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Tuesday, 31 October 2006 09:00

Write complete estimates the first time around

Written by Lee Amaradio, Jr.

The subject of supplements was brought up at the Collision Industry Conference (CIC) in San Jose last July - and it is an issue that is clearly in need of attention. One participant pointed out that each supplement costs an average of $250. While this number struck me as high, it began to make sense when I focused on the fact that supplements are time consuming - and estimators don't work for free.

Several different reasons for the growth of supplements were explored. First, it was suggested that inexperienced estimators were the major cause for the increase in supplements, but I disagree. While inexperience plays a small part, it is far from the major cause. Once again body shops are being blamed for the biggest part of the problem. I know exactly when we saw our supplements begin to increase at an abnormal rate - and that was with the inception of DRP programs.

There was a time when I could count the supplements we did in a month on one hand. Most old timers remember the days when the adjuster would come in, copy your estimate, verify the damage, and then ask if you included everything because he didn't want any phone calls.

This was before shop owners allowed the insurers to take control of our industry. Everything changed when DRP contracts began dictating the estimating process. I recall being written up for writing a radiator on an estimate that was pushed through the fan clutch. The DRP representative told me that if I couldn't see it, I shouldn't write it on the estimate. I could see the plastic tank was bent but I couldn't see the actual hole in the radiator because it was pushed over the fan clutch (this is true). I argued that I had enough experience to know that the radiator was ruined. He than told me not to rely on my experience, and to only write what I could see. This is how unnecessary supplements were conceived. If I couldn't rely on my experience, whose experience could I rely on?

Secondly, the "try and see" method was addressed. This works if you have no experience and want to act like you do. Sound familiar? We were next told to make some initial pulls to see how something pulled before we could finalize our estimate. However, we weren't even allowed to put pull time on the original estimate, thus creating another supplement.

For example, if we put eight hours on a frame and eight hours of repair time on each quarter panel, we are then instructed not to write the quarter panel time until we make our pulls. We know what is considered to be an eight-hour repair, but still we are asked to make the pull first to see if the time should be decreased. Another supplement is created even though repair time usually stays the same. Furthermore, we are required to photograph the damage during the repair process to assure there is no overcharging.

Shop owners can help

Now most supplements are being created because the DRP estimating model has become the norm in the industry - even when DRPs are not involved. Insurance companies are trying to estimate the vehicle's damage instead of doing their job - which is adjusting the estimates created by the shop. Even if an inexperienced adjuster comes into my shop, we are more than willing to help create a proper estimate.

Recently, when an inexperienced estimator from Progressive came into my shop to ask me a question about a particular repair process, I suggested she take a look at our estimate and use it as a guideline. Wow! She looked at me as if I were asking her to commit fraud, and then went on to tell me that if she even looked at my estimate she would be fired. The reasoning behind this is that she had been taught to leave items off the estimate hoping they would be overlooked - a third reason supplements are created. The mentality of some insurance companies is that if they make the shops fight for the repair, it must really be necessary. Remember, this applies to some insurance companies. There are insurers that have realized that shops are the repair experts and rely on our judgment, but they are the exception not the rule.

Let me emphasize that there is no lack of experience on our part. We still have to charge what we charge to make a reasonable profit. Supplements were reinvented by the insurers as a way to control the cost of the repair. We as shop owners still need to find all of the damage and to be paid for every repair process we do - just to remain solvent. This creates supplement after supplement - not because we don't know how to tear down a vehicle and write a complete estimate - but because the insurance companies have too much control in the estimating process.


See for yourself

Pull in your next job, tear it down, and write a complete estimate. Sit back and watch what happens. The insurance company will first ask you to search for LKQ parts; then they will do it themselves. They will question any suspension items and ask you to remove the suspension from the estimate until you're sure it is necessary. They will tell you to remove the frame time until you have it on your measuring system, and you better remove the blend time until you first see if you can match the color. These are reasons why the supplement is unavoidable.

It really irks me when someone suggests that shops are the cause because we don't write complete estimates. What they are really saying is that we don't know how to write an incomplete, unprofitable estimate.

