Car Insurance “Steering” And How It Effects You

You’ve been in an accident. As a responsible, law-abiding driver, you have car insurance coverage. Many people assume that one of the first steps in dealing with the aftermath of an accident is to call their insurance company to find out what to do next.

Unfortunately, many insurance companies take advantage of their policyholders’ trust, and engage in a tactic known as “Steering”. What is steering? Steering is designed to direct customers to a shop in that insurance company’s preferred or “Direct Repair Program” (DRP).

If you’d like more information, or would like to speak to K & M Collision, click here to contact us, or give us a call at (828)-575-5052

What is Car Insurance “Steering?”

“Steering” when applied to car insurance, is when an insurance provider directs their policy holders or 3rd party claimants to get their vehicles repaired at a specific body shop. Insurance companies have also been known to steer policyholders away from specific collision providers. This practice is in violation of US law (the 1963 Federal Consent Decree), yet is still pervasive throughout the industry, as insurance companies attempt to drive policyholders to shops on their referral networks. In exchange for a high volume of insurance company referrals, preferred shops will agree to use aftermarket, imitation, or junkyard parts, which are often unsafe and poor quality in comparison to genuine parts.

Maximizing Their Profits At Your Expense

Why do they want you to go to one of their preferred shops? Unfortunately, they don’t do this to make sure their policyholders get the best repair available. They do it to make sure you get a cheap repair.

How Do Direct Repair Programs Work?

Insurance preferred shops will agree to work within a very low repair budget, agreeing to discount labor, parts and materials. This will often lead that shop to skip procedures necessary to return your vehicle to the safe, structurally-sound condition it was in before the accident.

These kinds of problems with safety and quality are just some of the reasons why steering is illegal. In North Carolina, your insurance company is required to clearly inform you that you’re under no obligation to use one of their shops, and that you’re free to use the repair facility of your choice.

Unfortunately, insurance companies regularly engage in steering, despite the fact that it’s illegal. They’ll often make misleading statements to dissuade you from taking your car to a shop that doesn’t play ball with their strategy to maximize their profits.

Check out this great video from Mark’s Body Shop on steering…

Video Courtesy of Mark’s Body Shop

Common Scare Tactics

They’ll often use scare tactics, telling you that they can’t guarantee the repairs if you don’t take it to one of their shops, despite the fact that it’s the shop, not the insurance company that provides the warranty on repairs.

They may tell you that you may be responsible for additional costs, despite the fact that the law states that they have to cover all costs required to restore your vehicle to pre-loss condition.

We’ve even heard them tell customers, flat out, “We can’t work with that shop” despite the fact that the law clearly states that every customer has the right to take their vehicle to the shop of their choice.

Why Steer Away From Independent Shops?

Why would an insurance company steer customers away from a body shop like K&M Collision? It’s all about control and profit. K&M Collision works with all insurance companies, but we don’t have any contractual agreements for referrals.

A preferred shop that depends on insurance referrals for volume isn’t in a position to insist that the correct procedures and quality parts are used in a repair. If they did, they’d lose their referral source.

We Take Your Safety Very Seriously

At K & M Collision, we take your safety very seriously. Your vehicle is supposed to be returned to pre-loss condition, meaning it’s just as safe and structurally-sound as before the accident. That’s why we’re certified by 18 manufacturers for collision repair.

Of course, we hope that you never have to experience an accident of any kind. But if you do, it’s important to understand the concept of steering, and the motivations that may be behind the recommendations made by your insurance company.

If you’d like more information, or would like to speak to K & M Collision, click here to contact us, or give us a call at (828)-575-5052

If you’d like to know more, check out some of our other consumer education videos on our YouTube channel, and subscribe for upcoming videos in our web series.