The cost of termination


As a former body shop owner and manager, and in my role as an industry consultant to some of the best body repair facilities in the country, I keep hearing a lot of misinformation and just plain bullshit. . This comes primarily from insurance claims representatives doing their best to mitigate their company’s expenses through cost containment.

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Spreading false information is a tactic that insurers use a lot – telling untruths to claimants and service providers, such as collision repairers. Chances are you’ve heard some of these untruths:

  • “We don’t pay for it – it’s the cost of doing business.”
  • “We don’t pay for it because most stores don’t charge for it.”
  • “This is the first time I’ve heard someone charge this – no other store charges this.”

I heard these same statements in the mid 1980’s in my workshops when I was writing remove and replace (R&R) for exterior door handles and moldings, removing scratches, tinting paint for color matching and other procedures that are now provided by the insurer. estimates and not challenged as reasonable or necessary.

Not your father’s body shop

Needless to say, today’s automobiles have more technology than ever and essentially turn into computers with wheels and seats that transport us from one point to another. Hopefully they will continue to evolve without worrying about the reliability and safety of occupants and others on the roadways.

Too often, insurers tell us that our proposed charges, for example, “Original Equipment Manufacturer (OEM) tracing procedures,” are “the cost of doing business.” Insurers often try to gaslight repairers by saying things like, “Well, you as a repairer should know how to fix the vehicle you’re working on; we’re not going to pay you to learn how to do your job.

Interestingly, medical professionals have been working on the same two human models (male and female) for thousands of years. Watch how a doctor reacts when you say you’re not going to pay for time spent seeking treatment for a single disease. Try telling a contractor to construct a building without detailed plans or research local building codes. Watch what happens when you tell a lawyer they shouldn’t charge for time spent researching case law to effectively represent you, the client. Bodyshops today are no less professional and no less important when it comes to protecting the personal and economic well-being of their customers.

It is no longer the car body industry of our fathers. Times have changed, and so has the complexity and specificity required of repair-related processes and materials for each individual automaker and the different models they produce. Also, keep in mind that the potential liability involved in repairing today’s automobiles has grown exponentially.

OEM procedures

To make matters even more complicated, it is common for OEMs to change and modify their manufacturing processes and specifications as they manufacture each model year. Therefore, while it may be the same year, make, and model of vehicle, repairers cannot simply rely on data and repair information from an unrelated prior repair. They should research and retrieve all OEM repair procedures for each repair, and in doing so, should be compensated for the time and expense they expended in accessing, reading, printing, and providing applicable information for each repair to their customers and insurers, if applicable.

These fees may include:

  • Fees for access to OEM repair information on the manufacturer’s website for the required period. Note: If it was me, I would add a standard markup, as I would with any other incurred cost or sublet service.
  • The time spent and costs involved in obtaining, reading/revising, copying and sending the information to the technician(s), customer, appraiser, insurer, etc. — as well as retaining acquired information for a period of time (as prescribed by your state – for example, Florida is five years).
  • Reasonable copying costs that you can justify based on cost, duplication costs, people’s time, etc.
  • Copy charges to compensate the store for labor, paper, and ink required. The time assessed would apply to printing of electronic records and documents as well as copying/printing of paper records. Check what your region charges for these costs. Contacting local law firms can be a viable resource. Note: When acting as an expert for legal counsel, I assess a fee of $25 for the first 100 copies and 20 cents for each additional copy thereafter.

While preparing this article, I attended a Zoom meeting with an OEM collision certification manager, whom I asked the following question: “The cost of accessing your repair specification portal considered an operating cost, the cost be passed on to the consumer? »

The guest commented that in his “personal opinion” it should be considered a cost of doing business, just like water in the store. He was then asked, “If following your recommendations is so important to maintaining proper operation, longevity, and brand loyalty, why do you charge a fee for this information?” While it was obvious he had heard the question, it went unanswered.

Personally, I think OEMs should view it as their “cost of doing business” and, if they choose to assess access fees for this information, it should then be passed on to the customer by the repairer. Of course, I always tell my clients, “It’s your business, and you can offer your services if you want, you can’t do it for very long!”

As a business owner, you must make the decisions that best serve your business and its profitability, growth, and longevity. Repairers should look to other successful businesses and industries and emulate what they are doing to continue to be successful.

Cost of doing business

So what is the cost of doing business? According to Law Insider, one definition is:

“Operating Cost or “Overhead” means all operating costs incurred in the conduct of the business and, by way of example, include, but are not limited to, the following expense items: labor labor (including salaries of officers and directors); lease; interest on borrowed capital; depreciation; cost of sale; equipment maintenance; Delivery costs; credit losses; all types of licenses, taxes, insurance and advertising.

Costs of doing business are your standard operating costs required to be in business, including rent/lease/mortgage, telephone, lighting, internet, computers, equipment, maintenance of equipment, depreciation, interest expense, wages, property taxes, marketing, certain utilities (not including paint booth heat) and others. These may be referred to as “overheads”, “operating expenses” or “fixed costs”, being independent of any specific business activity. In other words, the fees you would have to pay even if you didn’t have a job in the store.

Any other costs a business would incur to make repairs (productive labor, parts, materials, research, etc.) would not be considered the cost of doing business, but rather “direct costs” or “variable costs” and/or cost of goods sold (COGS) and/or “cost of producing goods and services”.

One thing I’ve learned as a store owner and manager is not to ask the party responsible for paying for repairs how much I should charge. As silly as it sounds, it happens daily across the country, and many repairers are given inaccurate information that benefits others and not the repairer or the customer.

As I’ve said before, there are three simple reasons why an insurer will make incorrect statements or claims and/or provide inaccurate information:

  • Ignoring
  • Blatant incompetence
  • Intentional misrepresentation

It is important to understand that because individuals claim to be placed in a position of public trust, their failure to act in good faith violates most state laws and regulations and could result in loss or suspension of license. exercise, penalties (fines) and potential jail time. It could also place an insurer in a position where it could defend itself from legal action for bad faith and/or deceptive marketing practices. If a pattern of such practices can be justified, the insurer could be sued for bad faith, resulting in massive fines and/or penalties.

Remember: Accepting the payer’s explanation that a service you provide is “the cost of doing business” can become the cost of going out of business!


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