If your shop works with insurance companies or warranty providers, California’s updated BAR regulations for 2025 bring big changes. These updates directly affect how you handle third-party payor estimates.
Whether you’re a shop owner, service advisor, or repair technician, understanding these rules is essential. Following the correct process keeps your documentation compliant and your customers fully informed.
What Is a Third-Party Payor?
The Bureau of Automotive Repair (BAR) now defines a third-party payor as:
“An aftermarket warranty provider, insurer, or other entity who is responsible for, or has contracted with, the customer to provide payment for vehicle repairs.”
This includes most extended warranty companies and auto insurance carriers. If your shop accepts these forms of payment, these rules apply directly to you.
Using a Third-Party Estimate? Follow These Rules
When a customer provides a third-party estimate, and you plan to use it when preparing your own shop estimate (known as the ARD estimate), you must:
- Inform the customer that third-party estimates are subject to California’s Fair Claims Settlement Practice Regulations.
- Ensure your ARD estimate meets all BAR requirements. Do not simply copy the third-party estimate.
- Clearly record the following details on your estimate:
- A statement that repairs will follow the third-party estimate.
- The name of the third-party payor.
- The claim number or reference ID.
- The total cost listed on the third-party estimate.
- Attach a copy of the third-party estimate to your ARD estimate.
- If the customer approves changes to the repair plan, you must notify the third-party payor before making adjustments.
These steps protect your shop from disputes and make sure the estimate holds up under BAR review.
Why Customer Communication Matters
Miscommunication between shops, insurers, and customers often leads to delays, rejected claims, or compliance issues. That’s why the BAR requires clear language in your estimates.
If the third-party’s payment amount is known, include it in the estimate.
If the amount is unknown, your estimate must state:
“This estimate is for repairs to meet vehicle manufacturer and industry standards. As the customer, it is your responsibility to contact the third-party payor for approval of payment for the repairs you have authorized.”
This statement ensures the customer understands their responsibility before work begins.
Why This Matters for Automotive Training
At Smart Auto Training, we don’t just teach diagnostics and smog testing. We also prepare students for real-world compliance. That includes handling estimates, authorizations, and third-party payor rules.
For Smog Check Inspector and Advanced Diagnostics students, this knowledge is especially valuable. BAR regulations are tested during state exams, and proper documentation can be the difference between passing and failing.
Take the Guesswork Out of Compliance
Third-party repairs require more than just technical skills—they require careful documentation and professional communication. By following these updated rules, you protect your shop, your customers, and your license.
At Smart Auto Training, we train technicians to work confidently, both under the hood and at the desk.
👉 Call us today at 909-539-0114 or visit smartautotraining.com to enroll and stay ahead of BAR compliance.