Is State Farm’s New Offer One the Industry Can’t Refuse?

A new offer is on the table from State Farm to auto glass providers in its National Glass Program. Effective Monday, July 5, State Farm will be offering a labor rate of $42 per NAGS labor hour in Zones 1, 2 and 3. Additionally, the company is offering the following for glass parts:

  • 41 percent off NAGS List Price in Zone 1:
  • 25 percent off NAGS List Price in Zone 2; and
  • 0 off NAGS List Price in Zone 3.

The insurer announced the changes in a letter dated June 28, 2021.

State Farm periodically changes what it “offers” to reimburse shops for its insurance work. In September 2016, reported an increase from $35 per NAGS labor hour to $38 per NAGS labor hour. Zone 1’s pricing decreased from 25 percent off NAGS list price for an auto glass part to 32 percent off; from 15 percent off to 24 percent off the NAGS list price in Zone 2; and Zone 3 remained at 0 percent off the NAGS list price.

“It’s a small change that [State Farm] made, but just the whole concept of the idea is a slap in the face,” says Rick Valentine, owner/operator of Intermountain Auto Glass in Boise, Idaho.

As a Zone 1 shop, Valentine says we will see the NAGS percentage off go from 38 to 41 percent, and labor go from $39 to $42 per NAGS labor hour. The percentage off increasing is what will hurt shops like Valentine’s.

The last price change by State Farm was two to three years ago, according to Valentine.
Valentine says it is particularly challenging with all that is going on nationwide as well as the lingering effects of a global pandemic and a labor shortage.

He says that, for the first time, he is considering no longer participating with State Farm.

“It impacts us significantly when our costs go up,” Valentine says.

Intermountain Auto Glass is based in Boise, but has multiple locations to serve customers.

“I’ve been through it all,” Valentine says of his company which opened in 1996.

According to Valentine, 80 percent of the work his business does is through insurance.

“I just don’t think it’s reasonable, nor fair,” he says.

In the last 18 months, Valentine says costs have escalated and supply issues have become a concern. To his knowledge, only State Farm has reduced what it is willing to pay in the last six months.

“All of our costs have done nothing but go up. We counter that by passing that on to the customer,” Valentine says.

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5 Responses to Is State Farm’s New Offer One the Industry Can’t Refuse?

  1. i am in agreement. I approached our GM and advised we get off their network for State Farm too. If State Farm is doing it, who’s going to be next? It’s a kick in the teeth and the extra couple of bucks an hour do not make up the difference.

  2. This is ridiculous, “offer” not an offer, it’s strong arm. Plus lynx is making things more and more difficult to get approvals and bills paid in a timely manner and in full.
    Plus all of this and nags isn’t increasing list prices. So sad

  3. Chuck Miller says:

    I have been in this business for 51 years, and I must say , that the more we cow tow to these companies, the more it becomes our fault. We are in charge of our destiny, and we also need to make informed decisions. At this point I am not sure what I will be doing, but I do know that this is WRONG.

  4. Monday 6/28/2021 I had a Office Manager abruptly resign because of the stress of our industry. She was the best CSR / manager I had ever had in 21 years. Oddly she came to me from the Insurance industry she was a licensed agent. She made it less than 10 months in our industry.
    She said she had know idea the responsibility and the LIABILITY Auto Glass shops faced and were exposed to. The pressure and demands we face day in and day out do not justify the pay and the lack of respect the Insurance industry shows us.
    I see our industry facing real up hill battles with getting qualified help and being able to compete when it comes to pay and benefits.

  5. At least what we have here is a top tier, well-respected Insurance Company telling us (on their letterhead) what to charge and not some foreign-owned T.P.A. – Competitor – Bully that fabricates list prices and makes statements like: “it has been determined….. that this is what you have to do”.
    Scott Harkey.

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