Built on Bad Estimates: How Insurers Undermine Shops – and Trust – One Illegal Appraisal at a Time

by Sean G. Preston, Esq. Managing Attorney, Coverall Law

In Massachusetts, every auto damage appraisal ends with the same unambiguous declaration: “THIS ESTIMATE HAS BEEN PREPARED AND SWORN TO UNDER THE PENALTIES OF PERJURY.”

That sentence, required by 212 CMR 2.02(5), is not decorative text or bureaucratic flourish – it is a legal oath. By law, an appraisal is a sworn statement of fact. And yet, some of the largest insurers in the Commonwealth have turned these sworn documents into strategic instruments of underpayment. The initial estimates they produce often omit obvious procedures, exclude critical parts and list rates – especially for Paint and Materials – that appraisers and insurers know bear no relationship to prevailing market costs. In doing so, insurers shortchange their own policyholders and claimants while preserving the regulatory veneer of compliance.

This practice isn’t a clerical error or a difference of opinion. It is a business model that begins with knowingly incomplete sworn statements and ends with consumers and collision repair professionals paying the price. The insurer pays less on the first check, the consumer accepts less than they are owed, and repair shops must shoulder the burden of explaining why the insurer’s sworn document is fundamentally inaccurate. When a legal document becomes a tool for systematic underpayment, it erodes trust – not just in the insurer that issued it, but in the entire claims process that depends on accuracy, honesty and good faith.

That erosion isn’t theoretical. It is happening every day, in every corner of the state, through every lowball estimate written under penalty of perjury. And if Massachusetts continues to allow insurers to underwrite sworn appraisals with impunity, the consequences will extend far beyond shortchanged consumers – they will undermine the integrity of the regulatory system itself.

The Business Model Behind Lowballing 

The strategy behind these lowball estimates is as methodical as it is profitable. When a vehicle is damaged, insurers issue an initial appraisal that dramatically underrepresents the true cost of repair. Paint and Materials – typically calculated using a dollars-times-hours formula as with one particular insurer – listed at artificially low rates, such as $17 per hour, “even when insurers know the prevailing market cost is much higher. Appraisers, working under the insurer’s direction or pressure, also leave off procedures that are not just foreseeable but functionally unavoidable – operations like corrosion protection, structural pulls, diagnostics or blend panel refinishing. This initial estimate becomes the basis for the payment offered to the claimant, setting expectations for what the repair “should” cost, despite bearing little resemblance to what a safe and complete repair will actually require.

This strategy yields two significant advantages for the insurer. First, when a claimant opts not to repair the vehicle – and under Massachusetts’ direct payment laws, they are free to do so – the insurer has successfully minimized its financial exposure. The check is cashed, the matter is closed, and the insurer keeps the savings, having never disclosed the full scope of the damage or cost. Second, if the consumer does proceed with repairs, the shop is left to file a supplement for the omitted work. At that point, the insurer may offer slightly higher rates or allow for certain procedures – but only incrementally and still well below industry standards.

It’s important to understand: the insurer is not “correcting” the estimate. They’re simply offering a number marginally higher than the first, calculated just high enough to be reluctantly accepted by a desperate repairer. Most shops have learned that pushing too hard on supplements results in delays, reinspection threats or, in some cases, claims handling retaliation. And with cash flow hanging in the balance, many shops accept short payment, knowing that refusing it could sink their business.

This system places body shops in an impossible position: either absorb the financial loss or find ways to cut corners. And for those who refuse to compromise on repair quality, the pressure is even more acute. Repeated short payments make it nearly impossible to perform the kind of thorough, OEM-compliant and safe repairs that modern vehicles demand. In effect, the insurer’s strategy doesn’t just control cost – it quietly dictates how much safety a customer gets to buy with their claim.

This is not just an economic distortion; it’s a public safety risk, born from a model that begins with a false sworn statement. When insurers treat sworn appraisals as strategic placeholders, rather than truthful declarations, the entire repair process is poisoned from the outset.

Massachusetts Regulations Require Good Faith Estimates – 

Not Lowballs 

The legal obligations governing appraisals in Massachusetts are not vague, discretionary or open to interpretation. They are explicit, codified and legally binding. Auto appraisers in the Commonwealth are required to submit estimates that reflect not the insurer’s preferred numbers, but the actual, foreseeable cost to return the vehicle to pre-accident condition. When insurers or their appraisers deliberately suppress repair costs in a sworn document, they are not operating in a gray area – they are sidestepping regulations with precision.

