What Is an Auto Body Repair Agreement?
An auto body repair agreement is a document detailing the terms of service between an auto body shop and a customer looking to have their vehicle repaired. This contract is essential to protecting the rights of both the automotive service provider and the consumer. Having such an agreement in place helps to avoid conflicts should any damage or delays occur during the repair process. If the project isn’t completed, the customer has a written record of what went wrong and can hold the repair shop accountable for the stated points, while also ensuring that the terms of payment are kept in mind.
In most cases, the auto body repair agreement will detail information regarding the extent of work being performed on the vehicle and what parts are available to be replaced. The customer is afforded protections by the shop providing them with a written assessment of the vehicle’s condition before it is worked on. This protects the shop should the customer claim that they repaired more damage than was needed, or that they attempted to cover up damage that was already present. In such a case , the shop can produce their records of the condition of the parts, thereby providing a paper trail to support their case.
The agreement also outlines the customer’s obligations to pay and whether the repairs are guaranteed. From this, the customer understands how long the repairs are guaranteed for and how long they have to pay for them. In the event that the auto body shop doesn’t deliver on the repairs, the customer will already have an understanding concerning their rights in the matter, enabling them to seek some form of compensation or refund for damage.
When discussing the sale of the vehicle or trading it in for a new car, the owner will have a much more difficult time proving that certain dents or scratches were repaired or left, and signing over a bill of sale without understanding all of the services the repaired vehicle underwent could lead to a multitude of problems. To ensure that all bases are covered, and the customer understands what work is done and paid for, the use of an auto body repair agreement is imperative.
Repair Agreement Basics
A well-drafted repair agreement should contain the essential details necessary to provide the body shop owner with a clear understanding of scope of work and allow both parties to know what is expected from the other party. An agreement should include the particulars of the repair, including materials, parts, and labor involved. The following are some common elements that should be included in an auto body repair agreement:
Description of Vehicle. Make, model, year, color, VIN number, trade-in information, odometer reading, etc.
Scope of Work. A detailed description of the work to be completed, any special instructions or requests from the customer, and the scope of work not to be completed (if applicable).
Cost. Complete cost breakdown based upon labor rates, parts, materials, sublets, taxes, etc.
Estimates. Preliminary estimates of the costs involved in the repair work. Potential costs for parts that are not readily available and may need to be ordered and any subsequent returns of parts that were ordered at the customer’s request within a specified period of time.
Payment Terms. Payment terms should include deposit amount, full price, collection costs, and late fees.
Payment Schedule. Terms of when payments are to be made and a fully executed signature page or other indication of approval by the customer.
Other Disclosures. Notification that the state has a law that requires shops to disclose to customers they have a right to choose the shop where their vehicles are repaired. The customer also should be advised they may return for any problem, repair, or part covered under warranty.
Rights Upon Early Completion. The customer should be notified that the court can recover payment for any fully completed and satisfactory early work performed and allowed a reasonable time within the contract to complete the balance of the work.
Non-Compliant Parts. The customer should be notified if any parts are not genuine factory parts and what the warranty terms are for those parts.
Customer’s Rights. The customer should be notified that the court may award damages as specified by law for any infraction of the agreement.
Collection Costs. The customer should be notified that the court may recover costs associated with collection of debts, including attorney’s fees.
Rights Under the Guaranty and Lemon Laws. Federal laws protecting consumers from defective warranties and products.
Right to Consumer Claim Information. The customer should be notified they have the right to request information on any limits of the dealer’s ability to resolve disputes and list of claims that have been filed during a specified period of time.
Your Rights Under a Repair Agreement
An auto body repair agreement creates legal rights and obligations between the auto body shop and the vehicle owner. Failure to adhere to these terms may result in legal action and damages. The auto body repair agreement may be broken into two parts: the estimate, which is a cost estimate for repairs and is not a binding agreement, and the order, which is a binding contract once it is completed and signed by the customer. Generally, the auto body shop binds itself to perform the agreed-upon work and assumes liability if there is a failure to perform. However, the auto body shop has no obligation to begin repair work until a written order has been signed by the customer. Likewise, the order must be signed by both parties for it to bind the auto body shop to the order’s total terms, including the repair price. Vehicle owners are not legally bound by the estimate, as it is not a final offer of services offered to the owner. However, if the vehicle owner chooses to authorize the body shop to begin its repairs, the repair shop is justified in relying on the terms of the estimate. Moreover, the owner is bound to pay the reduced price if he authorized the repair shop to perform the work at the estimated price with knowledge of the estimate’s terms. While estimates are not binding contracts, they do represent what the owner can expect as the cost for the repairs. Therefore, if the repair shop violates its estimate by significantly increasing the repair cost, it may be liable for the difference. In addition, if the owner does not have enough money to pay the increased price, the repair shop may be required to restore the vehicle to its original condition as a remedy for its breach.
