"Can you imagine if the insurance company started arguing with the repair shop, asking them—no—telling them that they would only pay the $18,000 and not the additional $20,000 because that was the original estimate? Does that sound ridiculous to you? It does to me, too. Thank heavens, reality does not operate like this."

That happens all the time with insurance. I'm surprised at the confident tone in "reality does not operate like this". Not just car/home insurance either...health insurance also. They do often negotiate to a reasonable place, but not always.

It's also why they will write off a car if the estimate is much more than 70% of the value of the car. Yes the write-off may cost them more, but it's a known upper bound and it closes the claim. Insurance companies don't like open claims.

It depends on whether we're talking about estimates or negotiated rates.

In the latter (also called "preferred rates" for auto insurance) there's a blanket agreement that all work of a certain type is to be billed at a fixed, negotiated rate.

That is VERY different from a binding estimate, which typically means a one-off estimate for a specific job where the estimator takes the risk and promises to complete the work at the rate, even if it's much more complicated than they bargained for.

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