Monday, 31 March 2003 17:00

Garamendi pushes changes to claims handling

When John Garamendi was campaigning last fall to be elected California Insurance Commissioner, he addressed the California Autobody Association and said one of his priorities would be to revisit and strengthen the Fair Claims Settlement Practices (FCSP) regulations - the regulations that govern how insurers must handle claims. 

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Garamendi
It appears that Garamendi is keeping his promise, proposing new FCSP regulations that include provisions to protect consumers who choose to use a body shop other than that recommended by their insurance company. Included in the proposed regulations is an "Auto Body Repair Consumer Bill of Rights."
 

"Protecting the consumer is our top priority at the Department of Insurance," said Garamendi. "These amendments make the FCSP regulations applicable to all types of insurers and strengthen control of how claims are handled."

The FCSP regulations provide standards of conduct for insurers on how to comply with the Insurance Code's unfair claims settlement practices statutes. The Commissioner's filing with the Office of Administrative Law (OAL) in mid-March would expand the scope of the regulations to the entire insurance industry and require that insurers be held responsible for the accuracy of information they use to evaluate insurance claims.
 

In addition to prohibiting unfair penalties against motorists who use non-preferred provider auto repair shops, the new regulations would also enhance restrictions on certain clauses in policies that result in unfair claims practices, and broaden language that defines what constitutes non-compliance by insurers.

On recommending a preferred shop

The regulations contain strong language prohibiting an insurer from recommending a particular body shop unless the consumer both requests the recommendation and, at the time it is given, receives in writing a copy of the Auto Body Repair Consumer Bill of rights. If the consumer chooses to use a shop different than that recommended, the insurer can't limit payments to that shop based solely on what the recommended shop would have charged.

The new regulations also clarify that no repair estimate used by an insurer to pay a claim can be based on rates lower than the prevailing rate in the market area. This would appear to address a concern that, as insurers increasingly recommend body shops which they own or have a financial interest in, they could use artificially lower rates in those shops to justify paying less to independents.

As to the use of non-OEM parts, the regulations provide that if an insurer requires the use of such parts, the parts must be "at least equal to OEM parts in terms of kind, quality, safety, fit, and performance." The regulations would require, for the first time, that the insurer warrant that the parts are of like kind and quality and further, must insure that any such parts have non-removable identification as to the manufacturer which must be accessible, to the greatest extent possible, after installation.

Another provision that should be of interest to shops is that if an insurer specifies the use of non-OEM parts, the insurer "shall pay the cost of any modifications to the parts which may become necessary to effect the repair." This would appear to address the often heard complaint that certain non-OEM parts don't fit correctly and require additional hours to make them work, for which the shop is not paid by the insurer.

If approved, the changes are submitted to the Secretary of State's office and become effective after 90 days.

AUTO BODY REPAIR CONSUMER BILL OF RIGHTS
A CONSUMER IS ENTITLED TO:

1. Select the auto body repair shop to repair auto body damage covered by the insurance company. An insurance company shall not require the repairs to be done at a specific auto body repair shop.

2. An itemized written estimate for auto body repairs and, upon completion of repairs, a detailed invoice. The estimate and the invoice must include an itemized list of parts and labor along with the total price for the work performed. The estimate and invoice must also identify all parts as new, used, aftermarket, reconditioned, or rebuilt.

3. Be informed about coverage for towing and storage services. Every insurer shall pay reasonable towing and storage charges incurred by the insured and provide reasonable notice to an insured before terminating payment for storage charges so that the insured has time to remove the vehicle from storage.

4. Be informed about the extent of coverage, if any, for a replacement rental vehicle while a damaged vehicle is being repaired.

5. Be informed of where to report suspected fraud or other complaints and concerns about auto body repair

Complaints within the jurisdiction of the

Bureau of Automotive Repair

Complaints concerning the repair of a vehicle by an auto body repair shop should be directed to:

Toll free (800) 952-5210

California Department of Consumer Affairs

Bureau of Automotive Repair

10240 Systems Parkway

Sacramento, CA 95827

The Bureau of Automotive Repair can also accept complaints over its web site at: www.autorepair.ca.g

 

Complaints within the jurisdiction of the

California Insurance Commissioner

 

Any concerns regarding how an auto insurance claim is being handled should be submitted to the California Department of Insurance at:

(800) 927-help or (213) 897-8921

California Department of Insurance

Consumer Services Division

300 South Spring Street

Los Angeles, CA 90013

The California Department of Insurance can also accept complaints over its web site at: www.insurance.ca.gov

 

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