Pro Paint, the largest PPG Platinum Distributor in the Midwest, held their 7th Annual Trade Show on Tuesday, August 12. The event was held at Orchard Banquet Hall and Restaurant in Baldwin, WI. The event offered a variety of vendors demonstrating their products, six educational seminars, and a special guest appearance by NHRA’s John Force.

Friday, 22 August 2014 17:26

Repair Documentation Series, Part 2: Assignment of Proceeds and Writ of Replevin

Written by Chasidy Rae Sisk with Erica Eversman

Repair documentation plays an important role in your collision repair business, but many shop owners are not very familiar with what they need to protect their interests, so I’ve turned to an industry-leading attorney to provide crucial information on what you need to know about documentation in the collision repair industry. Last month, Erica Eversman, Chief Counsel for Vehicle Information Services, Inc. and founder of the Automotive Education and Policy Institute, a non-profit organization geared toward educating consumers, explained how collision repair facilities can use the Authorization to Repair and Repair Contract to receive proper compensation from insurers in legal battles. While those two documents are extremely important, they may not be the only documents you need to successfully pursue a shortpay case in a courtroom. Here, Eversman explains the relevance of an Assignment of Proceeds and Writ of Replevin in these situations.

The purpose of the Assignment of Proceeds is to create a bridge between the insurance company and the collision repair shop, and this is especially important when you have a consumer who is unwilling or unable to pursue proper compensation via a shortpay lawsuit on the shop’s behalf. Though the insurance company owes their customer the duty of indemnity and the customer thus expects their insurer to pay the shop that repairs their vehicle, many consumers simply do not know or care enough to pursue litigation in instances of shortpays. By asking your customers to sign an Assignment of Proceeds, your shop creates a necessary bridge to the insurance company, giving you the right to step into the consumer’s shoes (for purposes of collecting the full repair costs), force the issue and get paid.

The “devil is in the details”, so your first step is going to be hiring an attorney with experience in the collision repair industry who can assist you with properly wording the document. Eversman cautions, “you don’t have the right to sue on the consumer’s behalf for everything, such as diminished value; because you’re only being assigned the rights to proceeds, you can only sue the insurance company to collect proceeds for the repair. You need to understand what this industry is about, clarify exactly what’s going on, and specify which rights are being assigned to you.”

Though a Power of Attorney (POA) would also serve this purpose, customers are less likely to agree to sign this type of document. The problem with the POA is that, while it gives a repairer more power, it is also more complicated, leaving the repair facility with the burden of making all decisions for the customers, so Eversman discourages the use of the POA. While every insurer has an anti-assignment clause written into their policies, most states permit the use of post-loss agreements, making the Assignment of Proceeds a viable option. It also makes sense for the shop to assume responsibility for prosecuting the insurance company, if necessary, since it requires less action on the part of the consumer.

Once you get to the point of pursuing litigation in order to receive proper compensation, you must remember that the burden of proof falls on you, the plaintiff. In court, you should try to avoid allowing the insurance company to present their estimate as evidence because part of your battle entails proving that their estimate is meaningless – as the collision repair professional, YOU are the one with the right to determine how the vehicle should be repaired, while the insurer is merely obligated to pay for the repair, not to control the process (unless the insurance company has elected to repair).

In order for an Assignment of Proceeds to be legitimate, it is imperative that the consumer understand what they are signing, so it is also a good idea to ask your customers to sign a separate document confirming their comprehension of the Assignment of Proceeds. When constructing your Assignment of Proceeds, begin by defining what it is and how it will be used. The purpose of the document is to allow “a transfer of property or other rights from one person (the assignor) to another person (the assignee) which confers a complete and present right in the subject matter to the assignor… Essentially, this means that the assignee stands in the shoes of the assignor,” Eversman explains.

Because the assignment serves as a contract between the assignor and the assignee, it is thus subject to contract law and interpretation. An important item that must be included in Assignments of Proceeds is a definition of the assignable rights which will identify causes of action issuing from a wrong that causes injury to property or from tort by which property is diminished or damaged; both of these are generally assignable. It is also vital to inform your customers that they can assign their right to recover damages to their property without conveying the title to that property.

For an Assignment of Proceeds to be valid, it must contain clear evidence of the intent to transfer rights in addition to a description of the subject matter in question. The assignment must be clear and unequivocal and be noticed to the obligor. While there are no formal requirements regarding the verbiage used in this document, the language must clearly indicate the owner’s intention to transfer the claim.

Valuable consideration is essential to support the assignment, and while the word “consideration” doesn’t necessarily have to appear on the document, Eversman recommends it as evidence of the exchange required to make an Assignment of Proceeds valid. Essentially, this allows you to take possession of the vehicle without receiving payment if the document is signed, but you are also agreeing not to sue the consumer for money owed as part of the assignment.

In your supporting documents, you should also include an Assignment for Money Due which must identify the customer, the repair facility, the vehicle and the loss. As long as this is without defects, it should be enforceable without being notarized (dependent upon state laws).