Listen up!

Mr. Insurance Company, if you are reading this, pay attention to what I'm saying. Every time you take something off our estimates and we add it back, it is costing both of us money. We still need to have enough time on the estimate to make a profit or we have to find it. Life would be so much easier if you would just let us write complete estimates and then do your job and adjust them. We really don't need your help with the estimating process.

If you want to control costs and stop fraud, then re-inspect the vehicles and make sure they are being repaired the way they are estimated. Prosecute those that are not doing what they say. How about a DRP contract that says we will pay you what you want but if you screw up once we will not only terminate our contract but we will prosecute you and charge you for any overcharges. Why should we all pay the price because of a few shops that cheat?

Those of you reading this know that what I'm talking about - we have this big game going on. One insurance company chews us out if we have a supplement and the next one chews us out if we don't have enough supplements. Shops need to set the standards for how the vehicle repairs are performed. As long as we have ten different profiles from ten different companies, there will always be chaos within the estimating process.

More requirements to come

Even when shops tear down vehicles to try to reduce impending supplements, the present system makes it is impossible for shops to eliminate the supplement all together. We continue to fight an uphill battle with supplements because the insurance companies are still trying to control the entire process. If shops don't take back control of the repair process, insurers will be telling us who to buy our parts from in the very near future.

I've already had this experience on more than one occasion. I was ask to pull a vehicle out of the repair process five days after the repair had begun because the insurer found LKQ suspension parts $104 cheaper. The adjuster wanted us to return $800 worth of new OEM parts so the insurance company could save $104. The vehicle was finished except for the suspension. I was supposed to send back all of these parts and delay the repairs to save the insurer's money after the fact. Where was he when the estimate was uploaded five days earlier?

When I contacted the customer, I discovered that the insurance company had already contacted her and told her that the LKQ parts were the same as new. Because these were suspension parts and the vehicle was a 2005 with 20,000 miles, I called the adjuster and told him that rather than risk the liability, I would pay the $104 difference. He reluctantly agreed to pay, but if I hadn't insisted, the vehicle would have been in my shop through the weekend. Then they would probably have dinged me for cycle time!

These situations happen daily in shops across the country and when the repair takes longer the shops are blamed and our abilities questioned. We've all had supplements that have taken our estimators hours and hours to complete, because we know that if everything isn't perfect and well documented, the payment will get delayed or possibly rejected.

To see supplements decrease, we need to blueprint each and every vehicle repair and write estimates that begin with tear down. We should have complete estimates on all vehicles before repairs are started. If adjusters are forced to write a complete estimate before repairs are started, it could dramatically decrease the number of supplements produced. Even with DRP accounts, we need to write a complete estimate before the vehicle is put into production.

This would eliminate insurance company estimate changes after the repairs have begun. If they haven't contacted us with any changes before the repair has begun, then they have no business changing the estimate after the fact - especially after the repair has been completed. The act of reducing repair time after a repair has been completed needs to stop. If the photos are inadequate to determine the needed repairs, it is incumbent on the insurer to come to the shop and assess the damage before the repairs begin. If an element is questioned, it should be resolved before the repairs are started. Removing charges after the fact is stealing.

Here's the bottom line: if shops want to decrease the number of supplements per job, shop owners must be the ones to make it happen. It is imperative to have the most complete estimate possible before repairs are started. This will go a long way towards helping regain control of the repair. Supplements are very costly to both sides and it will take a major effort from both sides to make them decrease. If we persist, there will be a dramatic reduction of cycle time and a huge increase in customer satisfaction.


In business for 26 years, Lee Amaradio, Jr. is the president and owner of "Faith" Quality Auto Body Inc. in Murrieta, California. With 65 employees, he attributes his success to surrounding himself with good help, claiming to have some of the best office staff and techs in our industry. Amaradio has been in this industry long enough to see the handwriting on the wall. He feels that now is the time for us to unite as an industry before it's to late. He can be reached by e-mail at lee@faithqualityautobody.com.