When I read the article about a body shop owner scamming an insurance company on the cost of paint and materials, my blood started to boil. The more I read, the hotter I got, but not for the reasons that one might first imagine.
First, let me be perfectly clear. I have no compassion for anyone that would supply an insurance company with a fictitious invoice in order to be compensated for a part, material, paint or anything else that he does not deserve to be paid for, nor do I condone this type of illegal activity. If this is truly what this party actually did, then he should suffer the consequences.
However, on a daily basis, I see insurance companies shortchanging their own insureds, causing collision shops to conduct repairs for less than the cost of the paint materials that are required to properly repair automobiles that are damaged in an accident when the repairs are being paid for by an insurance company.
Many insurers in the State of New Jersey are currently using an antiquated, outdated formula to determine or limit the amount that they will pay for the cost of paint and materials required to repair damaged vehicles even though there are multiple accurate and computerized cost accounting programs readily available to the insurance companies or anyone else to determine the exact costs.
This paint and material issue was addressed by the NJ Department of Banking and Insurance back in 2007. At that time, the Department issued Bulletin 07-20, which cautioned insurers that traditional methods used for paint and material allowances were inadequate, recessive and were resulting in estimates that do not provide a sufficient allowance to restore vehicles to pre-accident condition. The bulletin put insurers on notice that they must be able to justify their paint and material allowances.
Because of the huge difference in the cost of red paint as opposed to, let’s say white paint, insurers cannot justify an allowance for paint and materials based on dollar figure per paint hour, PERIOD! Yet, the NJ Department of Banking and Insurance either looks the other way or supports the insurer’s position, essentially ignoring the bulleting that they themselves issued. Therefore, if the prosecutor is going to go after a fellow like this guy, who apparently provided false documentation in order to get paid or overpaid for the cost of paint and materials, then the prosecutor should also be going after the insurance companies that are utilizing an outdated system that does not provide proper and accurate information on the cost of the paint and materials required to repair the damaged vehicle being repaired and paid for by the insurer.
Again, for the record, I in no way support or even feel bad for a body shop owner that would create a false invoice or provide false documentation in order to get compensated for anything that he is not entitled to. However, in my opinion, this guy is no worse than an insurance company that is coming out to the collision shops and doing basically the same thing, but in reverse. The law should not be one-sided. If this guy is going to be charged with fraud or charged with a crime for supplying false documentation in order to get paid for more than he is entitled, then the prosecutor should be willing to charge insurers that are using false information to support their denial of the actual cost of the paint and materials they owe for on an insurance claim.