The Writ of Replevin is a document that the insurance company typically uses to retrieve a total loss vehicle, filing it to say a shop is unlawfully withholding a vehicle when they do not want to pay for the repair. Because this document is only valid if the insurance company can prove the shop is wrongfully withholding the vehicle, it is imperative that you are prepared to defend yourself against a Writ of Replevin by including a clause in the Repair Contract that states the consumer cannot transfer the title of the vehicle without ensuring the repair bill is paid in full. With the vehicle owner’s signature affixed to this verbiage, the insurance company has no right to the vehicle until they have paid for the repair, making their Writ of Replevin effectively useless.

So, with the Authorization to Repair, Repair Contract, Assignment of Proceeds and defense against the Writ of Replevin, you are well on your way to protecting your business interests, but you’ll also need a Parts Notice and Authorization as well as an Indemnification Letter (we’ll cover these next month in the third and final installment of this series). You can still get started right away by contacting a local attorney to start drafting these important documents which will allow you to recover proper compensation on every repair that comes through your shop doors.

Although the Independent Automotive Damage Appraisers Association (IADA) was forced to move the location of their 46th Annual Vehicle Repair Conference to the Lord Baltimore Hotel, located at 20 West Street, Baltimore MD 21201 at the last moment, the conference was successfully held on June 18-20, 2014 as “an educational tool for our members and the industry,” John Williams, Executive Vice President of IABA explains. “For guest speakers, we have experts in various fields relating to current methods of repair as well as what to expect from manufacturers in the future. Our expectations for this event are to promote our association and members as professionals committed to exceeding industry expectations as well as providing our members an educational and social venue to network with clients.”

According to Williams, “attendees were very pleased with both the location and the agenda. Our event always focuses on education and training as well as being a social event for members and guests, and it is important because it provides members with an opportunity to train and remain a viable force in the industry. This year, our conference exceeded expectations. We try to build on what we learned in the past to make our next event even more dynamic.”

Registration for the conference began on Wednesday, June 18, at 1PM and continued until 6PM when IADA held their Welcome Reception followed by exhibitor showcases which concluded at 9PM. After breakfast on Thursday morning, IADA President Leo Maki’s Welcoming Address served as the opening to the event.

IADA planned an exciting agenda filled with informative seminars led by nine industry leaders. Around 8:30AM, the educational seminars began with Wayne R. Schaumburg’s “An Illustrated History of Baltimore,” followed by “Best Claims Practices” which was presented by Harvey Lightstone, Vice President of the Directory of Claims and Risk for Management Claims Professionals Liability Insurance Company. Before lunch, Jim Aulby, Vice President of Claims Protective for Sagamore Insurance, discussed “Heavy Equipment Estimating.”

The seminars resumed at 12:45PM with the Highway Loss Data Institute’s Senior Vice President Kim L. Hazelbaker’s “New Technology of Electronics in Vehicles.” Thursday’s lectures concluded at 4PM with “Investigating Fuel System Contamination” as presented by Jeff Lange, President of Lange Technical Services LTD. Attendees then enjoyed a two-hour break which gave them a chance to visit exhibitors before attending the President’s Reception and dinner banquet.

On Friday morning, Dan Oscarson, Vice President of Global Marketing Insurance Auto Auctions, explored “Marketing Salvage in a Global Economy.” He was followed by CIECA Executive Director Fred Iantorno’s “Getting It Done for the Industry.” The final presentation, “Aftermarket Truck Parts,” was led by Donald B. Cameron, President and Founder of Dawson Truck Parts. After their closing remarks, IADA’s conference culminated with their membership meeting.

“Our 46th conference went well, even after facing the challenge of relocating to the Lord Baltimore Hotel at the last moment due to unexpected issues with the hotel we had contracted with. Our conference has always focused on education and training; this year was no exception!” Williams recalls, “our conference started with an excellent presentation by a local historian speaking about the history of Baltimore, and attendees were amazed to learn how Baltimore’s history helped shape many industrial and cultural advances we enjoy to this day. Attendees were given a glimpse of future vehicle technology as well as a look at the past to learn how far vehicle technology has progress and what to expect in the future.”

In regards to the valuable information provided at the conference, Williams also notes that “a presentation on Global Salvage was of great interest to learn how salvage vehicles are being purchased in the US, then shipped in cargo containers with available parts to repair included with each vehicle. Vehicles that would not be put back on the road are repaired in many third world countries due to cheap labor and a shortage of vehicles. Vehicles we take for granted are a luxury in many countries since few have options such as air or other power options.”

IADA was first founded in 1947 as the Independent Appraisal Plan (IAP) with a mission “to offer an unbiased automotive specialist appraiser to assess vehicle damage and establish a fair cost of repair,” Williams recalls. That same year, IAP was approved by the Association of Casualty and Surety Companies and the National Association of Mutual Companies. In 1964, the IAP reorganized and was reborn as the IADA, a national not-for-profit trade association.

Currently, IADA has 98 members in 43 states who employ more than 600 appraisers in over 400 service locations. Over the past 15 years, membership in IADA has increased around 15%. Williams details their membership process: “in order to apply for membership, applicants are required to have five years’ experience in the industry and owned and operated an appraisal firm for the past two years. We conduct a background investigation on all applicants, followed by a site inspection requiring the applicant to prepare a professional damage appraisal. Our Board of Directors then vote on the applicant.”

