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Friday, 28 February 2003 22:59

Anti-steering bill with teeth introduced

A bill to strengthen the California anti-steering laws was introduced in the California State Senate by Sen. Jackie Speier (D-San Francisco) on February 20. The bill would prohibit an insurer from recommending that an automobile be repaired, or not be repaired, at a specific auto body repair shop, unless the claimant specifically requests a referral. It would allow a claimant or repair shop damaged by a violation of this provision to recover damages and costs. 

The bill asks the legislature to declare that "Insurers are using unfair tactics to steer consumers, including suggesting or implying that the auto body shop selected by the consumer is inferior or inconvenient and that existing laws regulating the consumer's right to choose an auto body repair shop are weak."

The bill is supported by the California Autobody Association whose executive director, David McClune, said the bill codifies existing laws and regulations and eliminates any loopholes. McClune noted that CAA did not go to Senator Speier and ask for this bill. "She felt it was needed after the hearings she held last year on SB1648," said McClune, referring to Speier's unsuccessful bill to stop insurers from owning body shops.

Puts "teeth" behind existing laws

Jack Molodanof, CAA's Sacramento lobbyist and an attorney said, "This bill will strengthen the existing laws and put some teeth behind them. It empowers both consumers and shops to take action if they are harmed by an insurer's steering practices."

Perhaps the bill's most striking provision is that any consumer or body shop that suffers damage from steering can bring a civil court action against the offending insurer and seek compensatory, special and punitive damages. Asked if the possibility of winning punitive damages against an insurer for steering might entice some attorneys to take on a case that would otherwise be unattractive to them, Molodanof said it could. "You'd have to show a pattern of behavior by the insurer to demonstrate intent and malice, not just a single incident. But yes, if the bill became law with its original language - and that seldom happens - it should get the attention of some folks out there."

Molodanof also held out hope that insurers may not fight this bill with the vengeance that they battled SB 1648. "I've talked to a few insurance lobbyists who've indicated they could support an anti-steering bill. We'll have to wait and see."

The first hearing on the bill is expected March 24. You can follow the progress of SB 551 (or any other California legislation) on the web at www.leginfo.ca.gov.

Text of the bill
 

Introduced February 20, 2003

An act to add Section 758.5 to the Insurance Code, relating to auto insurance.

Legislative Counsel's Digest

SB 551, as introduced, Speier. Insurance: auto body repair shops.

Existing law generally regulates insurers by, among other things, defining certain unlawful practices.

This bill would prohibit an insurer from recommending that an automobile be repaired, or not be repaired, at a specific auto body repair shop, unless the claimant specifically requests a referral. It would allow a claimant or repair shop damaged by a violation of this provision to recover damages and costs, as specified.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The People of The State of California Do Enact as Follows:

SECTION 1. This act shall be known as the "Auto Body Repair Consumer Choice Act of 2003." SEC. 2. The Legislature finds and declares the following:

(a) Thousands of California consumers each year require repair of their vehicles as a result of collision or other damage.

(b) As a result of automobile collisions and other damage, many consumers make insurance claims.

(c) California consumers are entitled to select an auto body repair shop of their choice to repair auto body damage.

(d) Insurers are steering consumers to auto body shops chosen by the insurer and not the consumer.

(e) Insurers are using unfair tactics to steer consumers, including suggesting or implying that the auto body shop selected by the consumer is inferior or inconvenient. (f) Existing laws regulating the consumer's right to choose an auto body repair shop are weak.

(g) Accordingly, the Legislature has determined that it is necessary to strengthen the existing auto body repair consumer choice laws.

SEC. 3. Section 758.5 is added to the Insurance Code, to read: 758.5. (a) It is unlawful for an insurer, including an affiliate or subsidiary of an insurer, in connection with a claim, to direct, suggest, or recommend that an automobile be repaired, or not be repaired, at a specific auto body repair shop, unless the claimant specifically requests a referral from the insurer. (b) An insurer that violates this section shall be liable for any damages suffered by the claimant or auto body repair shop, including compensatory, special, and exemplary damages. Any injured party may bring an action for damages. The prevailing party in any action brought pursuant to this section shall be awarded reasonable attorney's fees and costs.

 

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