Thoughts on Rekeying Estimates: Part 2

In my article in last month's issue (which you should have next to you as a reference as you read this one), I promised to provide a further discussion on the rekeying topic and offer a fix for your facility to stop working harder and start working smarter and more efficiently. Additionally, I said I would revisit the topic of photo estimating and explain why I thought this was a critical issue for our industry.

The fix

Regarding the "fix," this will work for both Scenario 1 for Supplement 1 (after rekeying) and/or for your initial damage report. After negotiating with the appraiser, using your damage report (S1 or initial), you discover that the appraiser did not address all the operations and items you are charging the customer for. So, you will now need to call, email or fax in a request for a supplement. (Scenario 1 would be S2, and Scenario 3 would be S1). Now, here is how to not rekey.

In Scenario 1 or 3, you wrote an accurate damage report for the cost of repairs. For reasons we will not discuss, the appraiser did not reimburse the vehicle owner the full amount. So here are the steps to follow to not rekey:

1. Do not delete or write anything on your report.
2. Call for a supplement and do not delete or write anything on your report.
3. Call the vehicle owner to inform them of the supplement. (In some states, you are required to obtain permission from the vehicle owner to charge more than the original estimate and for each additional increase in price or additional supplement.) Do not delete or write anything on your report.
4. Continue with the repairs. There is no reason to stop; do not delete or write anything on your report.
5. When the appraiser arrives, hand them the original damage report you handed them the last time they were there. Now, the scenario will go a little something like this:

Larry (Damage Assessor): "Hi, John. Sure, I have the paperwork right here." [Larry hands John the original damage report. John quickly flips through the pages and looks perplexed.]

John (Insurance Appraiser): "Larry, this is the original paperwork you gave me last time. There are no S1s."

Larry: "Yes, John. It is the same paperwork from the last time. Nothing has changed on repair methodologies or the costs and, well, you forgot some things the last time. You will need to add them now."

John: "Like what? I don't see any S1s."

Larry: "John, I wrote an accurate cost of repairs for $8,134.56, and you wrote $5,478.21. That is a difference of $2,656.35."

John: "Larry, I can do math, but what is the supplement for?"

Larry: "Glad you asked, John. I wrote an accurate final invoice for the cost to properly repair the vehicle. John, you left off $2,656.35. Now, if this were a difference of only $100 to $200, I would be discussing those few items to make up that amount, but $2,600 is a significant amount."

John: "Whatever. But what is the supplement for? I do not know what it is for. How am I supposed to figure this out?"

Larry: "John, please understand that the $2,600 is YOUR problem, not mine. As it is YOUR error, not mine, now YOU will need to go line by line. It is YOUR job, so do YOUR job and figure out what YOU left off the last time YOU were here. It is YOUR job to ensure the vehicle owner is fully reimbursed for the cost of repairs to restore their vehicle back to its pre-loss condition. So, please have a seat. If you would like coffee, it is over on that desk. You will be here for a while; if you have any questions, please ask."

John (staring and looking completely baffled): "I have never had anyone ask me or expect me to do this before."

Larry: "Well, if YOU like, we will do YOUR job for YOU and rekey the estimate for YOU to make YOUR job easier. We charge $25 to fill in the customer, vehicle and insurer information on the estimate. It is $1.50 per line to enter for rekeying, $25 to check that the labor times and amounts are equal, $35 to enter all supplement charges, $5 per line for descriptive reasons for the operation in the notes and a $10 printing charge. Let me know which way you would like to do this."

How many estimates will you rekey now? How much will you have to spend on a third-party company to rekey the estimates for you? There is no law that requires you to rekey.

Photo Estimates

In August 2014, Jeff Lange and I wrote an article on this, and I feel I need to revisit this topic again. Over the past few years, many of you have seen customers come into your facility with a third-party photo estimating company estimate, and two things are very apparent:

1. There is a definitive issue with the vehicles being significantly underwritten. The person taking the photos, their skill level and even the type of camera they're using can affect the quality of those photos and what is being depicted in them. Photos often do not accurately reflect the extent of the damage; they can underrepresent the severity of deformities, gouges, scrapes and/or scratches, while some damages would not even be seen due to the angle, sunlight, etc. A scratch that appears like it could be buffed out may be too deep and require refinishing or may not even be seen in the photos. Additionally, without disassembly (which no consumer is going to attempt), no photograph will show hidden damage unless someone has an X-ray app.