Though obtaining membership to IADA seems somewhat involved, the cost-savings benefits offered to members makes it well worth the effort. For starters, E&O/GL insurance is provided under a blanket policy and is included in membership dues with no additional charge. Members receive discounts on estimating software from all three providers plus discounts on CarFax, NADA Online and Old Cars Price Guide reports. IADA members are also listed on the association’s website as well as in their annual service directory, around 7000 copies of which are distributed throughout the industry. In addition to the national marketing supplied, members have the opportunity to attend IADA’s national conference which provides them with useful educational seminars as well as the chance to network with other IADA members.

Still, IADA strives to continually add new member benefits in their efforts to attract new members. They also continue to promote educational and training seminars at regional and national events. The association works toward securing new business for their members by “upholding the integrity of the association and being consistent with our honesty policy to enhance our position with the public, insurance industry and automotive repair businesses,” Williams explains. “Our current goal is to recruit new members who have an interest in joining a professional organization dedicated to serving the industry with truly ‘Trained Professionals.’ Our members take pride in delivering professional, unbiased damage appraisals. Our goal is to treat the consumer the way we would expect to be treated if we had a claim.”

Regarding challenges currently facing the industry, Williams notes, “DRP programs have impacted our volume of business to a great degree. While DRPs may be a good concept for smaller losses, I feel some carriers’ attempts to completely control the repair process, no matter how large or small the loss, is a mistake. Having owned and operated an appraisal firm for 24 years, I enjoyed a great working relationship with repair facilities. Preparing an accurate appraisal and securing an agreed price with a reputable shop is quickly becoming a lost art. The industry is losing qualified appraisers at a rapid pace. Many of our members had second, third and fourth generation family taking over their businesses, but we are no longer seeing as much of that.”

IADA Association
PO Box 12291
Columbus, GA 31917

Friday, 22 August 2014 17:16

Wheels to Prosper’s Annual Giveaway

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On Saturday, July 26, Wheels to Prosper shops across the country gave away 15 vehicles to deserving people in their communities. Dino DiGiulio, owner of Body Best Collision Center in Sonoma, CA, and founder of Wheels to Prosper, notes that it is “mind-blowing to be able to change people’s lives in this type of way” and wonders “how big it could be if we got all the shops in the country involved?”

This year, Body Best awarded their car giveaway vehicle, a 2004 Saturn L300, to Irene Morgan. DiGiulio’s son, Chance, helped Body Best’s technician with the body repairs as his senior project, which his father proudly reports received a grade of “A”.

In 2010, DiGiulio took a public relations class at Management Success, and he admits “I didn’t realize how important it was until I took the class.” When the topic of car giveaways came up, DiGiulio thought it seemed like a practical way of giving back to the community. His friend, Jody Gatchell who owns A & J Collision Repair in Conway, AR was involved with a similar concept through Recycled Rides, and when DiGiulio saw an emotional video about a giveaway recipient, he knew he had to do it.

After acquiring information about the program from Gatchell, including how to organize a car giveaway, DiGiulio began planning Body Best’s first Car Giveaway with the initial intention of donating two to three vehicles yearly. Rather than choosing a person in need, DiGiulio put together a committee to choose a winner, enlisting the aid of a diverse panel of public officials and community leads to select a deserving individual. Early on, DiGiulio decided to choose winners who deserved a vehicle, rather than simply donating to someone in need, because “need is always there,” he explains. “We wanted to help people who help others. Everyone has to do their part, and this is my way of volunteering. By helping this person, he or she can help so many others.”

Gatchell suggested Wheels to Prosper as the name for DiGiulio’s giveaway, and Management Success advised DiGiulio to secure the name and website, helping him build the site. The idea behind Wheels to Prosper was to establish a program to help shops begin the process of sponsoring car giveaways, and when he pitched the idea for a national giveaway to 30 shops in hopes of getting more interest in the program, 11 shops signed up that same day. “We laid out some parameters and established a process, including marketing – there’s a lot of marketing you can do for free because people want to help,” DiGiulio states.

In the four years since its inception, Wheels to Prosper has increased to include 34 shops donating around 25 cars annually, but the program is growing consistently; DiGiulio hopes, by next year, 100 shops will participate in Wheels to Prosper’s annual giveaway because “Jody and I cannot do as much alone as we can when we involved the entire industry. Wheels to Prosper is all about telling shops how easy it really is.”

Though Wheels to Prosper is expanding to include non-Management Success shops, shops interested in participating in the program need to acquire approval from DiGiulio and the program’s administrator, Jim Anderson, because they want to elicit involvement from shops committed to giving away at least one car each year. Anderson, owner of Anderson Automotive in Marion, IA, did a giveaway called “Wheels of Change” several years before DiGiulio began his program, but Anderson joined Wheels to Prosper’s board as their administrator because he wanted to be part of something bigger.

