Direct Repair Providers, Steering Laws and Car Insurance

Car insurance companies process about 25 million repair and replacement claims every year. So they’ve got a pretty good grip on which repair shops can be trusted to do good work at a good price. Most insurers these days enter into contractual agreements that designate trusted shops as Direct Repair Providers (DRPs). The insurer recommends its DRPs to its policyholders when they file a claim; the DRPs agree to comply with the insurer’s requirements regarding how to write an estimate, report a claim, which parts to use, what and what not to charge for and other specifications.

The Direct Repair Providers system is  a mutually beneficial arrangement: the repair shop gets a steady stream of business and the insurer is protected from fraud and rising auto repair costs. But what do you, the policyholder, get out of the deal? Is it in your best interest to use the DRP your insurer recommends?

Your insurer has every right to suggest that you use its preferred Direct Repair Providers. In many instances, it will be to your advantage because car insurance companies negotiate volume rates with their DRPs that save you and them money. All well and good. But if an insurer tells you that you must use its DRP, that’s running afoul of anti-steering laws. Steering is the act of directing you to or away from a specific repair shop or requiring that repairs be made by a specific shop or individual – and many states including California and New York now have specific laws on the books prohibiting the practice. Even if your state doesn’t have a specific anti-steering law, most states already allow you to choose your own auto repair shop. If you feel you’ve been steered, contact your state’s insurance commissioner.

Also be wary of any insurer who tells you that if you take your car to the shop of your choice that you’ll have to pay the difference out of pocket if the labor charges are higher than those of the DRP. Insurers are required by state law to pay any reasonable and customary charge regardless of who performs the work. So use the Direct Repair Providers if you’re happy with the service they offer, but feel free to get estimates on your own and use the repair shop of your choice.