Body Shop May Not Force Insurer to Pay for Repairs not Performed

Fraud loses

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Allstate maintains a network of repair shops called Good Hands Repair Network (Allstate’s “network shops”). The network shops repair vehicles at the price set forth in Allstate’s approved estimates of repairs with no out-of-pocket cost to the insured other than the policy deductible. Insureds are not required to use a network shop and have the right to select the repair facility of their choice. A body shop sued because it charged more than the Good Hands Repair Network and Allstate refused to pay their rates and found fraud in there repair estimates. In Exclusive Auto Collision Center v. Allstate Insurance Company A/K/A Allstate New Jersey Insurance Company, Encompass Insurance; et al, Civil Action No. BER-L-1784-20, Superior Court of New Jersey, Law Division, Bergen (January 12, 2022) the New Jersey Court resolved the litigation.

Exclusive is not a network shop. Exclusive performed repairs on the 167 vehicles involved in the litigation. Exclusive had the vehicle owners execute an assignment to Exclusive of their right to receive payment of insurance benefits so that Exclusive could receive direct payment from Allstate. Under Allstate’s policy with its insureds, it is obligated to pay for the cost to repair or replace the vehicle to its condition at the time of loss subject to state laws and regulations.

RULE OF LAW AND DECISION

Exclusive, as assignee of the insured, can only get that which the insured agreed to by the contract with the insurer, which was what the insured was going to receive based on the adjusted costs.

Allstate’s obligation to pay was limited to the price that would be accepted by one of its network shops. Thus, Exclusive has no legal basis to claim that it should be entitled to more payment from Allstate.

The common law duty of good faith applies only when an agreement is reached.

Allstate began investigating Exclusive for insurance fraud in 2011. The parties have been in litigation against one another consistently since that time.

Allstate’s Motion for Summary Judgment was, therefore, granted.

ZALMA OPINION

When faced with an attempted fraud it is an insurer’s obligation to refuse to succumb to the claims of the fraud perpetrator and use the courts to defeat the fraud. Exclusive tried to recover more than they were entitled to receive for repairing a damaged vehicle by bringing multiple lawsuits against Allstate as assignee of the owner of the vehicles damaged. Allstate should be commended for its strength and refusal to be harassed into paying fraudulent claims.

© 2022 – Barry Zalma

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