2. There is an inherent major risk to the wellbeing of the vehicle operator and occupants. The problematic and dangerous issues that could arise to the vehicle operator and/or occupants is that most collision-damaged vehicles are not safe to drive, although they may in fact be drivable. In most collision events (although most are low-speed), there is often structural misalignment, suspension damage and deformed structural components that cannot be seen without disassembly and/or measuring. Operating the vehicle in this condition could put the vehicle operator, passenger and other vehicles on the roadway in a dangerous situation. For example, many times, a bumper fascia (cover), bumper reinforcement and front uni-rail can become damaged, but the fascia shows little to no damage. This is because the fascia is ductile and may have returned to its original shape with only slight stress markings, scrapes and scratches visible.

Another issue would be operating the vehicle with a Supplement Restraint System (SRS) Malfunction Indicator Lamp (MIL) illuminated. Some vehicles will set an MIL in a low-speed collision event because the passenger Occupant Weight System/Occupant Presence System requires reweighing and sensitivity testing. This basically means that the passenger airbag may not deploy when intended or may deploy when not intended. If a small child or a baby in the rear-facing child seat were sitting in the front passenger seat, the airbag could deploy in a subsequent event because the OWS is not accurately measuring the weight in the seat. What type of injury could that child sustain? Most vehicle systems will not illuminate an MIL, and the system may not operate as intended. The driveability and performance of the vehicle may cause a system shut-down, stranding the occupants (which may be a dangerous situation).

Another issue is the epidemic of uneducated and unqualified people writing damaged vehicles. Some in the industry (both insurance and repair facility personnel) cannot accurately and properly write a correct damage report with the vehicle in front of them, and you think someone can do this from photos alone? I have talked to many shops, and the estimates can be three to ten times what the original cost was.

So, who is gaining an advantage in this process by saving time and money? The consumer, you...or the insurance company?

Well, consumers sometimes believe whatever they hear. Do regulations support complete truth in advertising? Unfortunately, no. Until a claim is issued, they can say whatever sounds good on television and in print advertisements. Once in the hands of claims personnel, however, things can change. By using a photo estimating app, the insurance companies are betting the odds that many people will just keep the money and never have their vehicle repaired. They are also betting the odds that some shops will do the repairs for whatever price they are paid and/or are counting on a low-cost supplement. Remember that the insurance company saves time and money using a photo estimate app because they don't have to pay an adjuster to come out and look at the vehicle at your shop. Where is the advantage to the shop or the consumer? The consumer's best interests are served by getting their vehicle properly inspected by a professional at a reputable repair facility.

I'm not saying that these collision repair estimate apps have no value at all. These third-party guesstimating apps and services should be used at the scene with the vehicle(s) involved. This would assist with the prevention of fraud involving the actual sustained damage and even with fraudulent injury claims. Maybe the photo app should have a video app option, too. Always remember the repair facilities' number one concern is their liability and then the protection of their customer – the vehicle owner. Your contractual agreement is with the vehicle owner, and the insurance company has a contractual agreement with the vehicle owner or an obligation to a third-party claimant (if they accepted liability).

I hope this article has shed some light on recent events in the industry.

Executive Director's Thoughts: Everyone strives to be more efficient, and understandably so. If the insurer can gain efficiency, they save money. Insert photo estimating. Not sure if you've ever had your insurance premium go down, but I haven't. My assumption is that the liability of a policyholder still driving around a wrecked car without being sure it's safe is a risk they are willing to take to save those bucks. Take that photo, then take the chance… — Jordan Hendler

Larry Montanez, CDA is co-owner of P&L Consultants with Peter Pratti Jr. P&L Consultants works with collision repair shops on estimating, production and proper repair procedures. P&L conducts repair workshops on MIG & Resistance Welding, Measuring for Estimating and Advanced Estimating Skills. P&L also conducts investigations for insurers and repair shops for improper repairs, collision reparability and estimating issues. Larry is ISO 9606-2 Certified for Audi and Mercedes-Benz and is a certified technician for multiple OEM Collision Repair Programs. P&L can be reached by contacting Larry at (718) 891-4018 (office), (917) 860-3588 (cell) or info@PnLEstimology.com.