Body Shop Insurance Dispute: How the Right to Appraisal Protects Your Repair

The Insurance Underpayment Problem

If you own or manage a body shop, you already know the frustration. The insurance company sends an adjuster who writes an estimate that does not come close to covering the cost of a proper repair. They want you to use aftermarket parts instead of OEM. They cut your labor rate. They deny procedures that the vehicle manufacturer requires. And they expect you to absorb the difference or pass it on to the customer.

This is not an accident. It is a deliberate business strategy. Insurance companies save billions of dollars annually by systematically underpaying repair costs. Here are the most common tactics:

Tactic 1: Forcing Aftermarket and Salvage Parts

Insurers push for aftermarket (non-OEM) parts and even salvage parts to reduce costs. While aftermarket parts may be cheaper, they often do not fit properly, may not meet the same safety and quality standards as OEM parts, and can void manufacturer warranties. Vehicle manufacturers universally recommend OEM parts for collision repairs.

Tactic 2: Cutting Labor Rates

Insurance companies often refuse to pay the shop's posted labor rate, instead insisting on a lower "prevailing rate" that they determine. This rate is often based on outdated surveys or manipulated data that does not reflect the actual cost of skilled labor in your market.

Tactic 3: Denying Necessary Procedures

Modern vehicles require specific repair procedures that older vehicles did not. ADAS calibration (Advanced Driver Assistance Systems) is a prime example. After a collision repair, systems like forward collision warning, lane departure warning, and adaptive cruise control must be recalibrated. Insurers frequently deny these charges, putting vehicle occupants at risk.

Other commonly denied procedures include:

• Pre-repair and post-repair scanning
• Blend operations for paint matching
• Corrosion protection on repaired panels
• Test drives and quality control inspections
• Sublet operations for specialized work
• Proper disassembly for hidden damage inspection

What Is the Right to Appraisal (RTA)?

The Right to Appraisal is based on the appraisal clause found in virtually every auto insurance policy. This clause was originally designed for total loss disputes, but it applies equally to repair cost disagreements. When the insurer and the policyholder cannot agree on the "amount of loss," either party can invoke the appraisal clause.

For body shops, the RTA process works as follows:

1. Assignment of Benefits: The vehicle owner signs an assignment of benefits (AOB) to the body shop, giving the shop the right to invoke the appraisal clause on their behalf.
2. Demand Letter: The shop (or its appraiser) sends a formal written demand to the insurance company invoking the appraisal clause.
3. Appraiser Appointment: Both sides appoint an independent appraiser. The shop's appraiser prepares a detailed repair cost appraisal documenting every procedure, part, and labor operation needed.
4. Negotiation: The two appraisers exchange their findings and attempt to reach an agreement on the full cost of repairs.
5. Umpire (If Needed): If the appraisers cannot agree, they select an umpire. The decision of any two of the three is binding.
6. Payment: The insurer pays the agreed-upon amount. This is a binding decision.

ADAS Calibration: The New Battleground

Advanced Driver Assistance Systems (ADAS) have become the single biggest source of repair disputes between body shops and insurance companies. These systems include forward collision warning, automatic emergency braking, lane departure warning, blind spot monitoring, adaptive cruise control, and parking assist.

After a collision repair, these systems must be recalibrated to ensure they function correctly. Calibration requires specialized equipment, trained technicians, and specific environmental conditions. The cost can range from $300 to over $2,000 depending on the vehicle and the systems involved.

Insurance companies frequently deny ADAS calibration charges, claiming they are "not necessary" or "not related to the loss." This is dangerous and irresponsible. If a vehicle's ADAS systems are not properly calibrated after a repair, they may not function correctly, putting the driver and other road users at risk.

The Blacklisting Myth

One of the most common concerns body shop owners have about using the RTA process is the fear of being "blacklisted" by insurance companies. This fear is understandable but unfounded. The appraisal clause is a contractual right that exists in the insurance policy. Using it is no different from exercising any other contractual right.

Insurance companies cannot legally retaliate against a body shop for invoking the appraisal clause. In fact, many of the most successful and profitable body shops in the country regularly use the RTA process. They view it not as a confrontation but as a professional business practice that ensures they are paid fairly for the work they perform.

How National Appraisers Works with Body Shops

National Appraisers LLC is the leading body shop appraisal firm in the United States. We work with body shops of all sizes, from independent single-location shops to multi-state MSO groups. Our process is designed to be simple and effective:

• Review: We review the repair order, the insurer's estimate, and the shop's estimate to identify all areas of disagreement.
• Appraisal Report: We prepare a detailed, certified repair cost appraisal that documents every procedure, part, and labor operation needed for a proper repair, citing OEM repair procedures and industry standards.
• RTA Process: We handle the entire RTA process, from the demand letter to the final settlement, serving as the shop's independent appraiser.
• Results: Our appraisers have extensive experience negotiating with insurance company appraisers and consistently achieve favorable outcomes for our body shop clients.

We offer tiered pricing based on the complexity of the dispute, from simple RTA demands to complex multi-supplement disputes. Visit our body shop services page for detailed pricing information.