The Alliance of Automotive Service Providers of New Jersey (AASP/NJ) has launched its Collision Repair Consumer Protection Initiative (CRCPI) to inform consumers, lawmakers and automotive industry professionals about a growing trend of insurance companies reducing the reimbursements required to restore vehicles to roadworthy condition and refusing to negotiate in good faith, according to an AASP/NJ press release.
“My thought behind this initiative was to raise awareness among consumers, who are largely unaware of what is happening,” Ken Miller, president of AASP/NJ, said Tuesday.
Miller said the reduced insurance reimbursements mean consumers have to pay out of pocket the full cost of repairing their vehicle to a safe working condition. Or worse, a repair shop might neglect to make necessary repairs, he said.
“As we live through these times of rampant inflation and rising costs, insurers have seen double-digit premium increases and a sharp reduction in claim payouts,” the press release said. “Many insurers are reporting record profits and huge compensation packages for insurance executives in the millions, all at the expense of New Jersey policyholders, at a time when many in the state are struggling to provide for their families.”
New Jersey has seen a sharp increase in the number of short payments in the past year, Miller said. He said several insurance executives have commented on cost control.
“We should understand this as a reduction in reimbursements,” he said.
The press release states that vehicles have become more complex due to advances in automotive materials, advanced safety features and OEM repair requirements. This makes vehicle repair “exponentially more complicated,” it says.
“Even seemingly simple operations such as repairing a scratch on a bumper can be extremely difficult and require a variety of considerations and operations to ensure the vehicle performs, responds and protects its occupants as intended,” the press release said.
Aaron Schulenburg, executive director of the Society of Collision Repair Specialists, recently commented on the increasing complexity and cost of vehicle repairs in a LinkedIn conversation.
“Safer cars and fewer injuries are a good thing for drivers,” Schulenburg said. “But increasing technology is placing higher demands on the repair process and on the repair shops authorized by customers to safely repair their vehicles. Even if the customer uses their insurance policy for coverage, many customers still find themselves in a situation where insurers are not meeting the increasing demands placed on modern vehicles. Unfortunately, it is not uncommon for the claims process to not cover the necessary processes and procedures to repair vehicles as insurers try to reduce the cost of claims. This may still result in the owner having to pay out of pocket.”
Since many vehicle owners do not have the means to compensate for an underpayment by the insurance company, some workshops may decide to “cut corners,” the press release states. This approach potentially puts customers, the workshop, its employees and other motorists at risk, it says.
In addition, repair shops could be given the opportunity to refuse to repair a vehicle in order to protect their business and their employees, the press release continues.
“AASP/NJ is concerned about the proper repair of today’s modern vehicles, as well as the survival of thousands of small employers in New Jersey who employ tens of thousands of people who try to support their families while working in this industry,” the press release said. “And most importantly, the safety of motorists who use New Jersey’s roadways.”
“AASP/NJ rejects insurers’ often misguided argument that this initiative will increase insurance premiums for New Jersey residents. These claims are being made while the insurance industry is faced with huge internal profits and inflated executive compensation packages.”
CRCPI is an invitation to an open dialogue with all stakeholders, including legislators, insurers, repairers and consumers in New Jersey, the press release said.
“The goal of (AASP/NJ) is to provide New Jersey’s premium-paying policyholders with complete, safe and proper repairs to their vehicles while giving them the right to freely choose the repair shop of their choice,” the press release said.
The press release encourages anyone who finds themselves in a difficult insurance situation to file a complaint with the New Jersey Department of Banking and Insurance. HereIt also encourages residents to contact local Members of Congress, Representatives or State Senators to draw attention to underpayments or defaults by insurance companies.
Miller said he has told other association presidents across the country what AASP/NJ is doing. He said many are interested in starting similar initiatives to CRCPI.
“I would like to see other states do something similar in their states,” Miller said.
In response to a consumer complaint, Montana’s deputy insurance commissioner recently told Liberty Mutual that settling a claim was not enough and that it was unacceptable to simply label a cited blending study as “unconfirmed” without providing any evidence to support it.
Liberty Mutual refused to pay the amount invoiced by the repair shop for blending the vehicle in question on the grounds that the 50% blending period was “successful” and “well established.”
“While we appreciate that Liberty Mutual has made numerous payments on this claim, that does not justify the company’s failure to pay all costs for covered repairs that are reasonable and supported by objective evidence,” Deputy Insurance Commissioner Frank G. Cote wrote in an Aug. 6 letter to Liberty Mutual.
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