Save Big on Repairs without Compromising Safety!

By: Bob Glose – Senior Vice President, Operations & Enterprise Resources

Fleet managers are constantly pressed for ways to control costs, and saving money on collision repairs is one legitimate way to do it. But repairs are more than simply putting the vehicle back into service. The key objective is to make the vehicle safe to drive. That’s why the prudent fleet manager shouldn’t compromise on repair costs when it comes to safety. The goal should always be to make the vehicle safe again, in the most cost-effective ways.

So, how can you cut repair costs without compromising safety? Avoid purely cosmetic repairs and utilize high-quality used parts and certified aftermarket parts, for starters. New vehicles may not have many options for LKQ parts (like kind and quality), but when LKQ parts are available, the savings can be significant.

Other cost saving methods include authorizing repairs quickly and routinely picking up repaired vehicles as soon as they’re done, which shorten the time it takes to make repairs and keep replacement rental vehicle costs down.

The real test, however, comes when you’re dealing with judgment calls and what you don’t see – damage that isn’t obvious to the naked eye. If hidden damage goes unrecognized or if repairs are completed in a cost-saving way that leaves the vehicle unsafe to drive, the risk is another accident, life lost, and liability that could reach millions of dollars. Assessing the risk of a proposed repair is often a matter of having the experience to know what could lurk below the surface. A few examples will illustrate the point.

Frame damage. Unibodies and traditional structural frames are made to crumple in certain places in order to absorb the shock of an impact and protect a vehicle’s occupants. If the “crush” zones aren’t compromised, repair to the unibody or frame is acceptable, as long as it follows the maker’s standards and guidelines. The risk, however, is that what looks on the surface to be minimal damage can be something more, and the right choice is to replace the part or section of the unibody instead of repairing it.

Suspension damage. Suspension systems are a complex network of different parts bolted together to keep a vehicle stabilized to maintain proper control. Damage in severe impacts can be obvious, like bent parts that make it impossible to align the wheels. But in less severe accidents, suspension damage can be difficult to see or diagnose until the vehicle is repaired and aligned.

For example, suspension damage is sometimes overlooked when all that appears to be damaged is a wheel. In those cases, the shop may repair or replace the wheel without checking the wheel alignment, which would have indicated damage to the suspension. While the repair cost less, a system vital to maintaining safe vehicle control goes unrepaired and the driver is left at risk.

Steering system damage. A critical component of steering systems are the gears in a sealed unit called the steering rack, which transmits driver inputs to the wheels and tires. Depending on the severity of the impact the rack absorbs in a collision, those internal gears can be damaged. If so, the proper decision is to replace the entire steering rack. The key is knowing how to interpret the severity of the impact from the visible damage to other steering system components.

There are safe ways to save money on collision repairs, and there are risky ways. At CEI, the safety of repaired fleet vehicles is our first priority, and we manage to deliver on that priority while still saving fleets, on average, 8 to 12 percent per year on collision repairs. In 2016, CEI found nearly $16 million in savings on parts and labor alone. Still, whenever we’re in doubt about the integrity of a critical part, our philosophy is to replace it, because savings are never worth the lives at stake if something were to go wrong. We think that’s the same position every fleet manager should take.

What Does It Take To Achieve A Higher Subrogation Recovery Rate?

By Bob Glose, Senior Vice President, Operation and Enterprise Resources

There are five essential steps to the subrogation recovery process, each of which is subject to its own types of pitfalls, and is amenable to specific remedies:

Step One: Identifying the claims to pursue for recovery. This is the most crucial step in the entire process, and itself consists of careful evaluation of three factors: the kind of accident, the state in which it occurred, and the location of the damage.

     • Accident type. In descending order of frequency, CEI sees four main types of accidents: rear-end, intersection, sideswipe, and head-on collisions. However, in          terms of the percentage that has subrogation potential, we find the order reversed: head-on collisions more often have recovery potential, while rear-end collisions have the least. This order reflects the extent to which the fleet driver is responsible for the accident, which range from 0 percent responsible to 100 percent, and everywhere in between.

     • Location by state. Standards for recovery are established by state law and fall into four general categories, depending on the degree to which a fleet driver’s negligence is responsible for the accident. Some states prevent a fleet from recovering any damages if its driver is 50% negligent or more; below that level, a fleet can recover. Other states bar recovery if your driver is 51 percent negligent or more.

Then, there are states that bar a fleet from recovering if its driver is a little as 1 percent negligent. Finally, some states allow recovery under the principle of “pure comparative negligence.” This means that as long as a non-fleet driver bears some responsibility for the accident, the fleet may be able to recover damages.

