Overview of the Dispute
In a significant move reported by RepairerDrivenNews.com, the Montana Insurance Department has called out Liberty Mutual for its handling of a consumer complaint regarding repair cost denial. Deputy Insurance Commissioner Frank G. Cote challenged Liberty Mutual’s settlement process, specifically their refusal to cover certain repair costs without sufficient evidence.
Details of the Case
The dispute originated when Liberty Mutual denied payment for blending services performed by a repair facility, asserting that the 50% blend time was “successful” and “well-established.” This response was deemed unsatisfactory by the department, particularly since a blending study conducted in 2022 by the Society of Collision Repair Specialists (SCRS) and major paint companies indicated that blending generally requires more time than a full refinish.
Understanding Blending in Auto Repair
Blending in auto repair entails seamlessly merging new paint with existing paint on a vehicle and has become a common source of contention between repair shops and insurers. Insurance companies often use a percentage of the full refinish time to estimate blend time; however, these approximations can differ significantly, leading to disputes like the one at hand.
Findings from the SCRS Study
The SCRS study revealed that blending takes, on average, 31.59% more time than a full refinish, in direct contrast to historical insurance industry practices that allocate only 50% of refinish time for blending. This discrepancy has driven changes in estimating systems, such as MOTOR’s Guide to Estimating (GTE), which now necessitates actual on-the-spot evaluations to determine the time required for blending accurately.
Complaint from Capital Collision
Capital Collision, the repair shop involved, filed a complaint on behalf of their customer, who had to pay out-of-pocket for the difference in costs. They contended that Liberty Mutual was manipulating data by underestimating refinished times without justification, thereby violating Montana Code 33-18-224, which prohibits insurers from disregarding repair costs identified by industry-standard databases.
Department’s Response and Future Implications
The insurance department’s letter to Liberty Mutual stressed the necessity for credible evidence and on-the-spot evaluations, asserting that unsupported opinions would be inadequate for substantiating claims. Liberty Mutual’s subsequent reimbursement of $340.13 to the claimant is perceived as a potential victory for consumers, revealing ongoing issues in the collision repair industry.
Deputy Commissioner Cote reiterated the critical need for fair treatment of consumers, promising to review similar complaints to ensure consistency and compliance with Montana law. This stance is an encouraging sign for auto insurance consumers, indicating a possible shift towards more equitable treatment by insurers concerning repair cost claims.