He also said several major insurers have implemented a reject slip system where an estimator looks at a vehicle, takes a photo and can quickly determine if the vehicle is repairable before writing the estimate.
“If you’re a repairer, bumpers are often seen as rejects,” he said. “What reject slips accomplish is actually training an untrained estimator to see what is repairable or not.”
When deciding if a repair is the best route to go, Lammon stressed the importance of first checking OEM repair procedures, especially with newer vehicles where the damage is in the vicinity of a sensor.
“Most of the plastic parts on a vehicle are non-structural,” said Lammon. “You can repair these things without any risk of it affecting the vehicle’s crash energy management.” He used the example of bumper fascia and headlight tabs. “It’s really a low-risk sort of repair, unlike sectioning a frame rail.”
Lammon also advised shops to look at the replacement cost of the parts.
“As the price of the replacement part goes down, it makes it less appealing to do the repair,” he said. “You want to go the route that is going to make more money, but also need to find a win-win situation between the shop and the bill-payer.”
In the example of a replacement part that costs $400, if the shop makes 25 percent gross profit on parts, they receive $100 of gross profit and the bill-payer is out $400.
If this part is repaired and the shop is paid for six hours of work at $50 per hour with a 50 percent gross margin on labor, the shop makes $150 of gross profit and the bill-payer is only out $300.
“The shop is making more profit by repairing it and it’s saving the bill-payer money,” said Lammon. “That’s what you define as a win-win scenario.”
The bottom line, according to Lammon, is that anything that increases the price of the replacement part will make it more appealing to do the repair. This includes the availability of the part.