Advanced vehicle technology is reducing how many vehicles get repaired after collisions, but not for the reasons most people expect.
As repair complexity increases, insurers are more likely to declare total losses instead of approving repairs.
On older vehicles, a minor collision usually just required replacing damaged parts, repainting the area, and completing a final inspection. Modern vehicles place a strong emphasis on safety and rely heavily on Advanced Driver Assistance Systems (ADAS). These systems improve driving safety, but they also make repairs much more expensive. A single bumper repair may now require sensor replacement, calibration, camera testing, and final inspection to ensure everything works correctly before sending it off to the customer. These extra steps cause repair costs to increase much faster than the vehicle value.
Insurance companies decide whether to repair or total a vehicle based on total-loss thresholds. When repair costs pass a certain percentage of the vehicle’s actual cash value, insurers choose to payout the vehicle instead of approving repairs. Modern repair procedures involving new technology are a major driver of rising repair prices, and they also increase the time and resources needed to conduct the final inspection as well. Additionally, insurers know that updating internal records about pricing and procedures would increase claim costs. This creates a big gap between expected cost and real cost from the auto body shops. As a result, even if they are minor collisions, the total-loss threshold is reached more quickly than expected. Which leads to fewer approved repairs and more payouts from insurance.
Advanced vehicle technology is not only eliminating collisions, but also it is eliminating repairable jobs that were available. To combat this trend, auto body shops must focus on quoting the full repair correctly from day one and proving every action taken on the estimate.
More on this topic in a later article.
