Rhode Island Reps Introduce Consumer-Protection Bills

Rhode Island State House and Capitol Building, ProvidenceTwin bills recently introduced to the Rhode Island Senate and House of Representatives would put in place a set of protections that would ensure consumer choice when policyholders decide which body shops and rental car agencies to use after filing a claim.

The bills would make it so that Rhode Island car insurance companies would be permitted to give policyholders a list of preferred providers that customers can be encouraged to use, but it would be illegal for them to say that the policyholder must use one of those preferred providers in order to get services covered under a claim.

Coercing a policyholder to use particular service providers is often referred to as “steering,” and many states have legal provisions that prohibit insurers from engaging in the practice.

Many insurers would like to be able to steer policyholders to certain businessed because they often have direct repair programs (DRPs) established with a shop or a network of shops that enable them to get lower rental and repair costs.

DRPs work like this: Many insurance companies give policyholders a list of repair shops instead of making them look around for a reputable one on their own. The insurers routinely deal with the businesses involved in the DRPs, so they have a better idea of the quality of service that they’re likely to get. In exchange for getting the business from a referral from the insurer, the DRP shop will likely charge lower prices and put the repair as a priority. So in the end, the shop gets a steadier stream of business, and the insurer gets lower costs and expedited service.

While some consumers appreciate that they don’t have to look around for a reputable shop in this scenario, others already have established relationships with certain repair facilities that they would prefer to use.

These bills would make sure that those consumers’ freedom of choice is preserved.

The bills also include a provision related to insurers’ deeming cars total losses. Under the proposed law, insurance companies could not rule a car a total loss unless the cost of rebuilding it to its pre-accident condition is more than 75 percent of the vehicle’s fair market value.

About Matthew Morisset
Matthew Morisset is a proud alumnus of the University of Redlands, where he obtained a degree in English Literature. Utilizing his passion for analysis and writing, Matthew looks for important trends in the auto insurance industry and their implications for consumers and the market as a whole.

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