The Alliance of Automotive Service Providers of New Jersey (AASP/NJ) has launched its “Collision Repair Consumer Protection Initiative” (CRCPI) to educate consumers, legislators, and automotive professionals about a rising trend in insurance companies reducing reimbursements needed to restore vehicles to a safe condition and refusing to negotiate in good faith, an AASP/NJ press release says. 

“My thought on this initiative was to bring awareness to the consumers, who are largely unaware of what is happening,” Ken Miller, AASP/NJ president, said Tuesday. 

Miller said reduced insurance reimbursements mean consumers have to pay out-of-pocket to cover the full cost of repairing their vehicle to a safe condition. Or worse, a shop could omit needed repair procedures, he said. 

“As we live through these times of runaway inflation and rising costs, insurers have seen double-digit percentage premium increases and a sharp reduction in loss payouts,” the release says. “Many insurers are seeing record profits and huge insurance executive compensation packages to the tune of millions of dollars, all at the expense of New Jersey policyholders, at a time when many in the state struggle to provide for their families.”

New Jersey has seen a strong uptick in short payments in the past year, Miller said. He said multiple insurance executives made comments about controlling expenses. 

“We should read that as cutting reimbursements,” he said. 

The press release notes that as a result of advancements in automotive materials, advanced safety features, and OEM repair requirements vehicles have become more complex. It says this makes repairing vehicles “exponentially more complicated.” 

“Even seemingly simple operations, such as repairing a scratch on a bumper, can be extremely difficult, requiring a multitude of considerations and operations to ensure the vehicle acts, responds, and protects its occupants as designed,” the release says.

Aaron Schulenburg, Society of Collision Repair Specialists executive director, recently commented about the rising complexity and cost of vehicle repair in a LinkedIn conversation.

“Safer cars and less injury is a good thing for the motoring public,” Schulenburg said. “But increased technology places added demand in the repair process, and on the repair facilities that are authorized by the consumer to fix their vehicles safely. Even if the consumer goes through their insurance policy for coverage, many customers still find themselves in a position where underwriters have lagged behind the rising demands of today’s vehicles. Unfortunately, it’s not uncommon for the claims process to fall short in indemnifying for necessary processes and procedures to repair vehicles as insurers attempt to mitigate claims costs. This potentially still results in out-of-pocket responsibility to the owner.”

As many vehicle owners don’t have the resources to make up for an insurance company underpayment, some repair shops could decide to “cut corners,” the release says. This practice potentially places customers, the repair shop, their employees, and other motorists in harm’s way, it says. 

Repair shops also could be put in a position where they refuse to repair a vehicle in an effort to protect their business and employees, the release adds. 

“AASP/NJ’s concern is the proper repair of today’s advanced vehicles as well as the survival of thousands of small employers in New Jersey who employ tens of thousands of people seeking to provide for their families while working in this industry,” the release says. “And most importantly, the safety of the motorists utilizing New Jersey’s roadways.”

“AASP/NJ rejects the often misguided insurer argument that this initiative will increase insurance premiums for New Jersey residents. These claims are made while witnessing huge internal profits and excessive executive compensation packages throughout the insurance industry.” 

CRCPI is an invitation for an open dialogue with all stakeholders including legislators, insurers, repairers, and New Jersey consumers, the release says. 

“[AASP/NJ] goal is to provide the premium-paying policyholders of New Jersey with complete, safe, and proper repairs to their vehicles, along with the right to choose the repair shop of their choice,” the release says. 

The release encourages anyone facing a difficult insurance situation to file a complaint with the New Jersey Department of Banking and Insurance here. It also encourages residents to reach out to local congressmen, assemblyman, or state senators to bring awareness to insurance underpayments or lack of payments. 

Miller said he’s shared what AASP/NJ is doing with other association heads across the country. He said many have shared an interest in starting similar initiatives to CRCPI. 

“I would like to see other states do something similar in their states,” Miller said.

Recently, in answer to a consumer complaint, Montana’s deputy insurance commissioner told Liberty Mutual its settlement of a claim isn’t sufficient and that simply stating a referenced blend study as “unverified” without evidence to back it up is unacceptable.

Liberty Mutual denied payment for the amount charged by the repair facility to blend the vehicle in question, citing the 50% blend time as “successful” and “well-established.”

“While we appreciate that Liberty Mutual has issued numerous payments on this claim, that does not justify it from paying for all costs of covered repairs that are reasonable and objectively supported by evidence,” wrote Deputy Insurance Commissioner Frank G. Cote in an Aug. 6 letter to Liberty Mutual.

IMAGES

Photo courtesy of gguy44/istock