Rhode Island Representatives Pass Repair-Shop Legislation

Legislation in Rhode Island installing consumer protection measures into the repair process when policyholders file claims passed the state House Monday by a 38-20 vote.

HB 7782 overhauls state regulations governing competition and business practices within the insurance industry, adding provisions that prohibit insurers from “steering” customers to specific repair shops, limiting the instances in which insurers can label vehicles a total loss and giving auto repair shops the right to sue insurers over disputed work costs.

Rep. Stephen Ucci (D-Johnston), the bill’s sponsor, called it “consumer protection” legislation that “levels the playing field between the insurance industry and small, locally owned body shops.”

“The ability to have their automobiles and take proper care of them is very important to our residents,” Ucci said. “Next to their home, the automobile is one of the most significant investments our residents make.”

Under the bill, insurers are barred from deeming a car a total loss if the repair costs are less than 75 percent of the “fair market value” of the car before it crashed.

The legislation received a recommendation from the state House Committee on Corporations on June 8. It now heads to the state Senate for further consideration.

During the House debate on Monday, the legislation’s opponents said they were wary of exposing insurers to litigation that could send their costs up and lead even the cheapest auto insurance companies to increase their coverage rates.

The most recent state data from the National Association of Insurance Commissioners shows that, in 2009, Rhode Island was the seventh most-expensive state in the U.S. for auto policies. However, the average expenditure on auto coverage throughout the Ocean State shrunk year-after-year since 2005 and saw a 1.7 percent drop between 2008 and 2009, according to the data.

Worries that the legislation will inevitably create a surge of litigation are unfounded, according to Ucci.

Insurers “will say that any change to the way they currently run business leads to higher rates,” Ucci said. “The only way rates will go up is if insurers don’t pay the proper amount to fix automobiles. I hope no body shops are pushed toward their right to action, since the bill’s real intent is to ensure fair negotiating practices.”

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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