Under 212 CMR 2.04(e), appraisers are required to identify “all damage attributable to the incident” and to itemize every labor, parts and materials operation necessary to complete a proper repair. Not optional, not partial – all. This includes scanning and diagnostic procedures, corrosion protection, structural straightening and refinishing processes – regardless of whether the vehicle has been disassembled yet. The standard is what can be “reasonably anticipated” at the time of writing. It does not permit appraisers to leave these operations off and “wait for a supplement,” as is now industry practice.

Moreover, per 212 CMR 2.02(5), every estimate must include the following attestation:

“THIS ESTIMATE HAS BEEN PREPARED AND SWORN TO UNDER THE PENALTIES OF PERJURY.”

This is not ceremonial language. It carries the weight of Massachusetts law. A knowingly false or incomplete statement on a document bearing that phrase is not just unethical – it may be perjury.

Further, 211 CMR 133.04 obligates insurers and their appraisers to base their assessments on the true cost of repair, including the cost of parts and labor “of like kind and quality.” If rebuilt, used or aftermarket parts are specified, this must be documented. If a specific repair procedure is required to ensure safety or OEM compliance, it must be included. Nothing in these regulations supports or authorizes the “start low, settle later” approach that has come to define how estimates are written today.

Finally, any violation of these regulations is explicitly deemed an unfair or deceptive act under 211 CMR 123.08 and 133.08, tying these actions directly to Massachusetts General Laws Chapter 176D (Unfair Claims Settlement Practices) and Chapter 93A (Consumer Protection Act). That legal framework exists to protect consumers and small businesses from the exact behavior now normalized by major carriers: presenting appraisals that appear legitimate and lawful, but that are, in substance, hollowed out estimates designed to minimize payout.

In short, these are not “bad estimates”– they are non-compliant legal documents that form the foundation of nearly every auto claim in the state. And the fact that they are knowingly and strategically underwritten, under oath, ought to trigger enforcement, not apathy.

The Collision Industry Is Paying the Price 

While consumers may be the first to feel the effects of these fraudulent estimates, the collision repair industry bears the deepest, most enduring burden. Every time an insurer submits an artificially low estimate, repair shops are forced into a defensive posture – tasked with explaining to confused customers why the insurer’s numbers don’t match the reality of the repair. For many consumers, the appraisal appears to be a legal, authoritative assessment. After all, it’s signed under penalty of perjury. When the shop produces a supplement that adds $1,500 or $2,000 in overlooked repairs, it’s the shop that risks being viewed as dishonest or greedy – not the insurer that knowingly wrote the lowball estimate.

This reputational damage is only the surface-level harm. More insidious is the financial strain these practices impose on shops, particularly the independent businesses that make up the backbone of the Massachusetts repair industry. When insurers suppress labor rates, omit procedures and deny necessary operations, they force shops into a no-win dilemma: either accept inadequate reimbursement or walk away from the job entirely. Most shops can’t afford to walk away. They absorb the shortfall, dip into margins and shift labor around just to make the numbers work.

The result is a pervasive culture of “eat it or lose the job.” Some shops reluctantly comply, others silently absorb the loss, and some – unwilling to compromise their repair standards – simply stop accepting work from certain carriers. But the effect is the same: shops are being coerced into performing safe, complex and liability-laden repairs for reimbursement that doesn’t even cover costs.

And for those who refuse to cut corners, the pressure only grows. A repairer committed to OEM-compliant procedures and post-repair safety checks often finds themselves penalized – not compensated – for doing things the right way. The insurers’ suppression of repair costs doesn’t just threaten business sustainability; it threatens repair quality and consumer safety. Some shops are pressured to overlook hidden damage, skip scanning or ignore corrosion protection altogether because doing the job properly means doing it at a loss.

This isn’t merely a shop problem – it’s an industry-wide collapse in economic fairness. Independent repairers, family-run businesses and regional operators are expected to subsidize the insurer’s savings while operating under the false pretense that the original estimate was complete and lawful. They are working harder for less, under the shadow of regulatory language that – ironically – was supposed to protect them.

The question is no longer whether this practice hurts shops. It’s whether the regulatory and legal systems designed to protect them are willing to recognize what’s happening – and act.

Why Litigation Hasn’t Stopped This 

With the financial impact of these lowball estimates ranging from a few hundred dollars to $2,000–$3,000 or more per claim, it’s fair to ask: Why hasn’t this gone to court? Why haven’t policyholders lined up to challenge what, in many cases, amounts to blatant underpayment on a sworn legal document? The answer is as frustrating as it is familiar – the damage, while significant, is too fragmented to make litigation practical for most individuals.

