Sections 1952.301-1952.307 of Subchapter G apply to shop/insurer relations in regards to the repair of motor vehicles. This section outlines the rules against insurer steering.
“Except as provided by rules adopted by the commissioner, under an automobile insurance policy that is delivered, issued for delivery, or renewed in this state, an insurer may not directly or indirectly limit the insurer’s coverage under a policy covering damage to a motor vehicle by:
(1) specifying the brand, type, kind, age, vendor, supplier, or condition of parts or products that may be used to repair the vehicle; or
(2) limiting the beneficiary of the policy from selecting a repair person or facility to repair damage to the vehicle.
(b) In settling a liability claim by a third party against an insured for property damage claimed by the third party, an insurer may not require the third-party claimant to have repairs made by a particular repair person or facility or to use a particular brand, type, kind, age, vendor, supplier, or condition of parts or products.”
Doug Leopold, owner of Classic Collision and Restoration in Bryan, Texas, recently came face to face with insurer steering.
“I had an adjuster come to my shop last week, call my customer while standing right in front of me, and try to steer him to one of their preferred shops in town,” Leopold said. “If this isn’t blatant steering I don’t know what is. I ended up explaining to my customer, on the adjuster’s phone, that he had the right to have any shop fix the car. He ended up leaving the car with me and the adjuster was mad that he had to write an estimate.”
Leopold was determined not to let an incident like this pass him by. He researched the proper way to file a claim and submitted a complaint to the Department of Insurance.
The Insurance Code states that it is prohibited for an insurance adjuster to, “state or suggest, either orally or in writing, to a beneficiary that the beneficiary must use a specific repair person or facility or a repair person or facility identified on a preferred list compiled by an insurer for the damage repair or parts replacement to be covered by the policy.”
According to Larry Dunbar of the Property and Casualty Division of the Texas Department of Insurance, in the case of the insurance code, the law states that the commissioner has the right to go back and add rules to the code, called a TAC law. Rule 5.501 of the Texas Administrative Code is a TAC law.
The TAC law states, “By law you have the right to select where your motor vehicle is repaired and the parts used for repairs. However, an insurance company is not required to pay more than a reasonable amount for such repairs and parts.”
In his formal complaint, Leopold explained the steering incident in detail. His complaint is as follows:
“I own a paint and body shop in Bryan, Texas. On April 19, 2007, an adjuster from Farmer’s Insurance Company came to my shop to inspect and write an estimate on a car that was towed to my shop. The car’s owner requested that the tow truck driver bring the car to my shop from the scene of an accident because he wanted me to fix the car. When the insurance adjuster arrived at my shop he was talking to the owner of the car on a cell phone. The adjuster handed me his phone and said the owner wanted to talk to me and have his car sent to another shop for repair.
I got on the adjuster’s phone and asked why he did not want me to fix his car. He was very confused and told me that the adjuster had just called him and told him that I was not on Farmers’ “preferred” shop list and that the car needed to be fixed by a Farmers’ “preferred” shop. I explained to him that he had the right to have the car fixed anywhere he wanted but if he would like to take it to another shop that was his choice. At this point I explained my warranty and how I would repair his car if he wanted me to. He said to tell the adjuster that I would be fixing the car and I let him go.
I told the adjuster that I would be fixing the car and he could go ahead and write the estimate. At this point the adjuster was visibly mad. He wrote the estimate and would not talk to me at all. I offered him a copy of the tow bill, which he took from me and threw on his car dash. I decided to leave him alone to do his job. When he was done, he came back into my office and gave me the estimate. He just handed it to me and walked out the door.
A few minutes later the car owner called me back very confused about what had just happened. I explained to him what “steering” is in the body shop business and told him that I see it all the time from insurance companies. The thing that makes this case different is that the adjuster did it in my shop and really blindsided the customer who was uneducated on common procedures. The other thing that makes this different is that the adjuster was visibly mad that the car was staying put and he had to write the estimate since a “preferred” shop writes their own estimates and thus lightens his work load.”
The current legislative session has not made any changes to the Insurance Code as it pertains to auto body repairs. As changes are made, they are updated on the DOI website.
For questions about your rights regarding motor vehicle repairs under the Insurance Code §§1952.301 to 1952.307, contact the Texas Department of Insurance. You may write to the Consumer Protection Division at P.O. Box 149091, Austin, TX 78714-9091, call (800) 252-3439, fax (512) 475-1771, email ConsumerProtection@tdi.state.tx.us , or visit the Department online at http://www.tdi.state.tx.us .
For the Texas Insurance Code and the TAC law, click here.