Participating shops pay a one-time fee for inclusion on Wheels to Prosper’s website, but this provides a place to promote their business as it generates traffic back to the shop’s website; DiGiulio estimates receiving around 100 visits to his shop’s website annually through the link from Wheels to Prosper. He states, “it demonstrates that you actually care about the community. It’s a little about business but not really – it’s mainly about how many people are impacted by the donation.”

Wheels to Prosper does not hold any type of contest to determine their winners. Instead, they solicit stories from community members about a person who deserves to win the car giveaway, and a panel of judges reviews the stories to select a winner. “The difference between Wheels to Prosper and other giveaways is that it’s about who is deserving,” DiGiulio explains. “There’s always a need, but we want to help someone who is helping the community, so our winners are always majorly involved with volunteering efforts.”

In May 2011, DiGiulio held his first giveaway, awarding a car to a five-person family run by a local woman who is very active in her community. “She always thinks of everyone before herself. Even though she didn’t have the means to buy a car, she was still actively volunteering in the community, so we rewarded her efforts by giving her a car which allows her to help others even more.”

Gatchell held his giveaway in July 2011, and DiGiulio held a second giveaway that same year. Afterwards, they decided to choose a consistent date for the annual giveaway, electing the last Saturday in July at 12PM CST. Ultimately, the goal is for all Wheels to Prosper shops to hold their annual giveaway on the same day each year.

While the participating shops acquire the giveaway vehicles through various means, Wheels to Prosper requires the donated vehicle to be in good shape with less than 100,000 miles on it in hopes of servicing the winner for at least five years without any troubles. DiGiulio’s first giveaway was a salvage loaner with low mileage, and for his second giveaway, he purchased a vandalized car that just needed a new paint job. No matter how the vehicles are acquired, the Wheels to Prosper shop makes any collision and mechanical repairs necessary before donating the vehicle to their deserving new owner.

Thus far, nearly 50 cars have been given away through Wheels to Prosper with a few more giveaways scheduled to take place in October. A film company is currently in negotiations to develop a 12-part miniseries on a shop sponsoring a giveaway, and DiGiulio is optimistic about the publicity that such a program would provide for Wheels to Prosper.


The Wisconsin Auto Collision Technicians Association (WACTAL) held the 2014 WACTAL Conference and Trade Show Friday–Saturday, February 21–22, 2014, at the Wilderness Resort in Wisconsin Dells, WI.

The conference began on Friday morning with a slew of educational seminars. Greg Horn, VP of industry relations for Mitchell International, educated attendees on the current state of the collision repair industry by exploring claim frequency trends and key performance indicators (KPIs). He also touched on advancing vehicular technology in terms of changes in vehicle construction and the increase in cars being manufactured with accident avoidance systems.

Mark Mueller of PPG Refinish followed with "The New Collision Repair Administrative Paradigm." This seminar sought to teach participants a better way to deal with the pressures related to an increase in administrative responsibilities for managing claims.

After lunch, Tony Passwater, president of AEII, presented "How Have We Gotten Where We Are Now?" during which he examined the strategies used to force the collision repair industry into its current state, as well as how to identify and counteract these practices to improve the industry’s future.

WACTAL members met for a brief meeting before opening the trade show on Friday night. This was followed by the Hospitality Social, which provided attendees and exhibitors a chance to relax and network while enjoying the hors d’oeuvres sponsored by BASF, Body Shop Supply Co., Broadway Automotive Group, Finishmaster, Motors Service & Supply, PPG, and West Bend Mutual Insurance.

In "Salvage Vehicle Inspection – What You Need to Know" on Saturday morning, trooper Quinn Sieber, salvage vehicle inspector for the Wisconsin State Patrol, reinforced the illegality of removing VIN tags.

With the conclusion of the informational seminars, the trade show reopened on Saturday, an exciting expansion from previous years when the show was only open one day.

Nearly 30 companies exhibited at the 2014 WACTAL show, including 3M, Akzo Nobel, Axalta Coating Systems, Mitchell, BASF, PPG Industries, FinishMaster, and many others.

All aspects of the event were well-received by participants, though stormy weather on Thursday and Friday impacted attendance slightly.

The Automotive Recyclers Association (ARA) held their 70th Annual Convention on November 6 through 9 at the Sheraton Convention Center in Phoenix, AZ. Michael Wilson, CEO of ARA, was pleased with the event, and, though they are still finalizing the balance sheet for this year, he believes “the 2013 Convention will go down as the most financially successful Convention in our association’s 70 year history.”

