By Angie Zinzilieta In the past, property restoration businesses, body shops, and mechanics were made or broken by what is referred to as a “preferred vendor list,” which was created by large insurance companies (i.e. Nationwide, Allstate, State Farm, Progressive, etc.). Being an insurance company’s “preferred vendor” means a large quantity of work for the vendor, but what does it mean for the policyholder/you?
Generally, to become a “preferred vendor” with one of the large insurance companies, you have to agree to work off a discounted price list in return for a large amount of work. This becomes appealing to restoration businesses, body shops, and mechanics who no longer need to spend as much money marketing themselves. By sacrificing some of their price margin for a higher quantity of work, they are now able to make more money.
So, what happens when a policyholder does not use the insurance company’s “preferred vendor”? Generally, policyholders have the lawful right to hire anyone they choose to perform claim contracting services, including restoration services, body work, mechanic work, etc. Insurance companies cannot increase any policyholder’s rates based on who they chose to work for them.
Our office often hears stories of large insurance companies trying to bully policyholders into using its “preferred vendors.” Our clients are told that the restoration business, mechanic, body work technician is “not insurance friendly,” which leaves our clients believing that they will be on the hook for the claim. This is not true. Our office has handled multiple bad faith cases against the large insurance companies for substandard work performed by a “preferred vendor” who cut corners.
Ask yourself why the large insurance companies fight so hard for you to use one of their “preferred vendors.” If any restoration business, mechanic, or body shop is receiving most, if not all, of their leads/business from “preferred vendor” calls, do they really work for the policyholder? Or do they bend to the whim of the insurance company to avoid biting the hand that feeds them? If a restoration business, mechanic, or body shop is guaranteeing not to charge the insurance company after a set amount is determined, then what do they do when they reach that limit and there are still issues? Will they continue to work for free? Or do you leave the job half-done and move on to the next job? How are they really helping the policyholder cut future costs?