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Friday, 06 April 2007 14:40

California Insurance Code must be aggressively enforced to prohibit steering

  The CAA is requesting that the Department of Insurance aggressively enforce Insurance Code section 758 B (2) (c) that prohibits insurers from steering after the consumer has chosen a repair shop. The Department has previously indicated that an arbitrary cap by insurers is illegal. The CAA is asking the department to address and resolve this issue as soon as possible. The insurance code reads as follows:

758.  (a) It is unlawful for an insurer to require an auto body
repair shop registered pursuant to Sections 9884 and 9889.52 of the
Business and Professions Code, as a condition of participation in the
insurer's direct repair program, to pay for the cost of an insured's
rental vehicle that is replacing an insured vehicle damaged in an
accident, or to pay for the towing charges of the insured with
respect to that accident.  However, the insurer and the auto body
repair shop may agree in writing to terms and conditions under which
the rental vehicle charges become the responsibility of the auto body
repair shop when the shop fails to complete work within the
agreed-upon time for repair of the damaged vehicle.
   (b) A registered auto body repair shop that is denied
participation in an insurer's direct repair program may report a
denial to the department, which shall maintain a record of all those
denials for the purposes of gathering market conduct information.  An
insurer, upon the request of the department, shall disclose the fact
that a denial was made.
   (c) Any insurer that conducts an auto body repair labor rate
survey to determine and set a specified prevailing auto body rate in
a specific geographic area shall report the results of that survey to
the department, which shall make the information available upon
request.  The survey information shall include the names and
addresses of the auto body repair shops and the total number of shops
surveyed.


758.5.  (a) No insurer shall require that an automobile be repaired
at a specific automotive repair dealer, as defined in Section 9880.1
of the Business and Professions Code.
   (b) (1) No insurer shall suggest or recommend that an automobile
be repaired at a specific automotive repair dealer unless either of
the following applies:
   (A) A referral is expressly requested by the claimant.
   (B) The claimant has been informed in writing of the right to
select the automotive repair dealer.
   (2) If the recommendation is accepted by the claimant, the insurer
shall cause the damaged vehicle to be restored to its condition
prior to the loss at no additional cost to the claimant other than as
stated in the policy or as is otherwise allowed by law.  If the
recommendation of an automotive repair dealer is done orally, and if
the oral recommendation is accepted by the claimant, the insurer
shall provide the information contained in this paragraph, as noted
in the statement below, to the claimant at the time the
recommendation is made.  The insurer shall send the written notice
required by this paragraph within five calendar days from the oral
recommendation.  The written notice required by this paragraph shall
include the following statement plainly printed in no less than
10-point type:
"WE ARE PROHIBITED BY LAW FROM REQUIRING THAT REPAIRS BE DONE AT A
SPECIFIC AUTOMOTIVE REPAIR DEALER.  YOU ARE ENTITLED TO SELECT THE
AUTO BODY REPAIR SHOP TO REPAIR DAMAGE COVERED BY US.  WE HAVE
RECOMMENDED AN AUTOMOTIVE REPAIR DEALER THAT WILL REPAIR YOUR DAMAGED
VEHICLE. IF YOU AGREE TO USE OUR RECOMMENDED AUTOMOTIVE REPAIR
DEALER, WE WILL CAUSE THE DAMAGED VEHICLE TO BE RESTORED TO ITS
CONDITION PRIOR TO THE LOSS AT NO ADDITIONAL COST TO YOU OTHER THAN
AS STATED IN THE INSURANCE POLICY OR AS OTHERWISE ALLOWED BY LAW.  IF
YOU EXPERIENCE A PROBLEM WITH THE REPAIR OF YOUR VEHICLE, PLEASE
CONTACT US IMMEDIATELY FOR ASSISTANCE."

   (c) Except as provided in subparagraph (A) of paragraph (1) of
subdivision (b), after the claimant has chosen an automotive repair
dealer, the insurer shall not suggest or recommend that the claimant
select a different automotive repair dealer.
   (d) Any insurer that, by the insurance contract, suggests or
recommends that an automobile be repaired at a particular automotive
repair dealer shall also do both of the following:
   (1) Prominently disclose the contractual provision in writing to
the insured at the time the insurance is applied for and at the time
the claim is acknowledged by the insurer.
   (2) If the claimant elects to have the vehicle repaired at the
shop of his or her choice, the insurer shall not limit or discount
the reasonable repair costs based on charges that would have been
incurred had the vehicle been repaired by the insurer's chosen shop.

   (e) For purposes of this section, "claimant" means a first-party
claimant or insured, or a third-party claimant who asserts a right of
recovery for automotive repairs under an insurance policy.
   (f) The powers of the commissioner to enforce this section shall
include those granted in Article 6.5 (commencing with Section 790) of
Chapter 1 of Part 2 of Division 1.
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