New Jersey Gets Taste of Progressive. See How One Shop Deals With Them.

March 10, 2006 by
Filed under: Uncategorized 

by Nick Kostakis

John is still busy writing software. Here’s a great piece from Nick Kostakis from New Jersey.

A year or so ago, I wrote an article for NJA dealing with low-balled estimates, arbitrary parts discounts, a breakdown in the insurer-repairer relationship, and the use of the Appraisal Clause to overcome these obstacles. That story involved Allstate with a $1,400 original estimate and a $3,000 supplement generated by invoking the Appraisal Clause. It wouldn’t be fair on my part to move on without stating that, at least in my area and/or at our shop, Allstate is a somewhat better company to deal with lately. Don’t get me wrong. We’re not on each other’s Christmas card lists and they still steer most claims to their PRO shops before we ever see them, but they have either moved up the claims-handling-quality ladder, or they are simply looking better in comparison to some of the new players that have entered New Jersey.

For those of you not familiar with the Appraisal Clause Process, this is my understanding of how it works: Nearly all insurance policies, including but not limited to automobile, contain an appraisal clause provision. If a policyholder and insurer can’t agree on the amount of physical damage loss, either one may invoke the appraisal clause. If your customer signs a form designating you, the repairer as his representative, you can then invoke the appraisal clause on his/her behalf.

  • You choose and pay for a disinterested appraiser to represent you.
  • The company will choose and pay for an appraiser to represent them.
  • The two appraisers will select a neutral third party umpire to represent them.
  • Both appraisers will give their estimates for the loss.
  • If the appraisers can’t agree, they will submit their differences to the umpire and he/she decides.

 

Progressive entered the New Jersey personal line market a few months ago with a nationwide reputation amongst repairers as possibly being the worst of the worst. When a customer comes to you with a repair involving an unreasonable insurance carrier, you often find yourself having to make decisions which affect you, the customer and the vehicle. If your shop is full of better work you might opt to refuse to take in the repair, forcing the customer to take his/her chances with another shop. That same customer may soon thereafter switch their insurance coverage to a better carrier, but your decision not to advocate on behalf of this customer may have lost you this customer (& his friends/relatives) for life. You might decide to perform the repair and to charge the customer the deficiency between the full repair cost and what the insurance carrier “allowed”. This is possibly a better solution, but is again one that might serve to alienate the customer in the long run.

A third option is to complete a proper repair and to motivate the insurance carrier to pay the true full cost of the repair (less deductible). This option presents the greatest challenges but has the potential of producing the most positive outcome; a proper repair, a satisfied and retained customer, fair compensation for the completed repair, and a leveled playing field between quality-oriented insurers and those that can be categorized as bottom-line-driven.

We recently had the privilege of testing Progressive’s reputation on a claim involving a 2005 Honda. The appraiser seemed to be one of the nicest guys that you could meet, but left the shop after inspecting the vehicle without leaving a copy of the estimate, under the excuse that he had an emergency claim down the road. The faxed copy we received the next morning showed Progressive’s true colors, with obviously needed repair items deliberately omitted, and an instruction for us to weld a cracked transmission case on an essentially new vehicle. We notified Progressive to expect a supplement larger than the original estimate and proceeded to complete repairs.

Nearing completion of the repair, Progressive was notified to come back to process the well-documented supplement, including a dealer sublet replacement of a transmission case that they had reluctantly approved. They declined the visit, insisting that they could process it via a desk review of our documentation. Progressive’s first version of our 21-line supplement contained 6 lines and no suggestion as to where we could look for the other 15 missing lines. One of the missing items was the full cost of the dealer sublet, which they felt was excessive and lowered, leaving us with the difference. A persuasive call to a claims supervisor resulted in an additional 7 lines, but the last 10 lines were less likely to appear than Osama Bin Laden appearing on American Idol singing God Bless America.

We immediately invoked the Appraisal Clause, followed up by a typically worthless complaint to the Department of Insurance, just to make sure Progressive didn’t completely ignore the process. Meanwhile, Progressive soon thereafter returned to appraise a second claim involving a 2001 Lexus. More prepared for the experience this time, we sat down in one of the front offices to calmly discuss and hopefully agree on the “rules of engagement”; namely that we expected to be paid at NJ prevailing rates for all parts, materials and procedures necessary to perform a complete and safe repair. As you can imagine, the discussion deteriorated very quickly. Progressive couldn’t defend their insulting paint material rate, but wouldn’t concede to a higher rate. They indicated that they typically refused to pay for Color Sand & Buff and Color Tinting because these operations were included within the Mitchell database labor. A quick review of Mitchell’s P-pages confirmed that this statement was false.

Flustered but not ready to concede defeat, Progressive then stated that they were not paying for Color Sand & Buff because this operation was only required “when the shop neglected to properly maintain its spray booth”. Progressive declined to make a contribution to my spray booth maintenance fund, which is used to pay for items such as the $800 ceiling filters we had just recently replaced. Progressive typically also does not pay to blend or car cover, except in rare instances where it is necessary (they refused to blend the silver metallic fenders on the ’05 Honda above). Why, I asked, do their TV commercials fail to mention that, at the end of the claims process, you receive at no extra charge, a dirty, overspray-laden two-color vehicle?

