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“That’s how many insurers, since this past August, have seen fit to pay our revised labor rates rather than to try and legally defeat what we deem to be “Reasonable and Necessary” says Ray Gunder!
Ray goes on to state: “It’s been a busy few weeks, and while 14 of the 15 insurers conceded without so much as a whimper, Infinity Insurance needed a bit of persuasion. With the help of our legal counsel, Attorney Brent Geohagan’s representation of Gunder’s Auto Center, Inc., they too came to the right conclusion and are paying our new labor rates for body and refinishing as well as an elevated labor rate for frame/unibody repair. Of course they are also paying applicable legal fees and costs for the lawsuit as well.
To date, Gunder has 12 current lawsuits pending against State Farm, Allstate, USAA and GEICO for their failure to pay “Reasonable and Necessary” allowances for labor and materials and 5 lawsuits against them for labor rates alone.
“I can’t express what a feeling of freedom and an incredible sense of independence it gives me to once again have control over my business and its destiny” says the founder of the Central Florida based 44 year old collision repair shop. “For the first time in a long time, I able to offer my employees a pay raise! They have stuck with me through thick and thin and it’s time they were rewarded for their loyalty and support.”
Ray goes on to say; “Like many I suppose, I’d forgotten what it was like to operate my business without others telling me what I could and couldn’t do.”
Regulations impose stricter estimating standards for insurers and new consumer disclosures.
The California Department of Insurance has released its proposed regulations on “standards for repair and use of aftermarket parts.” The proposed changes to the Fair Claims Settlement Practices Regulations largely pertain to the specification and use of aftermarket parts, but also include new requirements for adjusting estimates as well as new consumer disclosures and increased insurer responsibilities in the event a defective part is used for a repair.
The first change adds more specific requirements for estimates written by insurers. Current law simply requires insurers to write an estimate that will allow the repairs to be made in “a workmanlike manner.”
The newly proposed sections of law would require insurer-written repair estimates to be in accordance with “accepted trade standards for good and workmanlike automotive repairs by an auto body repair shop,” and require that “An insurer shall not prepare an estimate that is less favorable to the claimant than the standards, costs, and guidelines provided by the [estimating software].”
In addition, the changes would mandate that insurers disclose in writing, on any insurer-prepared estimate that specifies aftermarket parts, that they warrant those parts as “like kind, quality, safety, fit, and performance” as OEM parts.
Another new requirement would provide that should an insurer have “implied, actual, or constructive knowledge” that a specified aftermarket parts is not equal to the OEM parts in terms of quality, safety, fit, and performance, the insurer shall immediately cease specifying the use of these parts and shall notify the estimating software provider and request this part be removed from the estimating software.
The insurer would likewise be required to notify the distributor, manufacturer, and, if applicable, any certifying entity.
In addition, the insurer specifying a part later found to be defective would be responsible for any costs associated with removing and replacing the part with either a compliant non-OEM part or an OEM part.
The Department of Insurance held stakeholder meetings to review the proposal in November and January. Additional changes to state regulations regarding labor rate surveys and prevailing rates are also being considered by the department. Revisions to those regulations have not yet been released by the Department.