Has the Auto Body Industry Lost Its Way? – Part 1

by Jerry McNee, AASP/NJ Collision Chairman

The Bean Counter Mentality

There was a time when insurers partnered with highly qualified shops – those that invested in training, equipment and proper procedures to ensure safe, professional repairs with the client’s best interests at hand. That era is long gone. Today, bean counters dominate. Everything is reduced to numbers. The result? Necessary procedures are skipped, safety is compromised, and NJ consumers pay the price.

The Complexity of Modern Vehicles

Modern repair isn’t just about fixing dents. Advanced driver assistance systems, OEM requirements and calibrations demand training, specialized tooling and constant education. Yet insurers behave as if nothing has changed in 30 years, treating repairs as routine line items. Cutting corners today isn’t just unprofessional – it’s dangerous.

A Broken Process

The system is collapsing under delays, supplements and poor oversight. 

Doing a few Post-Repair Inspections (PRI), I reviewed an estimate that had seven supplements totaling $45,000; yet not a single calibration was included. How could the shop and appraisers “miss” something so critical? I’ve viewed photos of this vehicle repaired on a 30-year-old frame machine that had no business in a facility today. 

Here’s another case: A vehicle recently repaired is now worth 50 percent less due to the repair shop unprofessional, industry standard repair. Another vehicle inspected three times by the insurance company was declared “repaired” yet left structurally unsafe. These aren’t exceptions; they’re routine. And who suffers? The unsuspecting owner, whose second-largest investment becomes a liability.

Shops Complicit in the Decline

It’s not only insurers. Too many shops chase volume, skip training or rely on outdated tools. A 30-year-old frame machine or a 10-year-old welder or little to no training doesn’t make you a professional; it makes you a liability. Producing “cheap and fast” work to satisfy insurers only deepens the crisis.

The Insurance Monopoly

Insurers mislead customers with half-truths, smokescreens and outright lies. Appraisers follow orders they know are wrong. All the while, insurers claim to protect policyholders while underpaying, undercutting and dictating repairs – hiding behind phrases like “prevailing competitive pricing.”

This isn’t consumer protection. It’s a monopoly.

When Did Doing the Right Thing Become So Wrong?

True professionals accept responsibility for restoring vehicles to safe, pre-loss condition. That requires investment, education and integrity. Insurers carry no liability for the quality of repairs, yet they control the process – dictating safety outcomes while bearing none of the risk.

A Path Forward

There is hope. New Jersey Senate Bill No. 4534 would protect consumers from abusive insurer practices. The bill seeks to require all automotive insurance policies issued in the Garden State to include the Appraisal Clause. (Read the bill in its entirety at bit.ly/SB4534.)

Predictably, insurers will scramble to oppose it – not to protect policyholders, but to protect their control. 

Other states are already ahead. 

•  Oregon has required appraisal clauses since 2010. 

•  Rhode Island strengthened policyholder rights in 2023. •  Massachusetts mandates appraisal in all personal auto policies. 

•  Texas (effective Sept. 2025) and Washington (effective Jan. 2026) now require mandatory appraisal clauses. 

•  North Carolina provides appraisal rights through statute. 

New Jersey must be next!

The Evidence: Post-Repair Inspections (PRI)

As a professional, I’ve seen firsthand what these PRI outcomes produce: 

•  Missing welds 

•  Unperformed calibrations

•  Misaligned radar sensors

•  Aftermarket structural parts

•  Totaled vehicles returned to the road, to name a few.

A Ticking Time Bomb

Every unsafe repair is a ticking time bomb. Not if, but when tragedy strikes. Insurers hide behind NDAs, burying the outcomes of PRI. Legislation like SB 4534 isn’t optional; it’s urgent.

On another PRI following two DRP shops’ corrections, our inspection uncovered 38 missing welds, no corrosion protection and zero calibrations or factory scans. The customer’s only complaint? Color match. Insurers had already inspected the vehicle three times and declared it industry standard repair. 

The vehicle was ultimately totaled, then sold at auction, placed back on the road to endanger another unsuspecting family. That’s not an oversight. It’s negligence.

While performing a PRI, one of our Board members discovered that a shop had wired resistors into a seatbelt harness to trick the computer into thinking seal belts don’t require replacement. Talented? Clever? Stupid? Dangerous? Absolutely! Kudos to the shop and the level of professional training and experience to uncover and disclose the hidden sin. 

Education Is Key

Repair professionals must do more than fix vehicles. We must educate lawmakers, consumers and each other, along with our clients. Third-party appraisals are not luxuries; they’re consumer rights.

I’m not anti-insurance. But coexistence cannot come at the cost of safety, professionalism or integrity just to satisfy insurance company egos or KPIs.

