Has the Auto Body Industry Lost Its Way? – Part 2

by Jerry McNee, AASP/NJ Collision Chairman

This month, we pick up where we left off in the October issue (see grecopublishing.com/nja1025collisionchairmansmessage) to breakdown the “broken” process even further.

Who is the repair professional?

Insurers are acting as the repair professional without education, training and experience to repair a vehicle properly, controlling cost over required procedures to maintain control, while hiding behind Section 64 and New Jersey Automobile Insurance Cost Reduction Act (AICRA) as they control the outcome.

You need to understand whether AICRA has relevance to the auto body repair business and whether it equates to, or impacts, collision repair the way it does medical/PIP claims. Here’s a breakdown:

1. Scope of AICRA

The Cost Reduction Act was written primarily to address medical costs under Personal Injury Protection (PIP) – the “no-fault” medical coverage every NJ auto policy must provide.

It sets PIP coverage options, treatment guidelines and medical fee schedules.

•  Its main focus is healthcare providers (doctors, hospitals, physical therapy, chiropractic, etc.), lawsuit thresholds and insurance fraud in medical billing.

Direct collision repairs and auto body shop payments are not governed by AICRA.

2. Why AICRA Matters (Indirectly) to Auto Body Businesses

While not written for collision repair, there are indirect effects that do ripple into the body shop industry:

Cost containment mindset

•  AICRA was built on the principle that insurers should pay only what is “reasonable and necessary.”

•  That same language/logic often appears in how insurers argue auto body repair payments — “we only pay what we can get it done for.”

Insurer reliance on statutory shield

•  In medical claims, insurers cite AICRA and fee schedules to limit payouts.

•  In auto body, while there’s no AICRA-equivalent statute, insurers often try to import the same reasoning, pressuring shops to accept prevailing rates or DRP terms.

Consumer perception

•  AICRA was sold to the public as a way to “cut costs and stop fraud.”

•   Insurers use that same cost-reduction narrative in  body shop disputes, suggesting that higher repair bills equal waste, even though no statutory fee schedule exists for auto body.

3. Key Difference: No “Body Shop Reduction Act” Exists

•  For medical providers, AICRA creates legal limits and fee schedules.

•  For collision repair, no equivalent statutory framework exists in NJ.

This means:

•  Insurers cannot point to AICRA as authority to reduce collision repair payments.

•  Payment disputes with body shops are governed instead by contract law, insurance policy terms and sometimes consumer protection statutes (e.g., NJ Consumer Fraud Act).

4. Practical Takeaway for Auto Body Shops

•  AICRA ≠ Auto Body: It does not apply to repairs directly.

•  Insurers may “hang their hat” on AICRA’s cost control philosophy, but legally, it is a medical statute only.

•  For shops, the right argument is:

“Unlike PIP medical, there is no statute capping or defining what is payable to collision repairers. Repair costs are based on industry standards, OEM procedures and what is necessary to restore the vehicle safely –not on an insurance fee schedule.”

Conclusion

The New Jersey Cost Reduction Act is relevant in principle (insurers borrow its cost reduction language), but it does not equate to auto body repairs in law. Collision repair businesses are not bound by AICRA, and insurers cannot legally invoke it as a shield to reduce shop payments the way they can with medical claims.

The Bottom Line

This isn’t about numbers. It’s about lives, trust and integrity.

Insurers put profit over people. They manipulate laws, underpay claims and dictate unsafe repairs back to consumers. That’s not protection. It’s exploitation.

Consumers deserve better. Shops must do better. Lawmakers must act. Because in auto repair, “good enough” is never good enough.

So we must ask: Is this really about protecting consumers, or is it about maintaining corporate control and profits?

Make no mistake – your voice matters.

Contact your local representatives today and show your support for Senate Bill No. 4534. Together, we can make a difference.

To find contact information for the current members of the Commerce Committee, please visit bit.ly/CommerceCommittee. Click on each Senator’s name, then click “Contact your legislator” below their portrait to fill out the contact form.

Stop sitting on the sidelines – it’s time to get in the game! As a member of AASP/NJ, you gain access to unmatched training, education and industry resources. From the nationally-recognized NORTHEAST® Automotive Services Show to exclusive member programs, advocacy and the latest industry updates, no other organization delivers the opportunities and value that AASP/NJ provides. Join today and make sure your voice is heard, your business stays ahead and your future is stronger with the support of the only association built to serve New Jersey’s automotive repair professionals.

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