The Indiana Auto Body Association (IABA) was founded at the beginning of 2004 by a group of forward-thinking shop owners and vendors with the mission of promoting “professionalism and consumer awareness of the automotive collision repair industry in the state of Indiana.” Near the end of 2004, IABA’s Board of Directors asked Tony Passwater to fill the role of Director for the association because they felt it would be best to engage someone who was not a shop owner or vendor to grow the organization for the future. Passwater notes that, at the association’s conception, “it had been almost eight to ten years since the last association had folded, and the timing was right.”
IABA was founded on a multi-faceted Code of Ethics. This code dictates that their members conduct all business practices in a lawful and professional manner. They must also recommend only proper collision repair procedures and explain to the customer why these repairs are required to correct the collision damage the vehicle suffered. Other items contained within the code of ethics include: offer the customer a price estimate for the work to be performed, obtain prior authorization for all work, notify the customer when promises cannot be kept, furnish an itemized list for all parts and services, exercise reasonable care of the consumer’s property during the repair, maintain a system to settle customers’ complaints, cooperate with all established consumer complaint mediation activities, maintain a high quality level of repairs, and cooperate in a good business manner with insurer representatives and make a sincere effort to provide affordable service to the motoring public.
According to Passwater, IABA’s short-term goals include growing IABA to the largest state association in the midwest and providing tangible benefits to members, as well as informing consumers that they have the right to choose the collision repair facility that works on their vehicle and educating them on how to choose wisely. These goals contribute to the association’s long-term objectives of protecting consumers from steering and improper repairs and of providing a resource that improves the professionalism and unity of the collision repair industry as a whole.
Some of IABA’s current projects focus on attaining these goals. In addition to trying to maintain and improve data privacy, they are also struggling to eliminate double taxation on some paints and materials. Additionally, IABA supports members pursuing short-pay lawsuits as they try to establish standards for collecting funds on operations performed that insurers refuse to compensate shops for completing.
Passwater notes that IABA is also involved in “stopping insurer-mandated programs that interfere in the industry’s business,” such as PartsTrader which he sees as “tortious interference that only benefits the insurers to fuel their greed... it is extortion and tactics used by the Mafia.”
In mid-September, IABA hosted six meetings across the state, which were attended by over 325 shop owners, managers and industry vendors, to discuss issues related to insurer-mandated programs, such as PartsTrader and American Family’s APU Solutions. Attendees were fearful of what insurers are doing to the industry, and many felt hopeless about doing anything to circumvent these programs. Panel discussions served to inform participants of the options available for stopping these programs as well as to educated them on the actions being taken on local, state and federal levels to eliminate insurer interference in the collision repair industry. The panel consisted of Lloyd Bush of Bush Collision in AL, Marvin Windham of Benchmark Chrysler in Birmingham AL, Steve Plier of C.A.R.E. in Hoover AL, and John Mosley of Clinton Body Shop in Clinton MS. A webcast of the panel discussion can be viewed at www.IABAlive.com.
IABA has committed itself to using whatever actions are necessary to prevent this form of extortion, whether the means are legal, legislative and/or related to public awareness. The association has come out in support of SCRS’s position on PartsTrader and similar programs because “the IABA believes, as other associations and leaders have recently stated, that all repair decisions, vendor selections, and business processes should be left to the collision repair professionals who work on these vehicles, and have been entrusted by the vehicle owners to make correct repair decisions regarding their vehicles.”
IABA recognizes that such programs are not designed to improve efficiency or to benefit the consumer; these efforts seek only to increase insurers’ profits and to allow insurers to establish more control over the collision repair industry.
In late October, IABA organized a nationwide petition to stop insurer-mandated parts procurement programs, and they are encouraging their members and other collision repairers across the country to sign it by visiting www.1963ConsentDecree.com. Their email blast, sent on October 24, explained, “To make change happen requires action, but it often begins by the smallest of actions. History has shown that changes begin not by the war to end all wars but by the individual battles that define the injustice and dedication to the need for that change by those willing to accept the challenge.” They plan to use this show of support to regain control of the industry.
In addition to the challenges imposed by these type of programs, Passwater lists several other challenges facing the industry which need to be addressed for the benefit of the collision repair industry as a whole: labor rate suppression, the manipulation of estimating systems and databases, the unequal enforcement of current EPA and OSHA laws, and “improper repairs due to new technology and the inability to purchase the training and equipment needed to repair the vehicle properly.”
Though IABA has not taken an official stance on the PARTS Act, Passwater believes “OEMs should be afforded the same protection as any industry for their investment in technology and innovation.” Regarding the Right to Repair, Passwater’s opinion is that “everyone needs the information equally to repair the vehicles today.”
In the beginning of 2013, IABA also implemented a comprehensive consumer-focused member benefit entitled “A Shop You Can Trust.” According to Passwater, “this program is available to IABA members that meet the qualification process. It includes a consumer focused website listing (www.aShopYouCanTrust.com), and three additional optional programs that are designed to eliminate steering and create customer loyalty. It has co-branded materials with the Better Business Bureau available. A webcast about the program is available at www.IABAlive.com.”
Covering the entire state of IN, IABA currently consists of 105 member shops, plus 15 supplier sponsors. IABA has designed numerous benefits to attract members, and according to Passwater, “with our affiliation with SCRS and ASA, they are even greater. Our greatest benefit is our partnership with Associated Insurance Agencies. They have saved our members thousands of dollars yearly.”
Still, there are always challenges inherent for any industry association to maintain operations, Passwater admits. “As with any state association, we constantly struggle to match time focus on dollars available. Even though we have tangible benefits that outweigh our members’ yearly dues, we still have only 10% to 12% of the shops members and much less for industry-related vendors and suppliers.”

