Repair Shops: Drivers Pocketing Auto Insurance Money


Owners of auto repair shops thought that their business would never get affected by recession. In fact, they expect body repairs to go up during economic crunch since drivers would choose to have their old vehicles repaired instead of buying a new one. But things took an unexpected U-turn this year, with car fixers saying the bad economy is driving them out of business.

Repair Shops: Drivers Pocketing Auto Insurance MoneyA shop owner from Greenfield Ind. says he may stop operating this year since car owners prefer not to have their vehicles fixed. He pointed out to the economy as the culprit behind his failing business. Analysts say the shop owner has reason to believe so.

According to them, vehicle parts suppliers, who are likewise struggling under an economic crunch, have raised the prices of their merchandise. A fender that caused $250 a year ago now sells for $387, causing more Indiana auto insurance providers to declare more losses on wrecked vehicles. This has also caused some carriers to raise premium rates, even on policyholders who hold excellent driving records.

On the other hand, more car owners are deciding to forgo repairs. Uncertain about this year’s economic upturn, many policyholders choose to pocket their claims instead of getting their vehicle fixed. Some of them even drive damaged vehicles if possible, the shop owner note.
With car parts suppliers still refusing to lower prices, consumers who already have a deductible worth $1,000 may have to end up covering a large portion of the repair through their own money, even if they are already covered by an auto insurance provider.

Some consumers are forced to hunt for bargain, with many of them finding one on repairers who are willing to fix vehicles at the least expensive price. But the Indiana Autobody Association, a group composed of approximately 65 members, says such practice is dangerous for consumers since it can easily lead to fraud or shoddy work.

Industry experts advise consumers to find other ways to save instead of taking measures, which are most likely to have extremely adverse effects in the long run. They cite paying higher deductibles as one way of saving on costs. Specialists explained that consumers who raise their deductibles from $500 to $1,000 are given lower premium rates by insurers.

But consumers also have other reasons for not getting their car fixed. Worried about insurers raising their rates, policyholders are increasingly opting against file claims. A repairer records that the number of his consumers who pay out-of-pocket has increased from 30 to 40 percent over the last two years. He believes such practice is a waste of money and encourages consumers to file for claims instead.