Texas Insurance Regulators Warn Against Auto Repair “Steering”

U.S. and Texas flagsAmid reports of possible “steering” by Texas car insurance companies in the state, the commissioner of insurance, Mike Geeslin, has released a statement saying that engaging in such practices is against the law and that violators could face investigations and possible punishments.

Insurers in Texas, according to Geeslin’s statement, are barred from suggesting in any way that their customers must use a specific mechanic or shop to handle repairs in order to have the fixes covered.

In actuality, state law requires auto insurance companies to give notice to policyholders that they have the right to choose whichever facility they’d like to perform the necessary repairs.

The state department of insurance said some insurers may be implying policyholders may not be reimbursed if they seek fixes from facilities not on a list of preferred service providers.

“While the prescribed notice specifies that an insurer is not required to pay more than a reasonable amount for repairs and parts, neither the prescribed notice nor policy language suggest that the reasonable amount for repairs or parts be based on a limited number of preferred repair facilities or specific repair parts,” the statement says.

In addition to the department’s concerns about insurers’ steering business to specific mechanics, the commissioner also raised the issue of insurers undervaluing some types of auto repair and providing insufficient reimbursement. According to the bulletin, this practice could lead to poor-quality repairs being performed, since mechanics will then have an incentive to complete the job more cheaply than they might otherwise. This could, indirectly, pose a risk to the safety of their clients.

About Ben Zitney
Benjamin Zitney has been covering the auto insurance industry for the past 2.5 years. Before coming to Online Auto Insurance News, he produced an extensive company history of the 30-year-old California Joint Powers Insurance Authority and worked at the Cal State Long Beach Daily Forty-Niner as a reporter, copy editor and news editor.

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