Insurance Recovery: When Wreckage Really Piles Up

by Alana Quartuccio

The wreckage that results from a motor vehicle accident doesn’t always come in the form of twisted metal and broken glass.

In today’s world, damage goes really deep. In this case, we’re not talking about hidden physical damage involving ADAS sensors and safety inspections – we’re focusing on the impact from abrasive insurance company trends that continue to fracture the collision repair industry, leaving body shops strained and vehicle owners pinned beneath the pile up of undervalued claims causing them to accrue out-of-pocket expenses.

The buzz around the industry is that insurance companies seem to be handling claims more unscrupulously than ever before, putting even more pressure on repair facilities. Meanwhile, vehicle owners are feeling the pinch and becoming more cautious about filing claims after an accident, with some drivers choosing to cut ties with insurance completely. Others just choose to live with damage, which could have dangerous consequences.

“Collision centers are experiencing a massive increase in pressure,” observes Society of Collision Repair Specialists (SCRS) Executive Director Aaron Schulenburg. “There has always been tension between insurers and repairers; repairers want to capture the cost associated with performing services, while insurers want to mitigate their claims expenses. Those two objectives are economic adversaries, and that has always been the case. But over the past 12-16 months, businesses are reporting increased pressure from the carriers they interact with related to operations that they once acknowledged or rates that were previously approved.”

Andrew Batenhorst (Pacific Collision Center; Glendale, CA) confirms that, although this is something he’s experienced sporadically in the past, it’s been happening on a more consistent basis since September/October 2025.

Although it’s not happening with any one particular insurer, it seems to be most commonly practiced among the top five largest companies. There also isn’t a consistent pattern in what parts or procedures carriers tend to deny. “One month, we may hear, ‘We don’t pay for flex additive anymore,’ or another would say, ‘We will only pay .2 for color match instead of .5.’ The only consistency to it all is that there is a new ‘flavor of the month’ material or labor operation that someone was telling them to stop paying,” he reports.

None of these behaviors are linked to new technologies or changes in billing procedures, so what could be causing these sudden changes in tune?

Schulenburg points to a number of things. “Some of it stems from change in behavior at the local level, and some may be a result of insurance companies moving away from in-person decision making.” He says many repair businesses are communicating what appears to be an in-person collection of data, but then a more centralized or audit-based review process that can change the outcome of what was discussed at the local level. “That’s really challenging and frustrating, especially if you can come to some point of consensus with people who you’re interacting with in person – only to have remote auditors or remote teams second-guess or override those decisions that were made locally.”

Although Batenhorst doesn’t believe centralization is the primary role in this claims handling behavior, he agrees it certainly contributes to it.

“The incentivization of cutting claims costs plays a large role,” he points out. “Many mid-level claims managers who oversee adjusters (whether they are remote or in the field) have a bonus tied to metrics that are driven by cost-cutting measures (regardless of the ethical, legal and moral implications that surround this behavior). I believe that, in combination with AI auditing tools, this level of aggressive cost cutting has become the most effective and efficient way for insurers to control this process, along with the utilization of DRP networks that willingly agree to accept the insurer’s terms.”

These practices are fueling an already established trend: increasing customer out-of-pocket expenses. However, this trend appears to be accelerating.

“I think insurance companies have gotten very comfortable with telling collision centers that if they need to do a certain operation, they can just charge the customer the difference,” Schulenburg notes. “Most auto insurance policies are not structured with out-of-pocket provisions the way healthcare policies are. Typically, policies include a deductible and then coverage beyond that amount.” Customers are generally not made aware that they may be charged beyond what their policy covers when they sign with an insurer.

Meanwhile, these trends are having an effect on customers with more and more paying outside of insurance. The numbers don’t lie. According to CRASH Network’s most recent quarterly “Collision Industry Business Perspectives” survey, in 2025 more than three out of five shops said more customers had chosen to pay without filing a claim – a significant difference compared to the prior year. Sixty-three percent reported that repairs were paid for by the vehicle owner rather than by an insurer compared to 45 percent who reported this in 2024.

Batenhorst says his repair center saw an 80 percent increase in customer pay work in 2025 compared to 2024. “If the value of the repairs were under a certain dollar amount, most customers felt that financially, it was a safer bet to just take care of it on their own, rather than suffer the pain of increased policy premiums on their next renewal. In reference to those who do pursue claims, we are seeing a 20- to 30-percent increase in out-of-pocket expenses due to required repair operations, parts and materials not being approved by their adjuster. This has resulted in a significant impact on the financial strain for the customer, as well as a considerable increase in time for the repair to be processed.”

Collision industry attorney Sean Preston (Coverall Law) offers another perspective. Where subrogation recovery is a normal part of the insurance process and tracking the successful recovery of performance metrics is not illegal, recovery targets can shape the way claims payment decisions are made.

“Anytime a company feels like they are leaving money on the table, subrogation gives every insurer an opportunity to pull the curtain back on what other insurers are essentially getting away with and how, and we are seeing more and more of this these days,” Preston relays.

It’s concerning because if adjusters are told not to approve certain labor operations based on what other carriers are doing, the focus is not about what the vehicle needs to be repaired properly; instead, it becomes about what another insurer might pay later. Preston says this can create uniform denial patterns where carriers may no longer approve OEM procedures they had in the past and labor operations could be denied because paying for them could reduce recovery success.

“It’s decades of what is called a monopsony, where you have a limited number of payers. Add in the fact that those limited payers are able to compare notes. I think the piece that probably makes this so pronounced is how differently insurers treat shops state by state, region by region.”

Preston believes it’s a problem that is only getting worse. “These companies are trying to be savvy. They look at each other’s notes, and they feel like they are being made a fool.”

Ultimately, with all this industry havoc surrounding claims, what matters to collision repair shops most is how they educate and work with their customers.

Batenhorst believes “we will start to see the rise of GAP-style insurance in the claim’s world.” He is aware of two companies actively working on supplemental policies that have low premiums to attempt to counteract some of this behavior. He also foresees a frequency of class action lawsuits coming down the pike if this trajectory continues.

“At the root of it, there will be no change for shops or customers unless there is dissatisfaction with the status quo. If shops continue to stay silent, and not advocate for their customers, then this system will continue to devolve past the point where we are at now.”

Schulenburg agrees. “At the end of the day, the goal shouldn’t be charging the customer. But the customer is who contracted the repair service, and as a business, the goal should be recouping for the services that you’re performing. That often starts with educating consumers up front earlier in the process. They will know exactly what to expect and know what resources are available to them to address the challenges that they’re going to face.”

Businesses experiencing these types of pressures that have provided their team members with the tools and capabilities to have these hard conversations early in the process will set themselves up as experts, he adds. “I think that’s where I see a difference between the shops that succeed and those who struggle. Do your team members at your front desk, in your repair planning and customer delivery process know how to answer those questions and really talk to customers? Shops need to find the right word tracks and ways to approach this and also understand what consumer protection resources are in the policy as well as what may not be included in the policy, depending on your state. They will need to know what other external resources a consumer may be able to leverage in order to be made whole in the process.”

It all comes down to running a repair business with clarity and purpose. “You have the customer sign a repair authorization to proceed,” Schulenburg continues. “Their expectation of the insurer is to be made whole based on their policy provisions. Repair businesses must clearly define their goals – what they will and will not do – and ensure their team communicates that consistently to customers.”

Want more? Check out the May 2026 issue of Hammer & Dolly!