The Oklahoma Auto Body Association (OKABA) is fighting a proposed state law that limits what collision repair shops can charge for multiple standard procedures along with storage rates or fees.
“This is a bill written for the insurance company,” said Brian Shellem, OKABA legislative committee chair. “It is interjecting into the free market.”
Oklahoma Sen. Lonnie Paxton (R-23) introduced SB 1853 Jan. 24 positioned as a consumer protection bill. It would create the “Oklahoma Motor Vehicle Repair Consumer Protection Act.”
Paxton’s website claims he’s operated an insurance agency for 24 years. An Oklahoma Farm Bureau Insurance site shows Paxton as a registered representative and notes auto insurance as a popular product of his. He did not respond to requests from Repairer Driven News by the publication deadline to discuss the bill.
“We are not just fighting for the shops,” Shellem said. “We are an advocate for the consumers.”
The bill lists insurance representatives as a “customer” or “responsible party,” giving them the authority to consent to repair estimates and procedures.
“No service work shall be performed by any motor vehicle repair facility unless the motor vehicle repair facility obtains the written consent or documented verbal consent of the customer or responsible party for the fees, charges, and costs, not including any applicable sales taxes, to be incurred by the customer or responsible party prior to performing the service work,” the legislation says.
Shellem said only the customer should have the right to authorize repairs. He also questioned if the bill could be interrupted to require insurers to agree to every repair the consumer does. This could mean a consumer has to receive insurer approval for mechanical repair work, not just collision repairs.
The bill limits hourly rates for teardown and “administrative charges” to $60 or less. It also limited the hours for each to four. It says the teardown process “means the disassembly of a damaged motor vehicle to a point where the motor vehicle repair facility can identify the extent of the damage and generate an itemized estimate for restoring the vehicle to its pre-loss condition.”
The bill says administrative charges shall include, but not be limited to:
- File creation
- Repair orders
- Vehicle travel
- Parts and vehicle identification
- Software charges
- Communication with vehicle owners and insurance representatives and any other party involved in the repair or total loss determination; pre-repair charges
- Pre-washes
- COVID-19 or bio-cleaning
- Charges related to pre-repair diagnostic scanning, photographs, electronic communications, parts identification, and preparation of a repair plan
- Any charges for work that is not a repair procedure for obtaining labor, parts, and materials
- Securing removed parts
- Delocating parts back in a vehicle determined to be a total loss; restocking fees
- Wrapping and tarping
- Moving vehicles from different locations
Gary Wano, owner of GW & Son Autobody, said it’s impossible to set a labor cost for the process. He said the cost of living and property costs vary inside the state. Labor prices can also vary by the type of vehicle a shop repairs. For example, shops that have acquired certifications or repair luxury brand vehicles could charge more.
The hours it takes to dismantle a vehicle can drastically vary, Wano said. He said some pickup bumpers have four bolts. Other vehicles extensive procedures and use of retainers and fasteners and potentially overlapping parts that need to be removed.
“You can have one bumper that is four bolts and go to a bumper that might have 10 times the attachments,” Wano said. “Pulling the bumper off the both of them is the same in the eyes of the insurance.”
As vehicles become more advanced, the repair process becomes more complex.
Wano said design features are changing so rapidly it can be difficult for repairers to rely on the muscle memory learned when repairing older models.
“Just because a technician may have known Honda Accords for the last three or four years, the next year, there could be a complete design change on that,” Wano said. “The whole complexity of the vehicle continues to get more and more sophisticated and your muscle memory may not know that particular year model of that car. If you are not familiar with it, you are not going to be more efficient.”
The bill also sets inside storage rates from $39 to $70 a day and outside rates from $24 to $55. The price varies depending on the vehicle’s length and width.
It says storage charges can’t be accrued or charged on vehicles until they are deemed a total loss by the customer or responsible party.
“The total loss determination date shall serve as the date upon which storage charges shall start accruing,” the bill said.
Owners and managers of repair shops nationwide have expressed concerns about insurance companies refusing to pay storage costs after delaying the decision to total a vehicle for weeks to months following a shop’s initial estimate that would total a vehicle.
Wano said he has at least half a dozen files where insurers wouldn’t immediately accept his preliminary estimate which conveyed the vehicle was an obvious total loss. In each case, insurers took multiple weeks and up to two months to agree and finally total the vehicle.
The bill would ask shops to foot the bill for insurer delays, Wano said.
Shellem said storage is a cost to repair shops. The shop has to protect the cars, such as having video surveillance.
Electric vehicles (EV) can require more costly storage needs.
Damaged electric vehicles involved in a collision should be stored 50 feet from other vehicles and structures because of fire risks, according to the National Highway Traffic Safety Administration.
Isolation bays, that include concrete walls and drainage systems, is a recommended option for storing damaged EVs.
Repair shops also can be limited in the space they have available. Once the space is full, they may be unable to take on new business.
“That stuff is not free and the rent on that building is not free,” Shellem said. “You are supposed to do all this stuff for free?”
OKABA is a little more than a year old. Shellem said this bill is one example of why an association like OKABA is needed.
“You aren’t the lone ranger trying to do this,” Shellem said. “We have a committee of people who have contacts with senators and representatives. It is a means of getting stuff done.”
Wano agreed that the association is vital to advocating for the needs of the industry. He said the association represents a larger voting public. It has more of a voice than just one repair shop contacting state legislators.
“This is what should drive each repairer to get involved with a state association,” Shellem said.
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Photo courtesy of DustyPixel/iStock
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Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.