Volume 11, Issue 3 - May/June 2009

I n d e p e n d e n t ’ s D a y

State Farm in the Spotlight
by Dave Zoldowski

Much of my time during the month of April was spent dealing with member concerns over the recent correspondence from State Farm Insurance concerning its Offer and Acceptance Program (see related story on page 10) .

As soon as the Independent Glass Association (IGA) received word of this change it took immediate action. The IGA officers have been in contact with State Farm officials from the start and have prepared the following questions for State Farm to address at our May Independents’ Days conference. 

1. What is State Farm’s definition of “pre-loss condition”? 

2. The O&A requires use of the least expensive glass regardless of whether or not logos and insignias are an issue. Was it State Farm’s intent to tell O&A participants they must use the cheapest glass regardless of quality issues?

3. What’s next? Will State Farm next be requiring the use of the cheapest moulding and/or adhesives available?

4. Under a strict interpretation of the O&A, the least expensive glass parts typically would come from a salvage yard, yet industry standards preclude the use of salvage yard glass in most cases. Will State Farm clarify that it is referring to new glass and not salvage glass?

5. Section V(B) of the O&A agreement states that the “Glass company agrees that it will (B) perform quality glass services using methods and materials that meet or exceed the vehicle manufacturer’s original structural integrity and retention characteristics. Perform quality glass services in a workmanlike manner using parts that serve to return the vehicle to its pre-loss condition.” A customer’s agreement to allow non-insignia glass does not relieve the O&A signer from his obligation under the above. How will State Farm reconcile this?

6. Section VI (L) of the O&A says that a participant may “not under any circumstances submit invoices for any jobs that may be fraudulent or in violation of any law.” Would billing for a NAGS part (when we all know NAGS does not make parts) and installing a different part constitute insurance fraud?

7. Likewise, State Farm’s O&A agreements specifically say that you cannot charge the customer an additional fee. Though State Farm is saying that can now be done in this case, it is not included in the actual agreement. How will State Farm remedy this?

8. State Farm suggests that if a customer wants logo glass, the customer may be billed directly for the difference in price, therefore the prices for which State Farm reimburses and the company’s records will actually be distorted by this fact. What mechanism is State Farm putting in place to include these up-charges when it determines the self-determined “usual and customary” pricing it reimburses glass shops?

9. In some cases, the dealer part, though more expensive, includes mouldings and other attachments while the part reflected in the NAGS List Price does not. How is such a scenario being handled?

10. Will participating shops be held harmless by both State Farm and its policyholders for installing what they as professionals believe are inferior glass parts because they will not be reimbursed for non-inferior parts? 

11. State Farm’s FAQ sheet says that “LYNX Services, in consultation with State Farm, will exclusively maintain a list of NAGS part numbers for which there are documented, confirmed and current deficiencies in form.” How is that information being collected and maintained? How quickly is it disseminated? How will shops gain access to it? What happens to glass shops that find inferior quality parts delivered? 

And while this policy may have the greatest implications for O&A participants, it will also affect non-participants as well. State Farm suggests that questions on individual customer issues be directed to the program administrator. The experience of many IGA members is that the often leads to an attempt by the administrator to steer the job elsewhere. 

As I indicated previously, IGA is presenting these and other questions to State Farm officials at our annual conference. Based on their response, IGA will determine its next steps in providing members tools to help educate their customers, car dealerships, consumer groups and other insurance policyholders to these changes as well. 

Rest assured, we will take whatever action, public and private, we can to protect the best interests of independents. 

Dave Zoldowski is president of AutoOne in Brighton, Mich., and serves as president of the IGA. Mr. Zoldowski’s opinions are solely his own and not necessarily those of this magazine.

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