My sister-in-law had a little fender bender in her truck. Bent hood, header panel, grille, fender & headlight. No structure or AC problems. Truck runs and drives fine.

Simple fix I can buy new parts for less than a grand and used for less than $500. Paint $1,200 buy a shop with a booth and can color match. Official estimate not just a guess. Now I know insurance companies can not base repairs off of a brother-in-law with a plan and an "awesome set of tools man." I'm just saying it is a super easy repair.

Here is where they are loosing money.

She takes the truck to a shop and they want $4,200 to fix it, out the door. I say a fair price for a shop.

Insurance company totals the truck, I told my sister in law to keep it, I can fix it "cause I was a TV repair man with an awesome set of tools man."

After Salvage (so my sister can keep it) and deductible was taken out they still paid $5,800 for the damages.

Call me crazy but somebody should have said hey we can fix it cheaper than we can total it, let's fix it. So instead of $3,200 (after deductible was paid) they are out $5,800.

I know they have some formula's to go by and sometimes damage estimates have to be updated but they paid out almost twice what the repair would have cost them. ($5,800 totaled vs $3200 repaired).

You answered your own question. They can't pay repairs based off what some guy is going to charge in his backyard, and shops have to make money so a real shop saying "we'll do it for $3,200" is not a thing. The insurance company owes what they owe, and if the vehicle owner can get it done for less, then good for the vehicle owner.

They're also not going broke, just most are losing money on their insurance product.

Another way they can "save" money is not have a commercial on every channel at every commercial break. They must have learned that from the drug companies, an industry that can "charge whatever they want". I wonder how much is spent on these commercials... 100's of millions?

I can tell you that our ad budget is about 3.5-ish %. But good advertising pays for itself in the form of new business. We have years of hard data that proves it. In fact, if we're in a period where we're growing faster than we want to, you know what we do? Cut back on advertising. Growth quickly slows down. Happens every time.

The comments about TV commercials and golf tournaments and stadium names are totally misplaced and incorrect. In fact, when my employer signed an agreement to name a stadium, our ad budget didn't change at all. They took money from the existing budget and allocated it to the stadium name, spending didn't increase a dime. But people who know zero about it lost their minds.

You are only looking at one side of this. It is not that simple. There are other contingencies in this.

Insurance cos are invested in other things; their "losses" are essentially an accounting function.
There's a thing they call "Reserves", which is basically the investment account(s) the money to pay claims comes from.
Shops might make around 8% net on insurance repair work - which is why so many sell out to the big consolidators, who operate on volume.
As N-A-C said, Insurers can't really pay on a "friends-and-family" basis, but on retail estimates...which from their Direct Repair shops, are discounted, but that's another discussion.
They also don't pay on non-visible damage, even when it's certain to be there: hence what's called Supplements, which is aka "hidden damage" that must be photo'd/documented.
A lot of their overhead is in staff: think appraiser/field adjuster, car/mileage, benefits, yadda yadda...which is why many just pay claims from photos; they're looking at the total cost of the claim.

State Farm is the #1 example of this. The really well run companies do try to make a profit on the actual insurance product. Our goal is to make make a profit of $0.04 for every dollar we collect. That's the sweet spot that allows controlled growth while being profitable. If we are making more than that, we adjust rates and invest in technology and increase ad spending and such so that we don't chase off new and existing good customers while still facilitating growth. If we're making less, mass panic ensues, and by that I mean "No one is allowed to order $2.39 desk calendars" and "Stop printing things unless management approves." I kid you not.

I have no doubt you are right. I have never doubted your advice on insurance.

I guess I wasn't too clear but the $4,200 was from a legitimate body shop. The insurance company would have been out $3,200 after deductible. The preface was just to illustrate how easy the fix was.

I just had to think that when somebody presents an estimate from a legitimate and licensed shop for $4,200 (before the $1,000 deductible) and they say nope we would rather pay $5,800 (It would have been $7,900 if she gave them the truck to salvage) somebody at the insurance company would say, hey we could save a few grand here. In my business if somebody tells me I can pay $3,200 or $5,800, I know what I would choose. LOL

I guess that is why I will never be rich. I don't know how to spend more than I have to spend.

All I can say is that you have no idea what these vehicles bring on the salvage market. ALL of Copart's growth is overseas. And that is where more and more of the 'salvage' vehicles go. As I said before, there is far more to this than just what you see.

There's a bit of math at play on repair vs total loss, and that's the salvage value.
Some companies set up a %, others - or specific vehicles - may go to a bid scenario.
Some salvage is highly sought after for hard-to-get parts, or due to a stronger-than-average market.
There were some situations I recall where the return on the salvage tipped a vehicle into a total, because the net loss would be less.

Funny story: back in my BMW collision-repair shop days, one of my crew had a Ford Aerostar. This was the SF Bay Area, and it got hit on at least a yearly basis.
Every time, it was a Total Loss, and he'd retain salvage, get a smaller check, and we'd fix it in the shop - we took care of our guys.
Over about 6 years or so, he made good money on the thing, and we used to call it his Side Income.
Just for fun, we sectioned in a BMW kidney grille, shaved the Ford badges, added BMW roundels front & rear, and made it an "825" on the liftgate.
A lot of people would snap their necks trying to figure out what the heck it was.

They came out ahead after the salvage recovery.

At least she got to keep it for a decent amount. When I wanted to buy back a vehicle after an accident they put a value on it so high it wasn't worth getting into.

It's a proven fact in an open and free society any message (advertising) repeated often enough, eventually sinks in and gains merit and results. All people are gullible, some more than others, and all will deny it.

It's a proven fact in an open and free society any message (advertising) repeated often enough, eventually sinks in and gains merit and results. All people are gullible, some more than others, and all will deny it.

It's a proven fact in an open and free society any message (advertising) repeated often enough, eventually sinks in and gains merit and results. All people are gullible, some more than others.

Any message (advertising) repeated often enough, eventually sinks in and gains merit and results. All people are gullible.

Any message repeated often enough, eventually sinks in and gains merit and results.

A worthy example of above in recent times is how media advertisments over their broadcast life become shortened of pertinent facts to the ad, as they know the the facts omitted have already sunk in with the viewing targeted audience, meaning you have already been played.