Texas Regulators Remind Insurers of Auto-Repair Regulations

The Texas Department of Insurance issued a bulletin on Tuesday reminding coverage providers of their limited role in the auto-repair process. Regulators point out in the bulletin that complaints continue to be filed against providers of auto insurance in Texas regarding steering, limited reimbursement and “other potential unfair claim settlement practices.”

Auto repair shopInsurance companies in Texas and many other states maintain contracts with what are known as direct repair facilities, in which the insurers often get priority service and discounted rates in exchange for increased traffic to those shops.

But when insurers push policyholders or third-party claimants to use these shops, it is seen as a restriction of consumer choice and may be a violation of state law.

It’s called “steering” when insurers even suggest that a person who has filed an auto-damage claim must use a certain repair person or facility in order for the work to be covered. Regulators underscored the prohibition against steering in a bulletin from August 2010 and again on Tuesday.

Another guideline highlighted repeatedly by regulators is the prohibition of insurers’ “specifying the brand, type, kind, age, vendor, supplier or condition of parts or products that may be used to repair the vehicle.”

But the department pointed out in its most recent biennial report to the legislature that the possible application of the consumer-choice regulations is limited. That’s because under current law their is an exclusion for county mutual insurers, which constituted about 45 percent of personal auto coverage companies in the state in 2010.

The department has pushed for legislation that would extend the regulation to county mutual insurers, to no avail.

Insurance claimants in Texas should receive notice from coverage providers of their right to choose a repair facility. If they are unaware of their rights or feel that they are being steered, they may want to discuss the issue with the insurer or with state regulators.

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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