Usually, when a car is in the shop for repairs after an accident, the insurance company requires an appraiser to examine the car and give an estimate. But many auto body shops and insurance companies are starting to do things differently. Direct Repair Facilities (DRFs) are auto body shops owned by insurance companies. When a car is taken to a DRF after an accident, it's appraised by someone who actually works at the shop owned by the insurance company.

This might sound like a simple idea that streamlines the system and gets a car fixed faster, but not everyone agrees that it's a good idea. In fact, some states have made DRFs illegal. Below you will learn some arguments for and against DRFs.

Arguments supporting DRFs

• DRFs repair cars more quickly than other shops.
• DRFs save money by using in-house appraisers instead of paying someone from outside the shop.
• DRFs reduce paperwork.
• DRFs could lower insurance costs by reducing fraud because the insurance company itself is responsible for the repairs.

Arguments against DRFs

• DRFs could lead to price-fixing and other unfair business practices.
• DRFs might put independently-owned shops out of business because insurance companies could influence their policyholders to use only the DRF.
• DRFs could result in lower quality repairs and lower labor rates since the insurance company that owns the shop will want to cut costs because they are paying the bill for the repairs.
• DRFs eliminate competition between businesses, and competition often lowers prices for services while increasing quality.
• DRFs could cause independent appraisers to go out of business, leaving consumers with no choice but to agree with the insurance company appraiser.