A single consumer who is shorted $2,200 on Paint and Materials, diagnostics or structural repairs may be outraged, but pursuing legal action would cost more in legal fees than they stand to recover. This economic imbalance is precisely what insurers are counting on. By keeping underpayments just beneath the threshold of affordability for most lawyers, insurers exploit the gap between wrongdoing and accountability. It’s a textbook case of “too small to sue” – repeated thousands of times a year.

At Coverall Law, we’ve represented dozens of consumers in matters involving these shortchanging tactics. And the results are telling: in every matter where a consumer retained counsel, the insurer paid. Not once has a properly supported case gone to trial and resulted in a loss for the consumer. 

Even class actions, which might offer a path forward, face barriers. The practices at issue – underpaying by a few hundred or thousand dollars – are spread across a large population, but the “smoking gun” evidence is often buried in insurer-side internal policies, directives to appraisers or patterns that require industry-wide cooperation to surface. In the absence of subpoena power or a regulatory audit, these systemic abuses remain insulated from public exposure or judicial scrutiny.

What we’re left with is a regulatory blind spot: insurers knowingly underpay on sworn documents, while consumers rarely discover the loss, and even when they do, the legal system provides no practical remedy. Insurers understand this. In fact, their business model depends on it.

A Captured System: When Regulators Fail to Act 

As these practices continue unchecked, attention must turn to the agencies tasked with preventing precisely this kind of abuse – particularly the Auto Damage Appraisers Licensing Board (ADALB) and the Division of Insurance. These bodies are not just passive observers of the problem. Through inaction, they have become part of it. Despite widespread knowledge within the collision repair industry that initial appraisals are routinely underwritten in violation of CMRs, ADALB has failed to hold even a single insurer or appraiser accountable. 

This consistent pattern of inaction doesn’t merely erode public trust. It potentially exposes the Commonwealth to legal liability. In a July 2025 letter to Commissioner Sarah Wilkinson, we outlined the serious legal risks the state faces under the US Supreme Court’s decision in North Carolina State Board of Dental Examiners v. FTC. That ruling makes clear that state licensing boards composed of active market participants – as ADALB is – must be actively supervised by the state in order to avoid violating federal antitrust laws. If they are not, and their conduct reflects anticompetitive bias or enforcement patterns that favor dominant industry actors, the state itself may be held accountable.

Despite agency restructuring across other regulatory bodies in Massachusetts following that ruling, ADALB was allowed to remain under the oversight of the Division of Insurance – a conflict-laden arrangement given that the very insurers ADALB fails to regulate fall under the Division’s purview. The result is a structurally and behaviorally compromised Board, one that now operates with an apparent bias toward insurers while repairers are left without meaningful regulatory recourse.

The stakes of this failure are not abstract. If Massachusetts regulators continue to allow sworn, non-compliant appraisals to form the basis of thousands of claims each year while continuing to protect insurers from oversight, the Commonwealth itself may become a defendant in a future federal antitrust action. The legal theory is already well-established. Increasingly, the facts are undeniable. What remains to be seen is whether Massachusetts will act in time to protect its repair industry – and itself – from further harm.

Conclusion: These Estimates Aren’t Just Inaccurate – They’re Unlawful 

Let’s be clear: these are not just bad estimates. They are false legal statements, sworn under penalty of perjury and submitted not in error but with intent. When appraisers working on behalf of some of the largest insurers in Massachusetts knowingly leave off procedures, underprice labor and materials and suppress foreseeable repair costs, they are not issuing a rough draft or a starting point for negotiation – they are executing a strategy. That strategy relies on the assumption that no one will challenge them, that the public doesn’t understand the regulations and that repairers will eventually back down under financial pressure. For too long, that assumption has proven correct.

But the law is not on the insurers’ side. Massachusetts regulations make it clear: appraisals must be truthful, complete and based on all foreseeable damages and costs. These documents carry the weight of sworn declarations. When they are falsified, they are not simply misleading – they are potentially unlawful. If this conduct occurred in any other legal context – filing sworn affidavits with false numbers in a court case or falsifying financial statements under oath – it would be prosecuted. The same standard must apply here.

We cannot allow insurers to knowingly write inaccurate estimates, hide behind the shield of perjury disclaimers and place the burden of honesty and safety on the backs of small business owners. We cannot permit regulators to remain silent while consumers are shortchanged and the repair industry is slowly gutted by a thousand underwritten claims. And we cannot allow the Commonwealth to remain complicit – through negligence or design – in a system that places insurer profits above legal integrity and public safety.

It’s time for action. The Division of Insurance, the ADALB, the Attorney General’s office and the Legislature must confront what’s hiding in plain sight. Every day that this practice continues unpunished is another day that the law is broken with impunity.

We must hold these insurers accountable – not someday, not in theory, but now.

Want more? Check out the January 2026 issue of New England Automotive Report!