Common Motor Vehicle Agreement Problems
Common dispute issues include repair of existing damage (for example, paint overspray) and collection of payment for extras the customer approved and which exceeded the body shop’s estimate. Kessler & Matura advise clients to insure that the complete vehicle is carefully examined and was analyzed both before and after the repair. In addition any estimate prepared by the insurance company usually must be reviewed by the shop performing the work in order to ensure that nothing has been missed. This is definitely where a second pair of eyes comes in handy to make sure that nothing gets missed. Some insurance estimates allow for some line items that may not be needed if others are utilized. Many times these line items will be omitted or accounted for on the paperwork.
Types of damage that should be documented include:
If there is some type of scratch or paint damage on the vehicle it should be documented. If there is paint damage due to overspray or from an object hitting the vehicle it should be documented. Make sure that all lights and turn signals are functioning before starting the repair work. And don’t forget documenting decal placement and any damage around the vehicle in an organized manner.
Most disagreements and disputes can be avoided by having excellent forward communications with the insurance company, your adjuster, and your customer. If you are very clear on the estimate – both written and verbally with the customer – about what the insurance company (and/or customer) is paying for, you should not have any problems. But if you have an issue make sure that you communicate it up the food chain to someone who can provide additional information. It also helps to initially provide ample time to negotiate the repair with the insurance company to let them finish their investigation and decide how they will be paying for it.
Choosing the Right Auto Body Shop
Selecting a reliable repair shop is essential to guarantee the quality of your auto body repair. Furthermore, since you sign an agreement to authorize any repair with an auto body shop, it is important to understand what the agreement covers and how to ensure that it protects your interests. Repair agreements should be done in writing. Auto body shops should not attempt to convince you to accept a verbal estimate for auto body repairs. A written agreement is required by New Jersey statute and will describe the terms and conditions of the repair shop services, including any additional charges that may be incurred. For example, a repair agreement should include a statement about the repair shop’s right to charge for any additional charges if such a change in repair arises after the repair agreement is signed, usually due to unforeseen parts or additional labor that is required to complete the repairs. New Jersey State law requires an auto body shop to provide you with a written estimate of all repairs that are required. A written estimate should also detail how much time will be required for the repairs and the name of the person who prepared the estimate and performed the inspection of the vehicle. Generally, the delivery of a written estimate should occur before any repairs are made to the vehicle .
Additionally, once the estimate is provided, the repair shop may only add an additional 10% charge for work that is actually done, unless the owner authorizes more of the estimate to be completed. A repair agreement is signed when you approve the entire estimate to be performed or the repairs up to a certain amount. The estimate should then become the contract with the repair shop. The repair shop must notify you before the total repair cost exceeds the estimated amount. However, if you authorized the work to be completed up to a certain number and the additional charges exceed that amount, then you will not be required to pay for the repair charges that exceed that estimated amount. Sometimes an auto body shop will state that it is a manufacturer or dealer approved shop. Oftentimes these shops will be paid directly by insurance companies for insurance covered repairs. If you want to find a reliable auto body shop, it is important to do research about the company before selecting an auto body shop to comply with auto body shop authorization requirements in the repair agreement. Be sure to ask other business contacts or friends to recommend auto body shops they may have used in the past for you. The state of New Jersey also has an online website lookup of repair shops at www.nj.gov/mvc which can also help you with verifying the history of the shop when you select a repair shop.
The Role of Insurance in a Repair Agreement
The interplay between auto body repair agreements and insurance, and the implications for vehicle owners throughout both the repair process and the ultimate transaction.
