Did They Really Just Say That?
In the course of an average day at an independent (non-DRP) body shop, we hear some pretty outrageous comments from representatives of the insurance companies that are supposed to be protecting you. Today, we will focus in on an insurance industry catch-phrase: “Reasonable and Customary”.
The following example is based upon an actual conversation with a Concierge and Appraisal Manager from The Travelers Companies, Inc.. For the purposes of this article, we’ll call him “Nate”.
Nate: “If you don’t reduce your rates to what we (Travelers) feel is ‘reasonable and customary’, we will have to notify the Attorney General and lodge a complaint with the Better Business Bureau. Furthermore, we will tell any of our customers that want to choose you (Nylund’s Collision Center) that we will not pay anything more than what we feel is ‘reasonable and customary’, and anything above that amount, they will have to pay out of pocket.”
What EXACTLY is… REASONABLE AND CUSTOMARY?
We believe that Nate is drawing upon information gathered by Travelers, who, over the course of the history of their company and the aggregate of every claim they’ve ever paid – has developed an “average” of the typical expense for repairs. Does THAT make their list of averages “reasonable and customary”?
What about asking the insurance company (State Farm) that sells the most policies in the US? Do THEY have a lock on what’s “reasonable and customary” because they pay out so many more claims?
And isn’t the REAL question – What are the REAL costs of doing business… and WHO gets to set those costs?
The McDonald’s Corporation is the world’s largest chain of hamburger fast food restaurants, serving an estimated 68 million customers daily. They sell more $1 hamburgers than anyone else in the world. Burger King also sells hamburgers for $1. So is it “reasonable and customary” to suggest that the price of all hamburgers in the US should be $1? Of course not. Red Robin sells their least expensive burger for $8+.
Under the bully tactics that Nate from Travelers is using, he ought to be able to walk into Red Robin, or any other burger joint, and demand that he will only pay $1 for a hamburger, based upon what he deems to be “reasonable and customary”. And if Red Robin doesn’t cower and concede, he will threaten them with notifying the Attorney General and filing a complaint with the Better Business Bureau.
Here are the FACTS:
In America, we celebrate that the individual business owner gets to establish his/her own rates, and the customer – the CUSTOMER – will decide for themselves if those rates for services/products are “reasonable and customary”. The insurance agencies are NOT the customer of any body shop. And Nylund’s is NOT the customer of ANY insurance company.
Our customers (we call them guests) bring their vehicles to us because we do the RIGHT repair – always. Our rates are not unreasonable – and in fact in most cases – are not any more than what the industry typically pays. And the irony of that is this: the INSURANCE companies set the industry standard rates. Here in Colorado, that’s $48/hour.
Consider that for a moment. If your computer crashes, you will pay a certified computer technician between $65-110/hour to repair it. If your cell phone breaks, the same rates apply. If you want a new logo for your business, the going rate for a graphic designer is between $60-300/hour. Certified Handymen receive $75-200/hour to patch the hole in your wall.
The body shop you choose is tasked with repairing your vehicle to “pre-accident” condition. They are responsible for the quality of repair and the safety of the vehicle’s occupants. And they must work within the industry standard of $48/hour to repair your vehicle.
The INSURANCE company must – by law – pay for the repairs to your vehicle to achieve pre-accident condition as well. The scare tactics that Nate and Travelers threatened us, and our guests with – are nothing more than bullying designed to reduce the expense of a repair done right.
Be informed. Ask questions. Know your rights. Protect your family.