Rhode Island Governor Vetoes Auto-Repair Legislation

Rhode Island Gov. Lincoln Chafee vetoed legislation Monday night that would have overhauled the relationship between insurers and the auto body shops that motorists go to for claims-related repairs.

HB 7782 sought to empower auto repair businesses with the right to sue insurance companies over disputes of compensation while restricting insurers from “steering” their policyholders to specific shops for repairs.

The legislation also would have barred insurers from dubbing a vehicle a total loss if repair costs were less than 75 percent of fair market value before the crash.

Chafee said his veto killed legislation that he believed would “hurt Rhode Island consumers” by raising the cost of car insurance in the state.

“With many Rhode Island families continuing to struggle as our state economy recovers, I do not believe it is appropriate to pass on any unnecessary additional costs to consumers,” he said in his veto letter issued Monday night.

Groups Pressed Veto After Bill’s Passage in Legislature

The bill was passed in the state House on June 11 and Senate on June 13.

After its passage by representatives in the state House, the bill’s author, Rep. Stephen Ucci (D-Johnston), said in an interview that his legislation was a “consumer protection” measure that evened “the playing field between the insurance industry and small, locally owned body shops.”

Trade groups embarked on a media and lobbying blitz against the legislation after it cleared the entire state Legislature, with the Property Casualty Insurers Association of America (PCI) conducting an analysis of the bill that it said showed escalating auto repair costs if such legislation had passed in 2008.

The American Insurance Association (AIA) also publicly spoke out against HB 7782, saying the bill’s provisions allowing body shops to sue insurers “pads the wallets of auto body shops at the expense of consumers.”

Several websites and radio advertisements against the legislation popped up in the week preceding Chafee’s veto, many of them saying that insurers’ increased exposure to litigation would inevitably lead to higher costs and, ultimately, even more expensive coverage for consumers.

According to the most recent state data from the National Association of Insurance Commissioners, Rhode Island was the seventh most-expensive state in the U.S. for auto policies in 2009.

In his veto letter, Chafee said the bill would have granted rights to auto repair shops that existed in “no other state in the nation.”

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for Patch.com and the Desert Dispatch and was the editor in chief of the Guardian (the twice-weekly newspaper at the University of California, San Diego) before coming to Online Auto Insurance News.

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