     • Damage location. A critical factor in determining whether and to what extent a fleet driver involved in an accident was negligent depends on where on his or her vehicle the damage occurs and comparing it to the accident description. For example, in an intersection collision where the fleet driver was attempting a left turn, damage on the front right quarter panel is more likely to mean the fleet driver was negligent, whereas damage on the rear right quarter panel points to the other driver’s negligence.

Step Two: Identifying the liable party. There are three possibilities: an insurance carrier, a self-insured company, or an uninsured driver. Normally, this step is relatively simple and straightforward, as long each driver obtains accurate driver and coverage information at the accident scene, and it’s relayed on a timely basis to the subrogation team. It’s helpful to offer a mobile phone driver app or pre-printed accident data form for fleet drivers to keep in the glove compartment, and to be sure drivers are instructed in how to complete the information. Fleet drivers must obtain the name, address, and phone number of each driver, their insurance policy information or, in the case of drivers of self-insured fleets, the company’s name, and appropriate contact information.

Here, it is also worth knowing that it is possible to collect from uninsured drivers, as long as they are employed and live in states that permit wage garnishment. In those cases, knowing which states and having the know-how and time to pursue it is rare among recovery non-professionals.

Step Three: Preparing and sending the recovery demand. Printed recovery demands can be extremely lengthy. They include a claim letter that clearly states the amount being sought and the reasons, police reports, estimates and/or bills, and photographs. Accurate and complete documentation, along with a sound argument, are critical to recovering the optimal amount in a timely manner. How the documents are sent also makes a difference: electronic documents and use of the internet to transmit the demand can eliminate the costs of paper and postage, significantly reduce labor costs, and recovery cycle time.

Step Four: Negotiating the recovery amount. More often than not, there is initial disagreement over the demand. Typically, differences arise over the extent to which each driver was negligent, as well as whether the cost of repairs is reasonable. Differences over repair costs can arise not only over whether the most cost-effective methods and parts were used but over regional differences in parts and labor. The more experienced and knowledgeable the subrogation agent is, both in the latest trends in repairs and claims settlement by state, the more likely that their view will prevail.

Step Five: Collecting the settled amount. Even after a recovery amount has been agreed upon, it can still take effort to receive timely payment. Multiple follow-up communications are often necessary, and having a systematic way of tracking receipts is essential. Sometimes an agreement will not come and arbitration will be necessary.

Recovering damages from third parties responsible for collisions with fleet vehicles should be a high priority for every fleet operator. Money left uncollected should provide an incentive for fleets to take another look at their recovery programs. The benchmark is recovery, over the long run, of 25 to 30 percent of total fleet accident physical damage expenses. If your fleet isn’t close to that, there is much to be gained by upgrading your recovery program.

Body Repair Shop Selection: Are You Setting Yourself Up for a Nightmare Repair?

By John Wolford, CEI Vice President, Business Process, Quality, and Sourcing

Choosing a body repair shop is one of the most important decisions a fleet can make.  If you don’t have a ready network of high-quality body shops at your disposal when a fleet accident occurs, lots can go wrong:

  • Damage that makes the vehicle unsafe to drive – like a crooked frame or broken wheel rim — can be poorly completed or left undone.
  • You can be charged for needless repairs or needlessly redundant repair steps.
  • You can be charged for original equipment manufacturer parts when cheaper used or after-market parts were installed or were available.
  • The shop can overcharge for labor.
  • The repair can take longer than necessary, driving up your replacement rental expenses, just because you’re no more important than any other shop customer.
  • The shop can bill you for storage at $25 to $50 a day if you declare the vehicle a total loss.
  • The shop can decide to keep your vehicle until you pay its bill in full.

These events are by no means the rule in the auto repair industry, but they do occur. And when they do, they can cause nightmares that cost fleets thousands of dollars for redoing the repair, or even millions of dollars in liability if an unsafely repaired vehicle is involved in a fatal accident.

That’s why, as a fleet manager, you should never leave the choice of a body repair shop to chance, and why somebody highly qualified to evaluate repairs should always closely monitor the entire repair process, from examining damage photos and reviewing the estimate to expediting through completion and delivery.

Here are the questions you need to answer when choosing a body shop:

  • Does it have the right equipment, like a frame machine and a properly equipped paint booth?
  • Are its technicians well-trained in the technology required to repair your particular vehicle?
  • What are its labor rates compared to the average in its area?
  • What’s the shop’s performance record for such things as repair quality, average repair time, average cost, callbacks (items that need fixing after the vehicle is picked up), and supplements (additions to estimates after the initial estimate is approved)?
  • Is the shop insured against damages to your vehicle it may cause?
  • Does it assess storage charges when a vehicle is totaled?
  • Does it guarantee its repairs?

