State Warning To Registered Motor Vehicle Repair Shops: Do Not Suggest To Insured They Are Entitled To Reimbursement From Their Insurer For Any Money They Pay The Shop Over The Amount Already Paid For Repairs By Their Insurer

The Massachusetts Division of Standards (“Division”), the licensing authority for auto body shops and auto glass repair shops (“Repair Shops”), has issued a Notice about possibly erroneous insurance reimbursement information disseminated by some Repair Shops.

By statute in Massachusetts, no one can charge to repair a damaged motor vehicle unless they have a valid certificate of registration as a Repair Shop issued by the Division.

Also, by statute, automobile insurers cannot pay unregistered motor vehicle repair shops for repairing damaged motor vehicles under first- or third-party property damage coverages. When insurers have erroneously compensated unregistered body shops for insured repairs, the Attorney General has brought legal action against the insurers. See Agency Checklists’ article of October 6, 2015, “Encompass to Pay for Faulty Repair Work of Motor Vehicles.”

The Division’s concern about repair shops giving insureds incorrect advice about insurers reimbursements of Repair Shop charges

In its Notice, the Division states that it is aware that some Repair Shops are suggesting to their insured customers or potential customers that:

Insurers must reimburse or pay to claimants all of the amount of money claimants pay to a Repair Shop for motor vehicle repair or motor vehicle glass repair work (“Repair Work”).

If a customer pays the Repair Shop the difference between the Repair Shop’s charges and the amount the insurer pays for the Repair Work, the claimant is entitled to compensation for this difference from the insurer.

The Division states its position on Repair Shop charges and insurance payments

The Division’s Notice advises its registered Repair Shops states that Massachusetts law does not force insurance carriers to pay the specific sum that a Repair Shop may bill for repairs. The terms of the applicable policy and any applicable Massachusetts statutes govern an insurer’s obligation to pay for accident-related Repair Work to a motor vehicle. Thus, according to the Division’s Notice, insurance companies may be required to contribute a different amount toward repairing motor vehicle damage depending on the circumstances and the specific policy terms involved.

Repair Shops advised against suggesting insurers have a legal obligation and must reimburse customers for Repair Shop charges

Based on the Notice’s prior conclusion concerning the law not requiring automobile insurers to reimburse their insureds for additional payments made to Repair Shops beyond what they paid the Repair Shop, the Division’s Notice was unequivocal, stating:

Therefore, any suggestion to a Repair Shop’s customer or potential customer that an insurer has a legal obligation to pay for Repair Work at whatever rate charged for such Repair Work by the Repair Shop may constitute a false or fraudulent statement.

Similarly, any suggestion by a Repair Shop to a customer or potential customer that an insurer will or must reimburse the customer for all or a part of the customer’s payment to the Repair Shop is not supported by Massachusetts law and may be a false or fraudulent statement.

Division reminds registered shops of possible penalties for misrepresentation

The Division’s Notice also reiterated that “Repair Shops should be aware that such a suggestion [of insurer reimbursements] might be false and might subject the Repair Shop to penalties.”

The possible penalties enumerated in the Division’s Notice are that the Division may suspend or revoke a Repair Shop’s registration for:

A continuous and flagrant course of misrepresentations or the making of false promises, through advertising or otherwise, in the conduct of motor vehicle repair.

Making “any false or fraudulent statement in connection with any repair….:” and, in addition,  

Impose up to a $1,000 fine.

A copy of the Division’s Notice is attached.

Agency Checklists has attached a copy of the Division’s Notice which has more detail regarding the Division’s reasoning in support of its guidance to Repair Shops.

Any agency, auto damage appraiser, or property damage claim representative may find an official copy of the Notice useful if they interact with an insured seeking reimbursement for uninsured payments made to their Repair Shop.

For a copy: Click Here