You might be familiar with the following scenario: you get into a collision, you make a claim with your insurance company, you’re found not at-fault and get the go-ahead to repair the vehicle on the company’s dime, and then it gives you a list of car repair shops that can do the work.
In the above scenario, your insurance company isn’t just being helpful — it’s being strategic. When it’s paying to get your vehicle fixed, it has a vested interest in the work being done. And that’s why it will often refer you to what’s called a “preferred vendor.”
Trusted and pre-approved
A preferred vendor is an auto repair shop pre-approved by your insurance company that participates in a direct repair program (DRP). Most shops would probably jump at the opportunity to participate in a DRP because it’s guaranteed income for them.
One of the reasons insurance companies try and point you to preferred shops is because they’re trying to mitigate any instances of fraud.
In 2018, Aviva Canada completed an undercover investigation that revealed some auto shops in Ontario were intentionally damaging cars, installing used parts while they billed for new ones, and invoicing for “phantom repairs,” or repairs that never really happened.
In order to uncover these findings, Aviva deliberately crashed 10 private passenger vehicles in fender-bender scenarios, and found that about half of the repairs submitted by auto shops in the study were fraudulent. In fact, only one out of the 10 shops in the study acted honestly. This was costing the insurance company hundreds of millions of dollars every year, and no doubt translates into higher auto insurance premiums for customers.
To mitigate fraud, some insurance companies have even gone so far as to host their own repair shops, like TD Insurance does at its TD Auto Centres. Here, drivers can file a claim, speak with an advisor, get their car repaired, and secure a rental car if need be.
Can I use a different body shop?
You aren’t legally obligated to use the car repair shop your insurance company recommends, but doing so might be in your best interest, since it can make for a more streamlined process.
With preferred body shops, the shop and the insurance company are in direct communication with each other. The work that these shops do is guaranteed by the insurance company, the repair estimate gets sent directly to the insurance company’s appraiser, and no additional estimates are required.
Insurance companies approve certain shops because they have a reputation for honest work, have competitive pricing, comply with all regulations, and their procedures and equipment are approved by the industry.
That said, it’s important to understand that using a preferred vendor also means that your insurance company gets a lot of say in how your car is repaired. So if, for example, there are other repairs you would like done that don’t fall under the insured damage, you’re going to need to negotiate with the shop yourself on a quote for those repairs, and you’ll need to pay out of pocket for them as well.