PO Box 532364
Indianapolis, IN 46253
(317)290-0611 x201

Environmental concerns have become a major priority in the collision repair industry along with removal and reutilization of recyclable material. The Automotive Recyclers Association (ARA) is playing an increasing role in this movement.

Since it was established in 1943, ARA has been the only trade association representing the automotive recycling industry. It is dedicated to efficiently removing and reutilizing automotive parts as well as seeing to the safe disposal of inoperable motor vehicles. ARA has expanded to represent approximately 1250 companies through direct membership, plus over 3000 additional companies worldwide through their affiliated chapters in 43 states and 14 other countries.

Wednesday, 25 September 2013 22:21

Maryland Shop Owners Prevail Against Short Pays

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Anyone who has been involved in repair for any amount of time knows how frustrating it can be when insurers refuse to pay the full amount billed for a repair. Many repairers count their losses and move on to the next vehicle, but Mark Schaech Jr., co-owner of Mark’s Body Shop in Baltimore, MD, refuses to take this insult lying down. While he and his partner, his father, would prefer to avoid the necessity of taking legal action, he’s definitely “not taking it anymore!” Schaech knows this is a common problem that shop owners face, so he’s glad to share his experience and advice with collision repairers across the nation.

In May 2013, Schaech won his first short-pay lawsuit against GEICO for $392.95. Since then, Schaech won a case against State Farm when the insurer filed a replevin lawsuit (replevin  is a legal remedy for a person to recover goods unlawfully withheld from his or her possession) against him, claiming his charges for storage were unreasonable and not competitive within the market area. Mark’s Body Shop was holding a car while awaiting payment, but when State Farm settled with the car’s owner and took title, they refused to pay Schaech. The repair contract was the deciding factor in Schaech’s victory, playing a huge role “like it does in any other case,” according to Schaech, who added that “it is so important that your documents are in line.” In addition to being paid the full amount owed, Schaech was also reimbursed for his attorney’s fees. He feels the victory was very important since a loss would have given State Farm, and possibly other insurers, precedent for refusal to pay on total losses.

Schaech credits the CCRE (Coalition for Collision Repair Excellence) for his knowledge of such legal actions, noting that “the first time I heard of a shop taking control of their business was at a CCRE meeting.” He followed that up by hiring an industry consultant, Barrett Smith, of Auto Damage Experts and a good Maryland attorney, Anthony DiPaula to support his efforts to take control of his own business. He is also grateful to all of the “attorneys fighting a successful fight.” His next case involved an assignment of proceeds, ammunition he obtained from industry lawyer Erica Eversman, but it doesn’t stop there! Schaech is currently pursuing numerous lawsuits, including one involving an older claim of two short-pays from GEICO and a similar suit against State Farm.

The lawsuits that Schaech is currently pursuing are older claims since he has not had any recent problems with GEICO, which he attributes to his successful case in May. Most insurers are paying his operation costs, though labor rates with insurers refusing to pay his full labor rate continue to be a problem. The one exception he notes is State Farm who always leaves a short-pay, but for now, the customers are paying the difference. Schaech is not taking any additional assignments of proceeds at this time as he has several in progress.

Schaech notes, “I would say that 90% of the time, insurers in our market refuse to reimburse our customer for their entire repair bill. These short pays are for reasonable and necessary rates and procedures required to repair our customers’ vehicles to pre-loss condition to the best of human ability. It seems that the larger the carrier, the worse the behavior. It seems like as opposed to fairly paying claims, these carriers would prefer to spend those dollars on advertising campaigns.”

Regarding what may cause him to hesitate before filing a lawsuit, Schaech admits that it can be expensive and time-consuming to sue an insurance carrier, especially when the short-pays are small amounts, but one way to combat that is to pile several claims into one case, making it more efficient.  His ultimate goal is to handle these cases on his own; as he attends the trials, he is educating himself via his attorney in hopes of being able to handle future suits in small claims court on his own. “All I will have to spend is time which I’m more than willing to do in order to ensure my customers are being taken care of,” Schaech notes.

The short-pay lawsuit in May was the first that Schaech actually pursued to trial. Because these types of cases are new to the Maryland court system, “it takes a bit of educating the courts that we are contracted by our customers to provide a proper and safe repair and do not have any contract with any insurance companies. But the misconception is that, because the insurance company is paying the bill, they have a right to inject themselves into the repair process when this is simply not the case. Because we are the experts, we carry all of the liability associated with the repair. We are the ones who have to provide a warranty to our customers and stand behind the repairs. We are the ones who know our cost of doing business. Therefore, only a shop can know what to charge for a given repair. The duty of the insurance company, by contract, is to make the customer whole, not to control the price or dictate the repair methodology, all while not sharing in the liability for those repairs.”

Though most insurance companies insist that they don’t pay for certain operations or that a shop is overcharging, Schaech insists, “the collision repair community knows that these are word tracks that insurance adjusters have been trained to use for years, and in most cases, these carriers do pay for that, and the shops that are asking to be compensated are not the only ones asking for these operations and rates.”

