Once again, a question for Mr. Bischoff.

The regular practice of waiving deductibles is illegal in Washington state. That's the loophole. Regular practice.

Sometimes, (about 1 in 20 or 30 customers) someone will insist that we waive a deductible or he'll take his business elsewhere and sometimes, we might possibly waive part of the deductible. Usually not more than 50 bucks because the margins are too thin.

We do not solicit this waiving as it cuts into our profits and is by itself a foolish practice.

We try to sell the job on its merits and get the deductible, but there are some windows where you can eat 50 bucks and still make it worth your while.

Any info from Mr. Bischoff would be greatly appreciated.

He has been very forthright and I respect the way he is doing business.

Glass Shop in Washington State

If glass shops are forced to accept THEIR prices to be part of their network. AND the glass shop accepts their (low) payment offer... how is it their right to tell a shop what they can and can't do with their profit??

Some companies spend their profits advertising on tv. Some take out large newspaper advertisement, while really big ones advertise at sporting events. Pretty much whatever you want to do or think of to try and earn some business is fair game. So why would I not be able to waive a deductible for someone who can not afford it? I've agreed to THEIR price already. Why can't I give some of my profit away to someone who needs it?

I would completely understand if a shop was charging more and then giving away money. I just can't understand it when the payment amount is decided by them.

Serious question... Am I missing an important point somewhere?

JAC

Not sure what Mr. Bischoff would say but...

One thing I have heard from a legal point of view is that the insured's policy is a two-party contract between the insured and the ins. co. By the insured agreeing to a set deductible they are entering a binding contract to pay that amount in exchange for a lower premium. And by a glass shop paying in part of in full an insured's deductible the shop is becoming a third party to a two-party contract. Which I have been told is illegal in almost every state in all kinds of contractual matters.

I am no lawyer so this may be just hear-say.

Maybe those of you that know and understand policy language far better than myself can offer some comments. Maybe Mark1 or Mark2 if you are willing to reply?

I do agree that most state deductible laws do say "regular practice" or "no advertising" that they(glass shop) pays deductibles. I believe this was deliberate to allow for some situations, perhaps a failed repair and you want to give the customer a break on the replacement, etc. But as with most laws it is about the enforcement and the language. Many, many companies simply get around this with different wording or phrasing (cash back, rebate, meal coupons, etc.) that allow them to not be prosecuted. It is a simple word game I think now, and issue driven. And most states (other than Washington state perhaps) are simply not that interested in spending $$$ to prosecute the practice.

How any AGR company can get away with a huge mark-up to cover a deductible on most glass parts is beyond me with all the short-checking that takes place, but I guess the ins. co. still think AGR companies can and still do get away with it. I think in part this is why NAGS was pushed by the insurance industry to lower the NAGS LIST price. If a list was $1000 dollars I am sure it was hard for them to argue in court that a shop could not charge full list. But now that the list for that part is $200 it is a lot more difficult to charge $1000, you would have to show $800 labor which could be easily compared to other industries in a given area.

Just my thoughts.

You have the choice whether or not to sign the contract.

If any shop ever gets accused of the waiving of a deductible please post on this site. My state ins. comish. told me the only complaints come from competitor's and the word game makes it almost impossible to do more than a warning.

I believe a shop in Minnesota was taken to court for waiving deductibles and the shop won. The judge said since it is the shops responsibility to collect the deductible he has the right to waive some or all of it.

It is illegal to waive deductibles in MN. The law was passed in 2002 or 2003.

What if your state statute reads something like this...

It is unlawful for a service provider (as defined elsewhere- person who provides, advertises, or claims to provide services) to engage in a regular practice
of waiving, rebating, giving, paying, or offering to waive, rebate, give or
pay all or part of a claimant's deductible or claim for casualty, disability
insurance, worker's compensation insurance, health insurance or property
insurance...

Do you think this broad enough? Not that it matters if it isn't enforced. And as was mentioned above, if only competitors are complaining i am sure little will be done on the enforcement side.

Not that I agree with the practice, mainly because in the past companies did charge inflated prices to cover the deductible (I have seen copies of the invoices local agents received. $900 DW1217 for example or $1400 fw727 I think it was).

But I think I agree with the MN judge. If you are not overcharging to compensate for the deductible what harm does it do? As long as you are providing the same level of service, in accordance with the AGRSS standard now in place, how does it harm the consumer? I know many agents that refer policyholders to such companies. Who can blame them? If they know the ins. co. they work for has a pre-determined price (I mean contract price LOL)then why not look like the good guy and save your policyholder some of the out-of-pocket expense?

Like I said we do not pay deductibles (or any form of as a regular practice) but I can see the arguement for the other side of this issue as well. If we want to give up some of our sales $$$ to cover a deductible what harm does it present to the consumer?

