Some auto insurance companies use a direct repair program to provide repairs for their policy holders. In this type of program, a collision shop and an auto insurance company complete a contract to provide repairs for the insurance company's claimants. First used in the late 1970s, the concept became more common in the late 1980s and early '90s.
This is how a direct repair program works: You are involved in an accident and contact your auto insurance company or the insurer of the at-fault driver. The auto insurance company then refers you to a network of conveniently located repair facilities that offer a limited lifetime warranty on the repairs to your vehicle. The service might also offer on-site rental car arrangements. Because the insurance company and the collision shop handle all the details and paperwork, you do not have to.
The collision shop and the auto insurer determine the specific provisions of a direct repair program. The advantage to the collision specialist is the steady stream of referrals. A collision shop might participate in one, or several, insurance companies' programs.
Although this type of agreement can generate additional paperwork for a body shop, it can also prevent delays. When an additional part is needed for a repair, the shop does not have to stop working on a vehicle to wait for an insurance adjuster to re-evaluate the situation. Insurance companies promote the advantages of a direct repair program to their customers as convenience, warranties on repair work, and the freedom from estimates and other paperwork details.
Some direct repair program contracts between insurance companies and collision specialists require the repairer to write all estimates using aftermarket or salvage parts. Other details can assign the responsibility of any non-essential repairs to the customer. Some contracts also require the collision shop to shoulder all liability for repairs performed and indemnify the insurer from any lawsuit the customer might bring.
In some states in the U.S., legislation requires that insurers must admit any qualified collision repair shop into their direct repair program. This prevents insurance companies from limiting the number of automotive body repair businesses or locations with which they have agreements. In these instances, any automobile body repair business or location that meets objective criteria can participate.