Perhaps our most interesting conversation surrounded paint materials. The Progressive supervisor clearly defined “prevailing rate” as the rate of a dozen shops (out of 1,500 licensed NJ shops?) that were willing to work for Progressive’s rates. When pressed, Progressive reluctantly agreed that paint materials were a component of the overall repair, and that we were entitled to earn a profit of these materials, but refused to quantify what a reasonable markup on cost would be. Their estimate on the Lexus assigned an amount of $150 to cover these materials, including our profit component. They indicated that Progressive had performed a NJ market survey to determine these prevailing rates, but were not sure they could get their hands on it, or whether they could share it with us, the shop. Of course, we invoked the Appraisal Clause on the second claim.

Progressive assigned an independent appraiser as their “competent and impartial” appraiser in the Appraisal Clause process on both claims. We decided not to challenge the fact that this impartial appraiser regularly performed appraisal services for Progressive, and that this relationship clearly resulted in a potential conflict of interest. We also hired and independent appraiser. Both appraisers inspected the two vehicles. The Progressive appointed appraiser seemed to appreciate the credit we brought to his attention for two $365 headlamps that Progressive had written at $1,180 each (the original Progressive appraisers were so busy defending against $20 of Color Tint that they made a $1,700 mistake on the headlamps).

In the end, the two independent appraisers could not resolve their differences, so a mutually agreed upon “umpire” was brought in to make the final determination of necessary repair procedures and associated costs. The repair on the ’05 Honda went from $4,093.21 to $8,030.19. The repair on the ’01 Lexus went from $5,044.50 to $5,686.48, including the headlamp credit of $1,742. More importantly, Progressive was forced to pay truly prevailing rates in all categories, including paint materials. In the end, all necessary procedures were itemized and reimbursed. Oh, and by the way, the owners of these vehicles received complete, safe and proper repairs.

What will take place on the next Progressive repair in our shop? Your guess is as good as ours. We contend that this process has defined a standard for rates and procedures for Progressive repairs in our shop. Progressive would probably like to think that this unpleasant experience is an isolated case and that they can go back to business as usual. I believe that psychologists have determined that any new behavior has to be repeated roughly 20 times for it to become permanent. If this is true, I am looking forward to the next 18 appraisal clauses with this carrier.

The appraisal clause process is an invaluable last resort mechanism for dealing with a totally unreasonable situation. It is strong medicine and should only be applied when all other approaches have been exhausted. For the many insurance carriers that do act ethically and fairly, take the time to let them know that you appreciate their desire to work cooperatively with your shop. For the others, the option is yours as to whether to fight or give in. There is a saying in the military: “Is this the hill you want to die on?” The point being that you must choose your battles wisely. Every now and then, you need to head up the hill, for your own self-respect, and because your customer is counting on it.

Nick Kostakis,
Vice-President, Angelo’s Auto Body, Inc,
Operating in Essex County, NJ since 1950

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Comments

4 Comments on New Jersey Gets Taste of Progressive. See How One Shop Deals With Them.

  1. Sounds like a good story ending on Fri, 10th Mar 2006 11:03 am
  2. It is hard to cut through the insurance training to screw everybody but it can be done. An old assistant manager from the past is a Progressive adjuster and is the only one allowed in my shop. The last one he wrote here had a judgment line of $200.00 to make up his companies shortfalls and happened to come out to my total exactly. Go figure I can’t pay for tint and I can’t pay for wet sand and buff. I tell them all how much Ford just spent on their paint plant (19 million I think) and mine costs alot less but at least they can afford to rent mine for me to repair their insureds or claimants vehicles.

    All Precision Collision Repair
    Bob Winfrey
    NC, USA

  3. gtolovedaddy on Thu, 16th Mar 2006 10:50 am
  4. One of the big problems that lead to these problems with progressive is the fact that there are different levels of adjusters from a level one to a level Three each level has a differnt authoriy level attatchted to that level for instance I think a level one many only authorize $700. worth of repairs. which is why he had to leave the shop and get more approval from his barely more experianced supperior.
    you need to get up to about a level three before he can authorize a 5,000 dollar repair. so rather than have the adjuster admitt that he is actualy underqualified to write the damage he very politly excuses him self. and gets coached on how he needs to reject the claim.

    If they push you that far then you should also charge them administration fees as well a reinburse you for the unnescissary expence of contracting a third party adjuster. also you should charge stall rental for the delay they have created.

    I have done this successfuly .
    Also your shop does not have to opperate at the loss that the shop down the street is willing to work at.
    no more than state farm has to sell insurance at the same rate as progressive.
    that is a weak argument.

  5. exoticar1994 on Thu, 22nd Feb 2007 7:20 am
  6. Hello Gentlemen,
    Can someone please enlighten me as to how I can proceed with THE APPRAISAL CLAUSE?
    NYSID does not respond to my request(what a surprise) I am tired of Progressive and their business as usual, WE DONT PAY FOR THIS, THAT and the other. The appraisal clause seems to be a good ave. to travel.Please help me.
    Peter
    exoticarcoachworks@yahoo.com

  7. Neentepillgek on Fri, 3rd Dec 2010 2:22 pm
  8. New car coverage is just not especially exceptional. Subject to and that maintain you live through, it may indeed be some smaller sized or maybe much larger piece of your allowance rather than your friends upon talk about wrinkles. What’s the minimal to your state? Available this blog worthwhile to evaluate less expensive auto insurance. I’m thrilled to be here.

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