Imagine you’re involved in a car accident: you dust yourself off, check for damages, and maybe take a photo or two. Next, call the insurance company.
You begin your claim. You will take your car to the store. Once the insurance adjuster and body shop take care of everything, you will only be responsible for your deduction. You pay that fee, get the key back from the body shop and drive in your car.
That’s how car insurance works. However, in recent years, this process has become more complicated. More and more car owners are receiving calls from repair shops saying that their insurance companies won’t cover the full cost of repairs. Even drivers with full coverage may find that their insurance policy doesn’t cover everything they think they think in the wake of an accident.
This issue comes down to the discrepancy between the repair shop and the insurance company that is needed for auto repair. One of the key points of competition is the safety inspections that car manufacturers need in the post-collision repair process. This is what more and more insurance companies are refusing to cover.
To see what’s going on in the repair shop, we spoke to a woman who runs a family-run crash repair shop in Kansas. We call her Donna because she likes to remain anonymous. She has been in the business for 10 years and she says the problems are getting worse. “People really need to know what’s going on here.”
The repair instructions are clear, but the insurance company does not agree
The original equipment manufacturer (OEM) provides an extensive repair manual for your vehicle, including detailed instructions on what to inspect for repairs, replacements, calibrations and inspections during post-collision repairs. Body Shop pays for access to these instructions from the manufacturer or through third-party platforms such as Alldata.
To correct the car, that is, to maintain its safe function, repair shops must follow these instructions. But increasingly, some shops are receiving pushbacks from insurance companies about details of their OEM procedures.
Donna gives an example. Currently, her store has a 2021 Toyota Tacoma with “substantial damage” on the front fenders and bumpers. Despite the extent of the damage, the airbags did not deploy. According to the OEM repair manual, Toyota requires repair companies to perform certain safety inspections after an accident.
“So for me,” she says. “That’s very obvious. I’m going to choose one without airbag deployment and I’m going to follow those instructions.”
However, following Toyota’s instructions, Donna’s team will need to remove multiple trim panels in the vehicle in order to perform manual and visual inspections of the airbags along with other safety-related items. And the insurance companies that process the claims will not be paid to the store for the labor necessary to remove those panels.
“They said the safety inspection was “unfair” because the airbags didn’t deploy,” she explains. “These were the words they used in their emails.” Insurance companies consider this part of the OEM’s repair instructions unnecessary, so if Donna and her team decide to complete the required inspection, they will not be paid for it. Instead, they have to charge their customers or do what they have to do more and more. Complete the job for free and write it down as a project expense.
What happens if the insurance company doesn’t pay for the repairs?
If an insurance company refuses to pay for repair procedures the automaker needs or recommends, Donna said the cost often comes to the repair company. For most of her clients, “Paying from the pocket is definitely a last resort.”
It leaves three options for Donna and her family:
- Complete only the insurance-eligible repair procedures
- Ask the customer to pay for the full cost of repairs that are not covered by insurance.
- We will repair it for free
“A few years ago, we tried to take a solid attitude,” recalls Donna. Rather than amortizing the process, she and her family will call the client to explain the situation. This is an important part of the repair process, but you refuse to pay. Get your invoice for $150.
Instead of accepting the extra fee, the customers got mad. “And they’re mad at me,” says Donna – not an insurance company. “I’m a bad guy now because I shouldn’t charge from my pocket now.” She and her family had to change their approach as the situation generated by Donna’s customer base became so important.
“It’s really hurting our business,” she says. “We started hearing comments like, ‘Don’t go to that store – they’ll send you an invoice.’ “Now she’s writing down a significant portion of her business to avoid invading customers that the insurance company doesn’t pay.
Safety issues
Donna isn’t just worried about paying. She also worries about what will happen if she can’t complete the repairs according to the manufacturer’s instructions.
Failing to inspect the airbags on Toyota’s customer’s trucks according to the manufacturer’s instructions can cause safety issues if Donna is worried. If the customer chooses not to pay for the inspection and Donna doesn’t provide it for free, the airbag can fail in a future crash and cause serious injuries. “That’s hard for me to sleep at night,” she says.
What’s even more concerning is the silent cascade of safety issues, which can occur when shops like her start to open by cutting corners because they float.
“There’s really no way to track how these cars were repaired,” she explains. “When they get back on the road, the safety risks may not be revealed until it’s too late.” She remembers a car that came to her store where there was no airbags after the collision. The previous repairman had cotton on the back of the dashboard, she explained, hiding an indicator light that had warned the owner about the issue. “There was an empty hole where the airbag was supposed to be, and this guy’s 20-year-old daughter in college was driving this.”
Issues of responsibility
Donna’s safety concerns are more than just altruistic. She also worries about the legal consequences of the business if incomplete repairs cause safety issues later. “If you don’t inspect these airbags and something goes wrong,” she explains.
Repair companies like Donna get caught up in a triangle between manufacturers where repair procedures are becoming more complicated, insurance companies are reluctant to pay additional costs, and customers covering the full repair costs to pay the car for anticipated insurance.
Everyone in this equation agrees that the car needs to be repaired. However, they don’t want to pay from the manufacturers that built the car and the manufacturers that are driven by consumers.
“It’s not always like this.”
Disagreements in the claims process are not new. Insurance adjusters and collision shops are constantly encountering disputes over the correct repair costs. But Donna and her fellow repair shop owners say things have gotten worse over the past five years and that has caused problems for their business.
