Contracts Attorneys Council Bluffs IA

Unless an insurance company chooses the "repair" option in the insurance contract - making it fully liable for its repair choices - it has no legal right to be involved in the repair process.

By Wade Ebert
8/1/2006

Robert (Bob) Hurns, counsel and legislative database manager for the Property and Casualty Insurers Association of America, was recently quoted as saying: “An insurance contract is a legally binding contract, and it controls how a vehicle will be repaired when an accident occurs.”

But for the quote to be factual, Hurns would’ve needed to include this qualifying language: “ ... to an insured’s vehicle when the insurer formally elects the ‘repair’ option available under the payment of loss provision.”

And when an insurer elects the “repair” option, the insurer bears fully the liability for its repair choices. Absent the election of the “option to repair,” if an insurer chooses to deny payment for a portion of the claim while “paying for the loss in money,” it’s bound by most state laws to explain in writing the failure to pay the entire loss.

Of course, none of this applies to third-party losses, where attempts to apply policy language to someone who’s not an insured is common law fraud.

Where DRPs are concerned, they are, when applied to third-party losses, a “conspiracy to defraud” under each state’s Consumer Fra...

Arming yourself with the knowledge of your legal rights and your customers' legal rights is an integral part of ensuring your long-term success.

By E. L. Eversman, J.D.
6/1/2008

Today’s collision repairer needs to be a savvy businessman as well as a master craftsman. And part of being a savvy businessman and running a profitable, efficient and ethical repair facility involves knowing one’s legal rights and obligations that not only affect him or her but the entire industry.

Repairers can address these legal issues by understanding the rights and duties owed to customers as well as the lack of duties owed to anyone outside of the repair contract. Also, certain necessary business documents can help repairers comply with their states’ laws and outline the expectations of the parties involved in the repair.

Rights and Obligations

It’s clear that many repairers don’t understand their rights relating to customers, partly because they’re confused as to whom the financially responsible party is and why. An area that causes significant confusion for the repair industry is distinguishing between the status of customers when an insurance company is involved in “paying” for the repairs.

First, let’s understand that, unless you’re involved in an insurance company direct-repair program (DRP), the insurance company never technically “pays for the repairs.” Instead, the consumer is...