Schaech was happy when the judge ruled in his favor: “It felt good that the Judge got it. I also feel confident that the courts will continue to find in our favor as courts are in many other states all over the country. It takes a close look at the law and the insurance policies to realize that determining the cost of repairs and the repair methodology is not the business of insurance. In many policies, the insurance company has the option to take the customer’s vehicle and repair it themselves, but if they chose that option, they would have to accept all of the liability that goes along with the repair which is why they do not select that option.”

As a proud member of CCRE and SCRS, Schaech strongly encourages other collision repair experts to stand up for their rights. “I would encourage other shop owners to know their state laws and get a good attorney to work with. There are many shop owners across the country who have been forced to go legal, and these repairers have been an inspiration and have always made time to answer my questions and lend advice. There is unbelievable support available to those who want to learn.” Schaech’s desire to become more involved has also led him to become involved with the Washington Metropolitan Auto Body Association (WMABA) where he sits on the Board of Directors.

Schaech also assures other shop owners that the trial itself was not very difficult. “It was easy for us to explain who the expert repair professional is and who decides what the Final Bill should be, and the judge agreed that because GEICO doesn’t know our costs, they cannot possibly determine what we are able to charge.”

It is also important to note that Schaech’s lawsuit has not really affected his relationship with GEICO or any other insurers. His problem isn’t with the individuals that he deals with but the company’s policies on handling claims.

Schaech also takes issue with his state’s laws regarding insurance companies breaching contracts and how this affects consumers’ rights.

“If a Maryland Insurance Company breaches their contract with the policy holder, and the consumer wants to hold them accountable in a court of law, the consumer is not able to recover attorney’s fees in our state. This really inhibits consumers from taking action, even when it is obvious that they are in the right… I wish the carrier would spend some of those billions of dollars they spend on marketing to properly compensate consumers for quality and safe repairs. I see a lot of poor repairs that have been completed in shops who were not properly compensated for repairs, and this is a consumer problem, especially as it relates to consumers’ safety and the value of their vehicles.”

When asked what measures should be enforced to prevent the necessity of short-pay lawsuits, Schaech notes, “If insurers would get back to the business of insurance, selling policies and paying claims, and stay out of the collision business, we would not have to go this route. The reality is that, by law, consumers have the right to choose the body shop that they feel will do the best job, and by contract, the insurance company is supposed to indemnify the policy holder when there is a loss. So, I say ‘just pay the bill Mr. Insurance Company.’”

In 1975, Schaech’s father opened Mark’s Body Shop in a two-bay garage. After six years of refinishing cars through high school and college, Schaech managed the family business from 1999–2002 when they moved into their current 17,000 square foot facility. At that point, Schaech Jr. became his father’s partner.

Though Mark’s Body Shop repairs approximately 1000 cars annually, grossing around $3 million in sales, they do not participate in any DRPs, but that wasn’t always the case. “There was a time when we participated in as many as five DRP programs, but over the years, these programs developed into bargain basement repair programs. We were asked to use more aftermarket and junk yard parts which we find to be a lower quality alternative to new OEM parts. We were instructed to utilize remanufactured wheel and junkyard suspension components which we believe to put our customers in harm’s way. Finally, we were asked to work so cheaply that it became difficult to invest in new equipment and training which is imperative to repair today’s modern vehicles.”

To shops that are currently facing difficulties obtaining full payment on repairs, Schaech offers the following advice: “There are numerous organizations and individuals in our industry who really care about consumers and repair facilities. These leaders are only a phone call or email way and willing to provide sound advice when a shop owner or consumer needs some sound advice.”

“The reality is not all shops are the same; we all have different costs, different levels of quality, different equipment and training, different certifications, and different fixed costs. It just doesn’t make sense that we can all work for the same price.”

Mark’s Body Shop
4025 Mortimer Ave.
Baltimore, MD 21215

Over the past six years, the age of the average collision repairer has increased to 38.7 years old, which means many repairers will be retiring in the near future. In turn, this creates a dire need for entry-level repairers, and in anticipation of this crisis, the Collision Repair Education Foundation has taken the proactive step of supporting training programs for future repairers. Brandon Eckenrode, Director of Development, believes this is imperative because “the more actively engaged the industry can be with the high school and college collision programs, instructors and students, the brighter the industry’s future will be.”

to read a PDF of this story with photos go HERE

Established in 1991 to develop, promote and distribute a curriculum program to ensure entry-level employees received training on needed skills, the Education Foundation continued to sell curriculum and provide educational support through various programs, such as CRIN and the Training Alliance, until 2008 when curriculum sales and support moved to I-CAR, allowing the Foundation to focus exclusively on acquiring and distributing donations to schools and students in the form of scholarships and grants. Now, the Foundation is a purely philanthropic organization with the sole purpose of raising money to support and educate future collision repairers. Though I-CAR still plays a key role in allowing the Foundation to operate as a four-person organization, they changed their name in 2010 to distinguish their organization from I-CAR as a way of clarifying that I-CAR training tuition fees do not support the Education Foundation.


