Impact of Increased Deductibles on Collision Repair Industry
The recent trend of drivers opting for higher deductibles or forgoing insurance coverage to cut costs is significantly impacting the collision repair industry. This shift is leading to an increase in out-of-pocket repairs, evidenced by many collision shops observing an uptick in directly paid services.
According to data from the Insurance Research Council, the number of uninsured or underinsured drivers in the U.S. has elevated to 33.4% in 2023. This marks a considerable rise from 2017, with 15.4% completely uninsured. Research from Mitchell International further supports this trend, revealing a 47% increase in average first-party deductibles between January 2019 and July 2024.
Reports indicate that higher deductibles are increasingly common among consumers. The J.D. Power 2025 U.S. Auto Claims Satisfaction Study highlights that 26% of policyholders now select deductibles of $1,000 or more. Additionally, some drivers avoid filing claims due to concerns over potential rate hikes, with 7% acknowledging their reluctance.
Impact on Collision Repair Shops
Collision repair businesses are experiencing a marked increase in repairs paid directly by customers. Mike Anderson, from Collision Advice, notes that such repairs now account for approximately 20% of his monitored shops' orders, a substantial rise from previous years. This trend suggests a sustained demand for customer-paid services in the foreseeable future. Gary Wano Jr. of GW & Son Auto Body reports that these repairs constitute nearly 30% of their current workload.
The focus on customer-pay repairs presents an opportunity for collision repair shops. These services often involve fewer administrative tasks and quicker turnaround times, with potential for better profitability and usage of original equipment manufacturer parts. Offering third-party financing for more costly repairs could further facilitate this service.
Understanding Consumer Trends and Safety Implications
Industry data from CCC Intelligent Solutions illustrates a key aspect of this shift. It reveals a decrease in the proportion of repair claims under $2,000—from 41.5% in 2019 to 25.5% in early 2025. Due to higher deductibles and concerns about rate increases, consumers are opting to handle smaller claims themselves or leaving minor damages unaddressed.
However, not all drivers acting outside of insurance claims are addressing their vehicle damages, which may impair safety systems if critical components remain unfixed. Unaddressed issues often become evident during subsequent vehicle services, highlighting the importance of regulatory compliance requirements and routine inspections.
For collision repair shops, adapting to this new landscape by offering clear, transparent service estimates and flexible payment options is crucial. Shops that focus on these elements are better positioned to attract and retain customers who are increasingly price-sensitive, navigating the intersection of industry trends and consumer behaviors.