Tuesday, 24 May 2016 16:37

Moorhead Auto Body Shop Owner Says Insurance Agents Using Tactic Illegal in State

Written by Angie Wieck, Forum News Service

Llyods body shop owner says insurance agents using tactics illegal in state

Lloyd Van Raden uses a pneumatic tool to drill out a spot weld on a truck body he is repairing at his shop, Lloyd’s Auto Body Inc., Wednesday, May 18, 2016, in Moorhead. (Dave Wallis, Forum News Source)


The owner of Lloyd's Auto Body in Moorhead is fed up with "steering" -- when customers are advised, or coerced, by their insurance agent to use a preferred vendor after an accident.

Steering is against the law in Minnesota, but Lloyd Van Raden says it still happens. He wants insurance policyholders to know they have the right to choose where their auto repairs are made.

Insurance companies agree to refer clients to preferred shops through what is known as a Direct Repair Program (DRP). In exchange for referrals, these shops often agree to complete repairs at discounted prices determined by the insurer.

Van Raden is opposed to DRPs because he said they can encourage shop owners to take shortcuts or use inferior parts. That's why he says it's important policyholders know they have a choice.

"It is what it is and it's always going to be. We're never going to fix this, but we can try to let the public know they've got rights," he said.


Policyholder rights

Judell Anderson, executive director of the Alliance of Automotive Service Providers in Minnesota, said insurance companies doing business in the state are required to provide the following statement to policyholders once a claim is made:

"You have the legal right to choose a repair shop to fix your vehicle. Your policy will cover the reasonable cost of repairing a vehicle to its pre-accident condition no matter where you have repairs made. Have you selected a repair shop or would you like a referral?"

If the policyholder replies that he or she has selected one, the insurance company cannot make further attempts to convince him or her to use a certain shop, Anderson said.

The Minnesota Department of Commerce relies on tips from policyholders and repair shops to enforce the law.

The department recently imposed a civil penalty of $150,000 against the Auto Club Group for failing to provide the required notification and using a number of steering tactics such as informing policyholders they may not receive a warranty for work performed by non-preferred glass vendors.

Laws against insurance steering do not exist in North Dakota.

A preferred vendor relationship does not necessarily mean inferior parts or service. Anderson suggests policyholders do the homework as they would before making any other major purchase.

"Check out reviews and that type of thing. Just because an insurance company recommends a shop doesn't mean that shop is the only or the best shop to undertake those repairs," she said.

State Farm maintains a Select Service program, but spokesperson Holly Anderson said policyholders are informed they're free to choose where repairs are made.

"A vibrant, profitable auto collision repair industry is in the interest of State Farm. At the same time, we are advocates on behalf of our customers for reasonable repair costs," Anderson said. "We believe repairer profitability and quality auto repairs that are reasonably priced can both be achieved."

Common phrases used to influence policyholders, provided by the Alliance of Automotive Service Providers in Minnesota:

-- The shop you chose is not on our list.

-- We can't guarantee the repairs if your vehicle is repaired at the shop you chose.

-- Your repairs could be delayed if you don't use the shops on our list.

-- You may be responsible for additional costs if repaired at the shop you chose.


Thank you to Angie Wiecks and Forum News Source for reprint permission.