Their mission is “to secure donations that support philanthropic and collision repair education activities that promote and enhance career opportunities in the industry.” According to Eckenrode, “it’s a full circle from support to staff- the collision industry provides monetary and in-kind donations to the Foundation, which are then distributed to high school/college collision programs, and these donations help assist in providing the best technical education possible for the students, and then these students are ideally hired into the industry.”


The Education Foundation’s current goal is to educate the industry on who they are and who they support, in addition to getting more industry members involved in order to raise the level of support they provide. Eckenrode hopes that they will help place entry-level students in a more organized way in the future, in addition to providing a higher level of financial support. They’ve already begun to educate guidance counselors on the industry, teaching them about the great career opportunities students can find in the collision repair industry. According to Eckenrode, “through an increase in support, specifically with monetary donations, we can fill in the gaps within these instructors’ collision budgets and ensure that they have all of the proper tools, equipment and supplies needed to teach the students.”


Eckenrode is the sole full-time fundraiser for the Education Foundation, focusing his efforts on locating supporters within the industry as well as working in communications to inform the industry of the Foundation’s efforts. When asked if his work is rewarding, Eckenrode notes, “Rewarding doesn’t fully describe the work for me. I believe we are ‘facilitators of this industry’s generosity,’ and when you hear instructors get choked up because you were able to send them a box of safety glasses for his/her students or get to inform a student that they are the recipient of a $5000 scholarship, it makes you proud of our industry for making that possible.”


Eckenrode fondly recalls their Cintas technician shirt project when they provided promotional shirts to students attending NACE several years ago. The project led to the distribution of nearly 10,000 shirts, and he has been amazed to hear how this “uniform” has transformed students’ attitudes, giving them a sense of professionalism and pride. As such, he hopes to expand the program even further.

Melissa Marscin serves as the Foundation’s Director of Grant Programs, distributing the donations received, whether those donations are in-kind product donations, school grants or scholarships. Distribution plays a vital role in their mission as they strive to ensure that received support is distributed where it is most needed; their application process is critical in providing information on where support is needed and what exactly the need is.


Marscin says, “I have the best job in the world because I am able to give out scholarships and grant funds to deserving schools and students. And the best part is that I am able to directly see that my work is helping to improve the collision programs which, in turn, help to produce better entry-level technicians for the industry. It is extremely rewarding to have a student or instructor call me and say ‘thank you’… you really never realize how much of a difference you are making until you receive those notes and speak to the instructors or students in person, and then hear how the Foundation has changed their life.”


When Marscin was asked for an example of a rewarding experience, she said, “my favorite story is one about a recent $3 million donation to the schools which included basic things like sandpaper. The donation came late in the school year, and one of the instructors who received the items said he literally had no budget left for supplies this year, and he was worrying about how he would finish out the school year. Then, this box of materials showed up, and he said he felt like he won our $50,000 grant! It’s amazing what a difference a small item like sandpaper means to schools, especially with their budget challenges. The Education Foundation has been called Santa more than once, and it is always a great feeling to see that we are making a difference.”


The Collision Repair Education Foundation receives donations from industry supporters nationwide, and both products and monetary donations are then distributed to high schools, technical schools and college collision programs, instructors and students in all 50 states. All segments of the collision repair industry, and any outside entity as well, are invited to donate products and scholarship money to the Foundation. Eckenrode encourages such donations; “donated tools, equipment, supplies, and other materials greatly assist collision school instructors who are working with very minimal budgets. In 2012, we raised a record $4.9 million, and we are tracking slightly above (3%) that amount half way through 2013 so far.”


In 2013, 126 schools applied for the Foundation’s “Ultimate Collision Education Makeover” grant, a huge increase from the 72 applications submitted last year. Marscin believes this grant is very important because “as school budgets continue to decrease, schools need a way to supplement their budgets, and the Makeover is a perfect solution to this. The winning schools get $50,000 worth of tools, supplies, and equipment for their collision program, and we have hundreds of smaller prizes to help schools get supplies to better teach their students. Every school that applies does get some donations out of this program, so it is beneficial for every collision school to apply!”


Any school offering a collision repair program is eligible for grants by filling out an annual survey that helps the Education Foundation collect important data on trends and statistics within the industry.


According to Eckenrode, “the Collision Repair Education Foundation plays a vital role within the industry as we are supporting its future professionals. The more actively engaged the industry can be with the high school and college collision school programs, instructors and students, the brighter the industry’s future will be… Supporting the schools, instructors and students is vital, but we also need to collectively do a better job in showcasing this industry as a great career choice to students/ parents at an early stage in their education.”


It’s easy to make a monetary, tax-deductible donation or in-kind product donation. Simply visit the Foundation’s website, or email Eckenrode who invites “any and all industry members to reach out to us to help them find a collision school program in their area and get involved. The industry taking an active role with their local schools assists in these students being able to graduate as efficient, productive entry-level workers.”


Why would a collision repair facility want to support the Collision Repair Education Foundation? Eckenrode’s answer is simple; “to donate to the Foundation is a re-investment in the industry’s future.”


Collision Repair Education Foundation


5125 Trillium Boulevard

Hoffman Estates, IL 60192




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