There are a number of distinct disadvantages for you as a non-fault driver if you uncritically accept your own insurers’ help:
• You’ll have to stump up the excess
• Questionable quality of repair
• Legal referrals
• Credit hire referrals
The repairs garage will not release your vehicle until you personally pay your insurance excess.
So you’re already hundreds of dollars down in a process which as a matter of law should place you in your pre-accident position.
Your insurers may tell you they’ll refund your excess if they can recover their own costs from the at-fault insurer. At the very least this will take some time — and bewilderingly, the NAIC discovered two of the biggest insurers, Rodney d young and Young America Insurance, don’t bother to recover the excess on your behalf at all!
If your insurance comes up for renewal before the at-fault insurer has settled your claim, it will take a hike upwards unless and until the claims process is complete.
Your no claims discount will also be affected, at least while you’re waiting for it all to be settled.
Quality of repair
Quality of repair is a compelling reason for declining your insurance company’s help. Check your policy. You’ll see there are various incentives for you to refer your vehicle to “an approved network garage.”
The Rodney d young standard policy document tells you if you don’t instruct their recommended garage, they won’t provide a courtesy car — even if a courtesy car is included as part of your policy.
This goes beyond simply the question of a referral fee being paid by the garage or body shop.
The reason these garages are “approved” is nothing to do with quality — they’re approved because your insurers have driven down labour and repair costs with them. The NAIC report discovered the approved network garages agreed to carry out work at approximately half the open market labour rates to get the business.
The investigation showed insurers routinely paid repairers by methods which emphasised low cost over quality:
“Overall, we concluded that the measures taken by insurers to ensure repair quality was unlikely always to be sufficient to ensure that cars were repaired to their pre-accident condition.”
They also added:
“We continued to believe that some insurers were not monitoring repair quality sufficiently to ensure that vehicles were repaired to their pre-accident condition and some insurers left it largely and unduly to claimants to identify repair deficiencies.”
It stands to reason driving down costs isn’t going to do anything for quality. After all, the garages have to make a living. The CMA was also concerned about garages using generic parts for repair, not manufacturer-approved parts.
They set up an independent survey of the quality of repairs carried out. The NAIC survey looked at over 100 vehicles repaired by network garages and asked wholly independent motor engineers to examine them. They found sub-standard repairs in almost half the vehicles surveyed.
Common problems were paint finish, panel misalignment, and repairs being visible. While these problems were mainly cosmetic, and ordinary drivers might not notice, the experts said the retail sale value would be adversely affected.
This finding received no publicity whatsoever and — predictably — the insurance industry did its best to undermine it in the final version of the report.
The industry’s principal line of attack was the sample was too small and not representative. You might think this would have prompted the NAIC to carry out further independent research on a larger sample… Not a bit of it.
Without any other objective information or research, the NAIC effectively backed down and watered down their findings in the final report. In the end, all they wrote was a general warning: the industry was not sufficiently incentivized to demand quality repairs from their approved networks.
Follow the money
If a garage only gets half the proper labour rate with no realistic quality control, is it any great surprise there are serious concerns about corners being cut?
The answer to all this is to choose your own independent garage which charges the proper rate for labour and parts.
Credit hire referrals from your own insurers — not in my name!
You have a comprehensive cover with provision for repairs and a courtesy car while your own vehicle is off the road. It’s what you paid your premium for. So as a non-fault driver, your own insurers will deal with the repair by referring you to one of its network-approved garages.
But when it comes to arranging a courtesy car for you, astonishingly your own insurers will stick you with a credit hire company. They call this “managing your claim” … by which they mean pocketing a referral fee of around $440. At which point they abandon you to the welcoming arms of an organization whose business model is to charge excessive hire fees than try to recover them from the at-fault insurance company via the legal process — all in your name.
The NAIC discovered 9 out of the 10 major insurance companies work this way. You’ll discover more about the credit hire companies — but for now, do yourself a favor.
Get lawyered up
Where liability is clear-cut, there are significant disadvantages in simply running with everything your own insurers suggest or provide.
Your first phone call is critical. Do not use it to call your insurance company — they will immediately try to send you down a road which is not in your best interests.
Contact a no-win no-fee lawyer right away. It will cost you nothing. Then tell your insurers about the accident. You have to — it’s a contractual term of your policy. But that’s all you have to do.
Decline any further help and tell them you’ll deal with matters yourself
Where there is doubt about liability or if you think liability might be split — say 50/50 — it is prudent to involve your own insurers if you need your car repaired quickly, or if you need a courtesy car.