The Legal Reality

• N.J. Stat. § 17B:30-13.1: Unfair claim settlement practices.

• N.J. Stat. § 17B:30-13.1: Bans misrepresentation, delays and unfair settlements.

• N.J.A.C. 11:2-17: Details on the rules insurers must follow.

• N.J. Admin. Code Title 11, Chapter 2, Subchapter 17: Regulations defining unfair claim settlement practices and rules insurers must follow. 

Under § 17B:30-13.1, the law says no person (insurance company, etc.) shall engage in unfair claim settlement practices. Certain specific behaviors, when done with such frequency as to indicate a general business practice, are unfair.

I’ve pulled a few requirements. It’s open to debate: would or can you say that the insurers are following this statute? 

Here are requirements that I see violated daily:

• Misrepresenting facts or policy provisions.

• Failing to act reasonably or promptly upon communications regarding claims.

• Not attempting in good faith to settle when liability is reasonably clear.

• Compelling insureds to litigate by offering substantially less than the amount they would get in court.

• Delaying by requiring duplicative documentation (prelim report plus proof of loss with same info).

• Failing to explain denials or compromise offers in writing, in relation to policy and law.

• Lying or misleading about what the policy covers.

• Not responding to claimants. 

• Denying payment before looking at all relevant information.

• Waiting too long to say yes or no when documentation is complete. 

• Even when it’s obvious an insurer is responsible, they drag out or make unreasonable offers.

• Making an offer so low that the insured has no option but to sue.

• If ad materials promised something, insurer can’t use that to mislead or underpay.

Do Any of These Sound Familiar?

The New Jersey Department of Banking and Insurance (DOBI) has yet to find an insurer in violation even when citing their own statute! It’s completely shocking and a disservice to NJ consumers. Who are they really protecting?

Insurers violate these daily, yet regulators look the other way – even as rates have climbed 50 to 80 percent in just five years.

Sighting Delay, Deny and Defend

Actuaries determine policy amounts based on loss ratios. For every 10,000 policies, there are approximately 600 claims. Despite this, insurance companies are reporting a negative loss ratio – but mathematically, the numbers don’t add up.

Let’s view this example. 

Full coverage for a standard policy is $2,800-$3,500. Minimum liability $1,200-$1,400. 

Let’s keep it simple.

• 10,000 policies times $1,000 each = $10M collected.

• Average NJ claim: $6,200 × 600 claims = $3.7M paid.

That’s 37 cents on the dollar. The rest goes to lawyers, lobbyists, bonus and profits – while DOBI and consumers are told costs are “out of control.”

Section 64: The Shield

Insurers hide behind Section 64 of the Auto Insurance Cost Reduction Act, but it only applies if four conditions are met. If even one is missing, the defense is invalid. Yet, insurers invoke it anyway to deny fair payments and accountability.

To invoke Section 64 properly, the following must be satisfied:

1.  Existence of a “financial arrangement.” The insurer must have some financial arrangement with one or more auto body repair shops (or a network of such shops) for repairing vehicles under collision, comprehensive or physical damage coverages.

2.  Insured’s right to choose repair shop. The insured must be allowed to select a repair facility of their choice, rather than being forced into the insurer’s network. That is a central protection of Section 64.

3.  Acceptance by chosen shop of same terms and conditions. The repair shop chosen by the insured must accept from the insurer the same terms and conditions, including but not limited to price, that the insurer offers to the shop or network of shops with which it has the most generous arrangement.

4.  Written notification to the insured. Before any repair is undertaken, the chosen repair shop (if not a network shop/non-DRP shop) must provide the insured with a notice (in a form to be established by the Commissioner of Banking and Insurance) warning that by accepting the same terms and conditions as the insurer’s most generous shop, the insured may jeopardize any manufacturer or dealer warranty or lease agreement. This notice must be signed by the insured before repairs begin.

In short:

Section 64 itself is valid law. However, if any of the four required conditions are missing, the insurer cannot properly invoke Section 64 as a defense or shield in that instance. In such a context, it would not be enforceable.

Key questions to consider:

1. Were you offered their DRP agreement upfront?

2. Have they attempted to steer their policyholder away from your facility?

3. Were you offered the same terms and conditions as other providers?

4. Did the client sign the written notice that could potentially void their warranty or lease agreement? Insurers often rely on the argument: “We only have to pay for what we can get it done for.” 

Consumers pay their premiums with the expectation that their insurer will be there in their time of need. But too often, they’re left shortchanged, alone and confused – fighting against a system built to minimize payouts, not maximize safety.

Stay tuned for next month’s issue, where I’ll break things down even further as we take a look at whether or not the New Jersey Automobile Insurance Cost Reduction Act really does equate or impact the auto body repair business.

Want more? Check out the October 2025 issue of New Jersey Automotive!