Answering these questions takes time and effort, and not every fleet department and very few fleet drivers have the time or experience to manage the repair process. That’s one reason that fleets hand over their accident management process to third-party providers that have a meticulously selected and managed, coast-to-coast network of independently-owned collision repair shops.

For example, before any shop is admitted into the CEI network of more than 4,000 sedan and light-duty collision repair centers and 1,000 medium- and heavy-duty truck repair shops across the United States, Canada and Puerto Rico, it must undergo a rigorous evaluation to be sure it meets all the criteria for high-quality repairs and customer service.

We also keep score on each shop it does business with, to be sure it continues to deliver the right level of service. Shops’ incentive to meet CEI standards is the continuing flow of business an accident management company provides, which helps them operate at higher levels of capacity than they might otherwise.

In addition, the best accident management companies carefully review shop estimates to control costs, ensure that all needed repairs are completed properly and on schedule, handle payment smoothly so your driver can pick up the vehicle as soon as the repairs are done, and guarantee every repair.

There’s a lot a risk when you entrust collision repair shops with your fleet vehicles. Be sure you minimize that risk by working with an accident management partner with a proven shop network.

Read previous columns in On Fleet Driver Management Archive

Close Gaps in Fleet Safety to Avoid Negligent Entrustment Liability, Part Four

Part four of a four-part series on negligent entrustment: ‘Onboard vehicle technologies that address areas of liability'.

By Brian Kinniry, Senior Director, Strategic Services, The CEI Group, Inc.

Part one of the negligent entrustment series summarized the main grounds for a fleet-related negligent entrustment case. Part two addressed how a fleet manager could build a transparent, fair, and enforceable safety policy to help safeguard the fleet from exposure to this form of liability. Part three walks through technologies unrelated to the vehicle. Part four investigates onboard vehicle technologies that can prevent accidents and reduce liability.

Training on New Technologies is Paramount to Avoiding Negligence

If your fleet is able to adopt some of the new technologies being outlined today, that is a great step to keeping your drivers safe, but the job is not done after installation. The rollout of these new technologies must be paired with training to teach your drivers how they work and where limitations lie. Make sure you document the training completion for all drivers, because every record of training and communication with your drivers will help prove that your company properly completed its duty of care.

Backup Cameras and Back-up Warning Systems

One of the older technologies in this list that can help prevent accidents, backup cameras, will be standard features in every new vehicle from 2018 on in the United States. Backup sensors in vehicles have also been around for a while and chime in when a driver gets too close to hitting an object; some systems can alert the driver of cross traffic behind the vehicle. While these provide a better experience when reversing, it is important to still check around the back of the vehicle, use the mirrors, and physically turn around for a full view.

Automatic Emergency Braking (AEB)

AEB is a great feature that can help prevent accidents by applying the brakes if the driver fails to do so themselves. It works in tandem with forward collision warning systems and occasionally works with backup warning systems. Most AEB systems work only for forward collisions and are great tools to prevent rear-end accidents. Upfitting your fleet can cost anywhere from 100-450 dollars, according to a 2014 report from NHTSA. On March 17, 2016, an agreement was reached to make AEB a standard feature by 2022, but many automakers have said that it will be a standard offering much sooner.

Lane Departure Systems and Adaptive Cruise Control

Lane departure systems use an audio, visual, or haptic measure to alert the driver that they are drifting out of their lane. Some systems can keep the vehicle in lane in a corrective or semi-autonomous fashion, while others simply provide a warning that might help a distracted driver.

Adaptive cruise control allows drivers to set a speed and follow distance for the vehicle in front of them, and the car will speed up or slow down in accordance with the car in front of them. Some systems can come to a complete stop and even work in congested traffic, but the driver still need to steer the vehicle.

Making the Case for These Technologies

Many of these systems will be standard or optional with increasing frequency in the coming years. Insurers usually take their time judging the effectiveness of newer safety features, so it will take some time for insurance premiums to drop. But adopting these new features early or simply choosing a model for your fleet that has many of these features standard will help prove that your company is taking active measures to keep drivers safe if a third party tries to sue for negligent entrustment. Prices will drop with increased adoption rates, but certain systems remain pricey.

Remember that these cases of negligent entrustment are looking for a chink in your fleet’s armor. This is why it is important to keep liability in mind while drafting your safety policy, finding a set of fleet vehicles, providing training, and handling remediation. And always remember to document every measure you take along the way.