Changing the Tide

by Burl Richards, ABAT President

I recently came across an article in Repairer Driven News that I found very interesting (read it yourself at

A California District Attorney is suing several insurers and information providers over total loss under-indemnifications; USAA, Progressive, CCC and Mitchell have been accused of creating a systemic means of undervaluing totaled vehicles, which results in carriers paying consumers “less than the actual value owed under the policies.” The suit alleges violations of Insurance Code, Unfair Competition Law and False Advertising Law, and it estimates that each underpayment averages $3,000 to $4,000. 

Shocking, right? Well, let’s be honest. The fact that it’s happening isn’t shocking…We’ve all known that something isn’t quite right when it comes to how insurers “value” claims for years. But it is pretty exciting to see a public official taking note of this egregious wrongdoing and making an attempt to defend her constituents. 

I’ve often wondered if insurance companies will ever be held accountable for shortchanging customers on total losses and also on repairable claims as they often refuse to pay for the OEM-required processes and procedures, which are necessary to perform a safe and proper repair. It’s great that one state is taking notice of the under-indemnification scheme that shortchanges customers and makes it increasingly difficult for body shops to run their businesses effectively. Now, we need to build on that momentum in Texas and across the country to ensure that consumers have access to mechanisms to fight against these types of immoral and unlawful practices.

ABAT has taken a stance on behalf of consumers since its inception, and one of our ongoing fights directly relates to this situation. Texas must mandate that all insurance policies include the Appraisal Clause to give consumers the opportunity to fight for proper indemnification. Without the Right to Appraisal, how can anyone prove that insurers are undervaluing these vehicles? They can’t, and that’s exactly why other insurers (like Progressive) have sought to follow State Farm’s lead when it comes to repairable claims and remove the Appraisal Clause from their policies in the Lone Star State.

We cannot allow that to happen. As the president of ABAT, I have a fiduciary and moral responsibility and obligation to our association, its members, along with its insured clients, to identify and disclose alleged under-indemnification schemes, which is why I’ve reached out directly to the Texas Department of Insurance and Progressive to make sure they’re aware of the ongoing situation in California. I want them to know that we’re onto them and we will not be silenced.

As a shop owner, I encourage every repairer in Texas to consider a few things when an insurer refuses to pay for something on your repair plan: Is it required and necessary to restore the vehicle to its pre-loss condition? Are you performing those processes and procedures? If so, don’t you deserve to get paid? And if not, are you really going to be able to sleep at night when the vehicle gets in a subsequent accident and someone dies because a safety feature didn’t perform the way it was intended?

Each time a shop removes a necessary process from their repair plan, even if your appraiser “promises to make it up to you some other way,” that gives the insurer ammunition to claim it’s not a prevailing practice. It allows them to tell other shops that they are “the only one” asking for that, and if a shop isn’t confident in standing their ground, they just might decide that means it’s not required. They may return an unsafe vehicle to a consumer, and that vehicle is driving on OUR roadways, endangering all of us. 

We know the game is rigged. How else could insurers be so wrong so often? But the Appraisal Clause allows us to bring these injustices to light. ABAT is going to keep beating this drum. We want to educate shops, so you can educate your customers. Make sure you attend the Texas Auto Body Trade Show next month, so you can learn more about our ongoing legislative efforts to require mandatory Right to Appraisal in all Texas insurance policies. Our industry needs to change the tide, and ensuring all consumers have a right to proper indemnification seems like the perfect place to start.

Want more? Check out the June 2024 issue of Texas Automotive!