Title: Why Body Shops Relying on Insurance Companies Is Broken—and Unlike Any Other Industry

Why Body Shops Relying on Insurance Companies Is Broken—and Unlike Any Other Industry

Let’s be blunt: auto body shops are the only businesses expected to negotiate, justify, and often beg to be paid for the work they perform—after the work is already done. And they have to do it with the very people who have a financial incentive to not pay them in full: insurance companies.

Now compare that to how other industries handle insurance reimbursements. Let’s break it down.

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1. The Auto Body Shop’s Insurance Trap

When a body shop repairs a vehicle after a collision, the process goes like this:

The customer drops off the vehicle.

The shop writes a repair plan or estimate.

The insurance company reviews it, cuts it down, and sends back a payment offer.

The shop either fights for the correct amount (often unsuccessfully) or eats the cost.

The customer assumes, “My insurance will cover it,” but the payment doesn't go to the customer—it goes directly to the shop. That’s where the games begin.

Shops are not getting paid what it costs to do the job right. They're getting paid what the insurer decides they’re willing to pay.

It’s backward. It’s broken. And it’s unique.

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2. How It Works in Health, Dental, and Vision Insurance

Now let’s look at how other service-based industries handle insurance.

Health Insurance:

Doctors and hospitals bill your insurance company for covered services. If something’s not covered, you, the patient, get the bill. The provider doesn’t chase the insurer—they chase you. You’re the customer. You’re financially responsible.

Dental Insurance:

Dentists give you a treatment plan. Your insurer pays what they cover. Anything they don’t? That’s on you. Again, the dental office doesn’t just do the work and hope they get paid. They collect upfront or bill the patient.

Vision Insurance:

Get an exam, pick your glasses, and insurance covers what’s listed in your plan. You pay the difference. The optical office doesn't enter a battle with your insurer for extra lens coating coverage—they just charge you for it.

In every one of these industries, the provider is paid either by the insurer based on clear policy limits—or by the customer if the insurance falls short.

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3. The Unique Disadvantage for Body Shops

Auto body shops are stuck in the middle. They’re expected to:

Diagnose and document hidden damage.

Justify every OEM-required repair procedure.

Fight for payment on operations the insurer already knows are necessary.

And if they push back too hard? They risk being labeled "difficult" and losing referrals or DRP relationships.

No doctor gets blackballed by Blue Cross for charging the full rate for a procedure. But body shops? Insurance carriers routinely punish them for trying to do the job by the book.

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4. The Result: A Broken System That Hurts Everyone

This dynamic leaves shops underpaid, customers misinformed, and vehicles under-repaired. It also trains the public to believe that whatever the insurance company approves must be “correct”—when it often isn’t.

Other industries make it clear: If your insurance won’t pay, you do. Auto body shops are the only ones expected to eat the difference or shortcut the repair.

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The Bottom Line

It’s time the auto repair industry stops being the only business that performs critical, technical work based on what a third party is “willing” to pay. No other industry operates this way.

It’s not normal. It’s not fair. And it sure as hell isn’t sustainable.

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About the Author

I'm a seasoned professional in the automotive claims world, and I’ve seen the inside of this broken system for years. My mission is to help body shops take back control, educate vehicle owners, and challenge the status quo that’s been allowed to dominate for too long.

If you’re a shop owner tired of chasing insurance payments or a customer wondering why your repair wasn’t done right—follow this blog. The truth lives here.