When Ron McLeod's Jaguar sedan hit a chunk of concrete on a freeway ramp in August, he took his car to a body shop he trusted to do the repair job right.
His insurer, Geico, had other ideas, the Santa Rosa, Calif., real estate salesman said.
"They told me to go down and get the car out of there," he said, and pressured him to use a body shop that was under contract to the insurance company.
After some heated discussion, McLeod got his way, thanks to a 2003 state law that gives motorists the right to get their cars fixed at the garage of their choice, even when their insurer has a special arrangement with other repair shops. Geico, a unit of Warren E. Buffett's Berkshire Hathaway Inc., declined to comment on McLeod's claim but said it allowed its policyholders to take their cars to any body shop they wanted.
The case is indicative of what some in the auto repair industry contend is a continuing problem of insurance companies illegally steering repair work to so-called direct-repair body shops, which sign contracts with insurers promising to provide price breaks in exchange for a steady stream of business.
According to complaints from the auto repair industry, insurance companies use a variety of tactics to evade the 2-year-old law, telling policyholders that work at their chosen body shops might not be guaranteed or fully covered or might be delayed.
The insurance industry denies the allegations, saying insurers scrupulously comply with the anti-steering law and recommend body shops only when policyholders ask them to.
"Most companies bend over backward to make sure the consumer understands they can go where they want to go," said Michael Gunning of the Personal Insurance Federation of California, which represents Farmers Insurance Group, State Farm Mutual Automobile Insurance Co. and other companies.
The fight over steering is part of a larger conflict over who should have the final say on how a damaged car is repaired -- the policyholder or the insurance company -- and how much insurers should pay for that work. Auto body shops have complained for years that some insurance companies pay artificially low rates for collision repair work, particularly when the work is done at shops not under contract to insurers.
The dispute is drawing the attention of California lawmakers and government regulators.
State Sen. Jackie Speier (D-Hillsborough), who sponsored the anti-steering legislation and an earlier measure creating a so-called bill of rights for body shop customers, intends to look into the allegations of steering during a special Nov. 12 hearing of the Senate Banking, Finance and Insurance Committee.
The California Department of Insurance has proposed fining three insurance companies -- Progressive Group of Insurance Cos., Mercury Insurance Group and Infinity Insurance Co. -- for allegedly refusing to pay reasonable labor costs to body shops where motorists have elected to take their vehicles. The three companies deny the allegations. Investigations into similar claims against other insurers are continuing, the department said.
"We're basically taking a no-tolerance approach to areas where we find clear documented evidence of violations," said Tony Cignarale, chief of the Consumer Services Division at the Department of Insurance. "We've taken three actions so far and have a few more in the works.
Meanwhile, efforts by the department to clarify how much insurers should pay for auto repair work are drawing fire from the insurance industry and body shop owners.
Steering is a touchy issue for body shops, many of which are small, family-owned operations. Shop owners know the practice is illegal, but they're "afraid they'll be blackballed and put out of business if they open their mouths," said Eugene Crozat, owner of G&C AutoBody in Santa Rosa. Crozat has filed hundreds of complaints with the Department of Insurance alleging that insurers have tried to steer his clients to body shops that charge lower hourly rates.
"It's kind of insidious and difficult to deal with unless you're actually confronted by it," said Kelly McCarty, owner of Carty's Collision Center in Ontario. "My uncle was here in the shop reporting a claim [on the phone] and said he wanted us to repair his car. But the insurance company told him they wanted him to go somewhere else."
Insurers say they don't want to hand blank checks to body shop owners when the work can be done more cheaply at shops that have signed direct-repair contracts with insurers. And cutting repair bills helps keep premiums down.
Fewer cost controls "will drive up rates for everyone," said Sam Sorich of the Assn. of California Insurance Companies.
In recent years, insurers have been buying ownership stakes in auto repair chains so they can more closely control claims handling. And Progressive is backing a bill in the Legislature that would allow insurers, with customers' consent, to oversee all repairs, including deciding on how and where a vehicle is fixed.
All of which makes Speier wonder whether a tougher anti-steering law is needed.
Most auto shop owners are "small-business people who are just trying to make an honest dollar," said the lawmaker, who said she had received more than 600 steering complaints in the last year.
"Many of them are finding themselves in a lose-lose situation," Speier said. "When they do what's right and properly repair a vehicle, the cost exceeds what the insurance company wants to pay, and they won't get any more business sent their way."
In the meantime, consumers wind up being "caught in the crossfire" in a battle over the $5-billion-a-year accident repair business in California, said Douglas Heller of the Foundation for Taxpayer and Consumer Rights in Santa Monica.
"Either you have to cover expenses that should be insured if you go to a shop you feel comfortable with," Heller said, "or you're stuck in a shop that operates under a set of rules that may make it impossible for them to do the job you need."