Limits of Liability?
July 15, 2018



The majority of our customers tell us they would like to have their vehicle repaired based on the original manufacturer’s guidelines using the original manufacturer’s parts. This makes sense to us and it is the only direction we take when repairing damaged vehicles. However, when the customer buys a discounted insurance policy it becomes extremely difficult for us to repair correctly under policy language that only pays for the cheapest labor and cheapest parts available. For you to fully understand this article let’s read the Limits of Liability from the GEICO Insurance Policy. GEICO is the second largest auto insurer in America. Unfortunately, GEICO also has little interest in seeing your vehicle returned to the “same condition” it was prior to the loss. Be aware most insurance companies are similar in their coverage. Please read the policy language below and we will explain what this represents to the vehicle owner.

Labor Rate — “The limit of GEICO’s liability will not exceed the prevailing competitive price…”  FYI: This is a discounted labor rate. It is the hourly dollar amount at which the majority of insurers use for their street or photo estimates. The current prevailing GEICO labor rate is at $50.00 per hour. In comparison, your local lawn mower repair shop bills at $85.00 per hour. The average appliance repairman costs $85.00 per hour. Also, the average auto mechanical garage bills at $95.00 – $140.00 depending on the model of your vehicle. How does a body shop subsidize GEICO’s discounted labor rate? Does the body shop absorb the difference? Does the shop bill the vehicle owner for the difference? Or does the shop make questionable decisions while repairing the vehicle to make ends meet. We can tell you one thing from first-hand experience. A shop cannot perform proper OEM recommended repairs at GEICO’s $50.00 per hour rate.

Parts Replacement — Replace any of the parts, “including parts from non-original equipment manufacturers with other of like kind and quality.”  This statement says, you agree, GEICO can use the cheapest parts they can locate to repair your vehicle. This includes the cheapest of the non-original parts and/or aftermarket parts listings or parts acquired from a salvage yard – which they call “recycled,” and we call scrap! Think about it – The insurance industry totals a vehicle claiming it to be unsafe / unfit for the road but then it is OK for them to sell you parts of the same vehicles they totaled. We use the word “cheapest” because this is how their estimating data base searches for parts. GEICO does not take into consideration safety or proper fit and finish to be their concern. They only search based on the cost of the parts and the cheapest is always the selected part.

ACV (Actual Cash Value) — Understanding the Limits of Liability in one’s insurance policy is extremely important. It is within this part of your policy the company explains their obligation to their insured. Basically, it is how GEICO will settle your claim. By the way – Actual Cash Value represents the lowest value GEICO can find on a comparatively valued vehicle in the local market. This would be in the event your vehicle is not repairable and considered a total loss. Please, if this article creates questions or confusions about your auto insurance policy please call Crawford’s and we will provide greater depth and explanations for you.              


It is not the purpose of this article to be negative of GEICO’s policy, it is our obligation to you to educate and help make you aware of what your policy will cover in the event of a loss.