NYS - Mitchell Refinishing Guide Mark-Up

Posted: Fri Aug 14, 2009 07:29 pm Post Subject:

You may be approaching this all wrong. If you have a repair agreement with an insurer through a direct repair or preferred provider, you are at their mercy or the terms of the agreement. If you do not, do not consider the insurer your customer for they do not owe you. Make sure your contract of repairs is with the vehicle owner, do not use the insurer repair estimate as your repair plan, (write your own do not copy theirs).

Insurers do not owe us (shops) any thing. They are contractually bound to pay for what is reasonable and necessary to restore to pre loss condition to only their insureds. The shop's invoice is the repair invoice of record. Ask the vehicle owner for the difference, assist them in small claims court for the underpayment with necessary documents should the insurer refuse to pay your markup and have the vehicle owner submit your final invoice to be placed in the customer's claim file. It can then be shown that the amount paid by the insurer was insufficient. Works for us. Customer gets reimbursed by insurer as they do not want a record of underpayment for repairs in their claim files.

Posted: Fri Aug 14, 2009 08:42 pm Post Subject:

Thank you for the reply.

I am an independent shop. I have always done business through word of mouth and quality repairs.

I am not a Direct Repair Shop.

I have been offered the Direct Repair or Pro shop status by various insurance companies and always declined for the exact reason you stated. I do not want to be at "their mercy".

The bottom line for me is simply I only desire what is fair market price for the repair. Nothing more nothing less.

Costs continue to escalate for any body shop and obviously the insurance companies are slow to respond.

In terms of dealing with the customer on this - With the current economic situation all of us are facing especially the customers I'm not sure that is an appropriate avenue to pursue.

My contention is - Should body shops not make a profit on paint? With the current system they are trying to enforce we are receiving cost with no markup(aka profit).

If I purchase a fender for a car and replace it the insurance companies mark it up 25% with no issues as per reg. 64.

If I purchase paint or use mitchell guide to figure costs of paint - they currently will not get an agreed figure for repairs as they feel they aren't responsible to pay profit on it.

I indeed may be approaching this wrong, but it would make logical business sense to make a profit on paint as it is a cost directly applied to the body shop itself.

An agreed fair market price must be met between the body shop and the insurance company by law. But, according to reg NYS reg 64.

Once again thank you for your time.

Posted: Fri Aug 14, 2009 09:39 pm Post Subject:

You and I know the justifications they will use to claim they do not owe the mark up. If it is a prevailing practice and no one else is charging a markup or using a guide, paintex, etc, they will claim that by virtue of the contract they only owe for what they determine to be necessary or usual and customary based on prevailing rates and practices. Until the last 3 or so years most polices read reasonable and necessary. When some of the online insurers that pay for cheap and fast repairs were successful in changing the wording of vehicle owner policies to usual and customary (medical lingo) the rest soon followed suit.

They have shops trapped in a catch 22. If you charge more than the prevailing rate, they claim they do not owe more. If the majority does not use an accurate methodology to calculate all supplies and materials expenses required to peform all repairs specific to that one job, they are destined to accept usual and customary which is dollars per paint refinish hour. Materials rise 7 to 14 percent annually. We are expected to feel gracious if they allow a two dollar bump every two years in materials charges which amount to a 6% increase. If every shop decided to use a materials calculator at once, they would scream collusion and pricefixing even though it is a bonefide basic accounting procedure taught in all accounting classes and is justified and legal for our profession.

Until all shops realize that the current methodology to calculate paint and supplies by putting your finger in the air to see which way the favorable winds are blowing and asking for increases, there will be none. When every shop realizes that profit is not a dirty word and profit margins are justifyable, and start using methodology that tracks paint and supply usage per job, then shops will not have to beg for price increases. It can be proven that cost accounting of materials usage can increase profits to desirable and reasonable margins that are owed.

Until then, the only way that works is taking an assignment of proceeds, (stepping into the policyholder's shoes) and suing the insurer in small claims court as they are currently doing in large numbers in OHIO. OR bill the contracted customer for your services and let them demand the balance owed above their deductible. CCRE members that implement these policies are getting paid and their customers are getting reimbursed by their insurers.

This may not be a good forum for this discussion as it is mostly an aid for policy holders and claimants with questions. You may find more support and dialogue on this issue at a shop owner's forum such as www.prodiscussions.com or www.autobodyonline.com