Understanding the implications of insurance coverage on an auto body store. First, the reason that any insurance is involved in the equation is because there was a collision to begin with. So the first piece of information is that there is a collision and you should contact your insurance and report the accident. The insurance policy will require that you cooperate with its investigation. That could mean preservation of evidence, including, for example, the vehicle which might need to be inspected by a third party to determine the proper repair strategy. It could include photographic evidence of the vehicle and other documented evidence. The next part of the equation is the decision whether to file a claim. If the collision is your fault, it is likely that it will be deemed a "collision" claim by your insurance company and the claims will be paid from your insurance policy. If the collision is not your fault, you may elect to leave the claim with the other driver’s insurance company (the underinsured or uninsured policy) or attempt to settle with that driver outside of insurance and without a claim being filed, where your insurance company does not have to become involved. Next, if the claim is going through your policy, all appropriately written repair agreements will have a payment relationship with your insurance company. This means that the repair shop and insurance company have a direct payment relationship. This means that the repair facility does not have to wait for you to pay the bill first and then get reimbursement from your insurer. The insurance company pays the repair facility directly. In some circumstances, there could be a reservation of the right to payment by the insured based on a failure to cooperate with the investigation or based on potential pre-existing damage. That does not mean that the insurance company is looking to stiff the repair facility, it simply means that once a claim is filed under the insurer’s policy, that policy and rights are triggered and controlled by the policy language and rights negotiated by the parties. If the claim is deemed to be in coordination with your insurer, once the repairs are completed by the repair facility, that repair facility will invoice the insurance company directly. The insurance company then has the right to do any review it chooses to perform. There can be some time out for the review by the insurer. Once the insurer determines that the claim is valid, the insurer will pay the repair facility directly.
Repair Agreement FAQs
When considering auto body repair agreements, you may have some of these frequently asked questions answered below:
1. Q: Why have an auto body repair agreement in the first place?
A: Orally agreeing to auto body repairs with a collision shop is always problematic for consumers. In previous blog articles, I’ve discussed how consumers are often unaware of their rights and do not know that they have the right to choose their own collision shop. Collision shops are often willing to cut corners, and do what they need to do just to get the car back on the road, but cutting corners is never something a consumer wants done to their vehicle—and unfortunately it’s usually detrimental to the vehicle. It’s your vehicle, so be proactive and go to the collision shop yourself. Also, never agree to additional repairs with a collision shop without getting confirmation from your insurance company. That authorization can be obtained by calling the insurance company and speaking with a physical damage representative, who will request an adjuster to inspect the vehicle to confirm that the damage requires additional repairs and approval of the cost for those parts and labor. If the physical damage representative can speak to the adjuster while you are present, that’s even better. If they can’t speak to the adjuster while you are present, they can return to you when they have confirmation. You can then tell the collision shop to await instructions from your insurance company with regard to those additional repairs.
2. Q: How much do these agreements cost?
A: With regard to auto body repair agreements, there are no upfront costs. The costs will be entirely covered by the insurance company once you are approved for the specific repairs. If the insurance company denies payment for specific repairs, then you will not have to pay anything. Keep in mind, after you sign the repair agreement, the vehicle is property in the possession of the collision shop, and they may have a lien against that vehicle for payment for all repairs . If you want to take the vehicle from the collision shop without paying them any money, you will need to request that they endorse their lien over to you so that you can take the vehicle to another collision shop or from the possession of the collision shop altogether.
3. Q: How long do these agreements last?
A: Once you sign the auto body repair agreement, you are obligated under that contract until the work is completed or until you and/or your insurance company terminate the auto body repair agreement. If you have a good collision service department with a detailed repair agreement, your vehicle repairs should be completed and your vehicle should be returned to you within a few weeks (unless the collision shop needs to order parts). Generally, the collision shops will take the time to write a very detailed auto body repair agreement so that they can prove to your insurance company that the repairs were necessary and they aren’t just trying to gouge your insurance company.
4. Q: What happens if you take the vehicle out of the shop before the repairs are completed?
A: As mentioned above, the collision shop is required to endorse their lien on your vehicle to you so that you can take the vehicle from the shop. If the collision shop refuses to endorse the lien, you are not allowed to take the vehicle out of their possession and without their consent. If you take the vehicle without their consent and without their signature endorsing the lien, that may be considered theft of services and the collision shop may choose to prosecute criminal charges.
5. Q: What happens if the auto body collision shop comes back to me and my insurance company and claims that they need to do more repairs than what was agreed to in the written agreement?
A: If the collision shop calls you or your insurance company and requests more repairs, it’s important to contact them as soon as possible to discuss the situation and the reasons for those additional repairs. You should not authorize any additional repairs without approval from your insurance company. Remember, if the collision shop takes it upon themselves to make those repairs without consent and your insurance company has denied those repairs, you (as the consumer) will be responsible for paying for those repairs.