Andrew Batenhorst, who owns a crash repair shop in California, says the trend began around 2021. “It’s definitely been on the rise since the pandemic,” agrees Jerry McNee, owner of Ultimate Collision Repair in Edison, New Jersey and former president of the New Jersey Alliance of Automotive Service Providers (AASP/NJ). However, he’s been dating more trends recently. “I’ve never seen the tactics or things I saw last year.”
Both Donna and Andrew Batenhorst will track the upward trend in insurance denials five years ago until the start of the Covid-19 pandemic. Covid has narrowed the budgets of insurance companies in a variety of ways. Following a sharp decline in driving, dramatic increases in dangerous driving habits, supply chain issues have increased the costs of major auto repair components. Money lost to inflation and customer recovery during the 2020 lockdown. Customers have felt that pandemic pressure has been delayed since 2021 in the form of high premiums. The repair shop also felt that way.
But it’s not just the economy that has changed. The automobile has undergone major mechanical conversions over the past five years. On today’s vehicle, Donna says, “Safety is a much bigger issue.” They have many electronic components, many wiring, many sensors. “They’re computers on the wheels,” she says.
All of these computers make modern cars safer, but they make the repair process even more complicated. And Donna says it’s “much more expensive.” The car’s advanced driver assistance system (ADA) relies on countless sensors and cameras to work properly. If a camera or sensor is knocked out of the scene during a crash or subsequent repair, the safety system could malfunction in the future. As a result, OEM repair procedures include many steps for inspection and re-enhancing of these safety components.
Insurance company’s perspective
Just as the conflict between repairers and insurance companies can be frustrating, Donna isn’t just not wanting to beat the insurance company.
“I need insurance,” she says. And not all insurers approach the claims process the same way. “Some airlines act responsibly and provide fair and reasonable settlements.”
Ultimately, insurance companies and repair shops work towards the same end goal in the claims process. Repair the car and bring the customer back to the road.
“Insurance and repair shops really have the same goal,” says Bob Passmore, vice president of personal lineage at the American Property Casualty Insurance Association (APCIA), the largest trade association in the industry. “They want to provide quality repairs, safe repairs and cost-effective repairs. Just as customer relationships are important to repair companies, Passmore says it’s even more important to insurers.
However, he dismisses Donna and other repair companies concerns about the insurance company’s refusal to cover certain procedures listed in the OEM repair instructions. Shifting the liability for full payments to insurers, he argues that he will raise the cost of car insurance to meet unclear OEM requirements and pockets of line repair companies.
“Half of these things are vague or nonexistent,” Pasmore said. In his view, it “is actually only used in some shops to create leverage for higher repair invoices.”
Insurance companies always win
Passmore’s comments may encourage consumers to lessen their trust in repair shops. But Donna says, “What I’m looking at is the consumers and they see trust that runs in the opposite direction of having a lot of trust in the insurance company, which is disappointing to her.
“I know these people,” she says. “I grew up here. I see Mrs. Smith, Mrs. Smith, you know my whole life.
Despite working in a small country market with clients, she works with clients she personally knows, but Donna discovers that customers can ask her business more quickly than insurers when it comes to contested repairs. It’s not uncommon for customers to arrive and say, “Sorry, they said I had to go to this other body shop.”
“Of course they’re going to tell you to go for a cheaper option,” says Donna. “Why am I a bad guy that’s not a cheap option?”
One of the challenges for repair shops looking to negotiate a claim is the size of the insurance company they handle.
For example, take a look at State Farms. State Farm is the largest auto insurance provider in the United States. In 2024, State Farm earned $442,744,583 in personal auto insurance premiums in the state of Kansas alone, according to SERFF filings — one drop in the 48-state bucket of $69 billion in earned premium that State Farm reported in 2024. But in the CRASH Network survey of repair shops, just 29.2 percent of repairers working with State Farm reported being paid all or most of the time for OEM-required vehicle safety inspections – Lower percentage than other major insurance companies.
Donna says it’s frustrating to see repair procedures rejected by such a large, wealthy agency. Most repair shops, including herself, are small and independent businesses. “We have multi-shop owners who may have 10 or 12 stores. Of course, there are gerbers and calibers,” she says.
Neither Donna nor the customers have many options in opposition to major airlines. If the carrier refuses to pay for a particular repair, the claimant could be stuck either paying the extra invoice out of pocket or accepting the risk of skipping the OEM procedure. Aside from these options, the only other request that some customers have is to sue the insurance company. This is an expensive and time-consuming option that few people want to take risks.
“And the insurance companies are fully aware of this,” Donna says. “They know they just say, ‘No, we’re not paying for it.’ And no one is going to do anything about it. ”
Conclusion
It’s clear to Donna. The situation with her and other repair companies is not sustainable. In the short term, reducing the number of safe steps will help prevent customers from leaving.
If it’s a one-off situation, sometimes you’re forced to make business decisions, but can you accept the liability or risk of losing a customer? But more and more, this is becoming a widespread problem for more and more insurance companies.
– Donna
Collision repair shop owner
They considered rejecting business with insurance companies that have negative experiences and only worked with a small number of selected careers. “But it’s not always sustainable,” she explains. “These companies are not usually big, so limiting yourself means there’s a lot less work going through the door,” he says that if insurance companies continue to refuse to pay for the procedures required by OEMs, some stores will need to close.
