Society of Collision Repair Specialists Executive Director Aaron Schulenburg this month confirmed that Allstate will continue to handle third-party car rental coverage on a direct-bill basis, allowing the claimants to avoid having to come up with the cash themselves.
Schulenburg told the SCRS open board meeting July 14 that motorists filing claims against Allstate policyholders appeared to be told during the COVID-19 pandemic they couldn’t set up direct billing to rent cars. Instead, SCRS members reported Allstate representatives instructed people to seek direct reimbursement.
“Direct billing” refers to situations in which an insurer pays the claimant’s car rental company directly instead of make use of the customer like a middleman. This is actually the opposite of “direct reimbursement,” to which a claimant pays for the rental and then submits a bill towards the insurer for reimbursement.
“Obviously, lots of people faced hardship during this time period,” Schulenburg said. “That just compounds the problem.”
Auto repair loan provider DigniFi has stated many Americans don't have an extra $500-$600 on hand for unexpected expenses. This could create a chicken-and-egg problem in a situation where claimant needs a car rental throughout a collision repair — but can’t manage to pay-out-of-pocket after which wait for reimbursement in the at-fault party’s insurer.
Enterprise reported that 2021’s length of rental stood at 12.7 days, up 0.2 days from 2021.
Driving the damaged car while saving to pull together the rental cash may not be an option for subsets of claimants either. CCC 2021 “Crash Course” data found 21.7 percent of repairable vehicles in 2021 were nondriveable, and 20.5 percent of all auto damage claims wound up using the car being declared total loss.
Schulenburg said the issue could be compounded by delays throughout the COVID-19 pandemic, during which the insurance coverage industry now use an online footing.
However, when SCRS contacted Allstate about member reports of consumers told they have to use direct reimbursement, the body shop trade group was told “that’s not necessarily the practice,” based on Schulenburg.
Allstate’s policy involves a progression, according to Schulenburg:
The first option would indeed involve the insurer pursuing direct reimbursement: The claimant is out of pocket for the rental and then requests reimbursement from Allstate.
If that didn’t work, the “second option” would see Allstate providing accommodations car payment up-front throughout the repair shown by the first estimate, Schulenburg said.
“They could receive that” after which submit a bill for the remainder of the rental costs incurred when the repair ran longer than the preliminary estimate suggested, Schulenburg said.
Allstate said any estimate would suffice here, according to Schulenburg. He said it didn’t have to be a virtual estimate.
CCC found supplements arose on 60.9 % of repairable vehicles last year. The typical supplement represented 18.7 percent of the $3,421 average repair cost.
Finally, if a third-party claimant “truly needed” Allstate to handle the rental bill from the start, Allstate would oblige them, based on Schulenburg.
“If they requested it, they should receive it,” Schulenburg said.
In certain states, for example Rhode Island, this is moot. The state requires the insurer to provide direct billing as well as direct reimbursement.
Schulenburg said Allstate gave him permission to articulate its policy towards the industry at the open board meeting.
Allstate’s intend to primarily seek direct reimbursement took full effect in October 2021, based on Schulenburg. But it’s not really a mandate, and the “tiered practice” described above still applies, he said he was relayed through the insurer.
“It’s not a firm and fast rule,” Schulenburg said. “… That’s what’s been expressed to us.”
Schulenburg said Allstate’s advice ended up being to possess the customer, not the body shop, contact the insurer to explain “the things that work for them” and
“It really may come in the claimant themselves,” Schulenburg described Allstate’s message. The customer might have more power compared to shop, he explained following the meeting.
Allstate can also be monitoring state department of insurance complaints for concerns, based on Schulenburg.
Schulenburg said July 14 the issue had only been observed on third-party claimants. First-party Allstate policyholders remained as receiving rental direct-billing automatically, he explained.
Allstate’s preservation from the third-party direct-billing option might help their policyholders as well. If the insurer fails to create a third-party claimant satisfactorily whole, the motorist may need to sue the at-fault party to make in the difference. After all, while the third-party claimant may have obligations under state regulations, they aren’t bound through the insurance contract — the at-fault party is.