Good discussion topic by the way everyone.

What if you don't waive or pay the deductible, you just finance it at 0% interest or payments until the year 2100?

I think the concept behind not waiving deductibles is akin to something along the lines us billing the insurance company a predetermined amount and collecting a portion of that amount from the insured. The portion we are collecting from the insured is fulfilling their contract with the insuror and technically, I believe, doesn't have anything to do with us. If we decide to discount the amount of the invoice, the insurors are technically entitled to it, not the insured.

That said, it would seem that if the insured bounced a check to us, or failed to pay the deductible, the insurance company would be responsible for it. But alas, we sign that protection away as well.

The financing angle won't work, because, again, we are simply an agent of the transaction between the insuror and the customer. I think we would also fall under a different set of rules for financing as well.

BUT........

If we agreed to pay a person an amount of money for carrying a pen or scratch pad in their car with our name on it and speak well of our company after we serviced their account, -- after we collected their deductible of course, it seems as if that would not be a transaction that involved the insurance companies at all.

I don't like it, but that seems to be a way around it.

It's pretty rare that we pay a deductible, but I still think it's our right to do so. I have personally seen a bill to an insurance company for less than the network price, be paid HIGHER. The insurance company sent a check back for the HIGHER network price. When questioned, they said "that is the price we pay for that windshield replacement".

Great point JAC, I have seen this as well. In fact, I have told several customers this when they ask why the ins. invoice is more than the "time of service" invoice. I have told them the exact same thing, that even when I submit the invoice for a lesser amount, the ins. co. pays me the higher agreed upon price anyway. So who are we to tell them they can't pay us more.

Glass Shop in Washington State:

Thank you for bringing this issue to my attention for clarification. The most direct way to approach this issue is to refer to the specific terms of the State Farm® National Offer and Acceptance Agreement, as shown below.

Section VI. Commitments.

The Glass Company agrees it will:

M. Not give or offer any gifts or gratuities or other incentives including deductible waivers to State Farm Customers, agents or employees.

I believe you answered your question when you stated the practice of waiving deductibles in the state of Washington is illegal . It is also a direct violation of the agreement under the terms stated above that all participant shops agree to. This violation could be grounds for removal from the program.

If you would like to discuss please contact me at (309) 766-0660.



Bob Bischoff

National Glass Manager

State Farm Insurance Companies

How about State Farm waiving deductibles, isn't that illegal as well?

Perhaps that is why they are no longer doing it in several states starting January 2006? I doubt that is the real reason, but it is interesting.

AHH, but if you are not on thier o&a then you are not bound by thier terms!

unless.... your state has a law in place to prohibit the practice (paying deductibles as a regular practice, or advertising that you do) as well.

But as another poster said, how they enforce that type of law, and if they enforce it at all, is a totally different story.

What I really don't get is why is the glass shops responsibility to collect a deductible. Why doesn't the insurance company charge that to their own insureds and collect it themselves? I have never really asked this question in all my years. Just curious if anyone knows! I tell my customers it is like a copay when you visit the doctors office.

The answer to the deductible question is... There is no claim to be paid until the payments for the insured have reached the full deductible. In reality, the deductible is the first thing paid, not the last. Once the deductible has been reached, the Insurance Company will then handle their part.

Statefarm in my area tells the customer to not use us because we do not waive deductibles,and to find someone who does.Heck;they even sent me copies of the yellow pages with all the other shops waiving deductibles,anywhere from $50-200.OUTRAGEOUS!!Our insurance commish says it is an industry problem,not his.Legislators can't seem to grasp what is involved with auto glass and we cry foul all the time.Problem? there is no problem they say.If everybody else does why not you?Try to explain to our customers what is going on but they would much rather give in to their insurance,than speak up.After all their insurance knows best i guess.

Karl I would most definately call Bob Bischoff if your local State Farm agents are referring customers to other shops and promoting that they will pay the deductible.

Not sure it will get you very far, but his tone at the AGRSS convention in Vegas was very firm on this issue. Give him a call it can't hurt.

KB-

I like your idea of the insurance company collecting the deductible. They can bill the insured when their premiums are due and then the contract they have with the insured is satisfied and the agents will loose their incentives to save the insured money.

Bob B. what is your take on this?

I like the no deductible like Fla. and Az. have. State law does change things We should be nagging our state people for change, including no 3rd party with conflict of interest.

Thanks RO
I do think their should be a choice of deductibles to keep car insurance rates down. It would be a lot easier on this entire industry if we could just let the insurance companies collect what is due on a policies claim.
That would knock down insurance fraud too. Just like the insurance industry wants