images:

Part of the proposed California labor rate survey text is shown. (Provided by California Department of Insurance)

After a review process dating back to 2012, the California Department of Insurance thinks it has a template for a fair standardized collision repair labor rate survey form auto insurers should use. (Vepar5/iStock)