What's this all about? Does it mean "we're not good enough?" Absolutely not!

After an accident, some insurance agents and claims representatives will attempt to influence your freedom of choice and try to direct you to a shop on "their list."

Shops on these "lists" participate in the insurance company's "Direct Repair Program" (or DRP for short). Under a direct repair program, the insurance company solicits repair shops, promising to send these shops customers in exchange for the shop's contractual commitment agreeing to discounted repairs with imitation parts and repair guidelines set forth the by the referring insurance company!

Simple as that.

These direct repair shops are promoted by the insurance company in an effort to reduce claims costs, however these "reductions" are often enjoyed at the expense of the quality of the consumer's auto repair.

These programs often require the participating shop to follow a set of strict guidelines designated by the insurance company. Repairs must be performed using procedures, parts, and suppliers dictated by the insurance company.

These parts and procedures may not be in the best interest of the repair. The insurance companies often give their "preferred shops" a fancy name, such as Preferred, Blue Ribbon, Service First or Pro shops. These fancy names, however, have nothing to do with quality levels or certification standards.

For example, here are just a few "requirements" from a prominent insurance company's direct repair contract with the participating repair shop:

Requirement #1:
LKQ and aftermarket parts usage will be sought after prior to OEM usage.

Translation:
The repair shop is required to locate and install used (the industry term is LKQ, meaning "Like, Kind and Quality") parts, and imitation parts (commonly called "aftermarket" parts) before any new original factory parts are used.

Requirement #2:
Program's goal is to utilize LKQ and aftermarket parts at a combined 40% ratio adequacy.

Translation:
It's the participating direct repair shop's contractual responsibility to cut the insurance company's repair bill by installing more used and imitation parts.

Requirement #3:
When sheetmetal parts are needed, check for parts in the following order: (1) Used parts, (2) Reconditioned and rebuilt parts, (3) Aftermarket parts and (4) OEM parts.

Translation:
New parts are to be used only as a last resort.

Requirement #4:
[Insurance company] may suspend repair facility immediately upon notice if it fails to satisfy requirements under this Agreement.

Translation:
If the shop fails to follow the insurance company's guidelines, they'll be removed from the "list" or referral program.

The Bottom Line?

The direct repair process is dictated by the insurance company and shops participating in these programs work for the insurance company -- not you, the true customer.

If you have any questions regarding the proper repair of your vehicle, please call us.

Need further assistance?
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Arbitration Appraisals
8410-182 Street Edmonton Alberta Canada, T5T 1Y7
(780) 413-1815