Tuesday, 31 July 2007 17:00

Laws impacting collision repairs addressed in numerous states this year

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With many state legislatures winding down for the summer or year, collision repairers are wondering what some newly-passed laws will mean for them.

In California, AB 1483 continues to move forward in the legislature despite objections by such representatives of the collision repair industry, as the California Autobody Association (CAA) and Automotive Service Councils in California.  Even the California Department of Consumer Repairs, parent agency to the BAR, is opposed to the bill.

The bill requires auto body shops to provide written certification to the customer that the crash parts identified on the written estimates are the actual parts that were installed on the vehicle during the repair, and that certification must appear on the first page of the final invoice.

“Why should shops continue to prove that they are accurately repairing a vehicle?” asks CAA, which further claims that the bill provides no consumer protection.

On the other hand, the Center for Auto Safety (CAS), sponsor of the bill, argues that this bill will rectify a missing element in California law and provide “authorities with a full complement of tools to stamp out auto body repair fraud and other forms of insurance fraud.”

Oregon supports consumer choice

In Oregon, the governor has signed into law legislation that shops hope will support consumer choice.

Though significantly amended during the legislative process, the new law requires insurers, prior to making a shop recommendation, to tell the consumer that Oregon law prohibits insurers from requiring repairs be made at a particular shop and that vehicle owners have the right to use the shop of their choice.

If an insured chooses a shop recommended by the insurer, the insurer must send the insured in writing within three business days a statement that says, “If you agree to use our recommended repair shop, your vehicle will receive repairs returning it to a pre-loss condition relative to safety, function and appearance at no additional cost to you other than as stated in the insurance policy or as otherwise allowed by law.”

If a vehicle owner does not choose a insurer-recommended shop, the insurer may not limit the cost of repairs “other than as stated in the policy or as otherwise allowed by law.”

Up in Minnesota, the governor has signed into law legislation that prohibits insurers from adjusting a repair shop estimate when the extent of damage is in dispute unless the insurer conducts a physical inspection of the vehicle. This should eliminate so-called “desk audits” of estimates often conducted by third-party (and often out-of-state) companies reviewing estimates and negotiating with shops by phone without ever having seen anything more than photos of the damaged vehicle.

The Minnesota legislation also prohibits insurers from requiring that shops use a particular vendor for parts procurement. The legislation became effective August 1.

“From a practical standpoint, the passage of this legislation means that repair shops will no longer be tied up in disputes based solely on an insurer’s or third-party auditor’s view of a photograph of a damaged vehicle,” said Judell Anderson, executive director of the Alliance of Automotive Service Providers in Minnesota, which backed the legislation. “In addition, the legislation ensures that shops can continue to work with parts suppliers with whom they have established a good working relationship and who they can rely on to provide quality parts and good service.”

Consumer makes the call on parts

In Rhode Island, lawmakers approved legislation this summer that would require repair facilities to provide written notice to consumers informing them of their right to have OEM parts used in the repair of their vehicle.

The measure gives consumers whose vehicles are less than 30 months old the right to choose OEM or non-OEM parts, and requires their insurer to pay for the repairs using the parts they select.

The measure is awaiting signature into law by Governor Donald Carcieri. But Carcieri in July vetoed several other bills related to auto insurance, including one that would have allowed insureds to use the rental car company of their choice and one that would have made it an “unfair practice” for an insurance company not to follow all components of a repair manual when appraising a damaged vehicle.

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In Wisconsin, legislation is under consideration that would prohibit insurers from steering consumers to shops, altering estimates without physical inspection of the vehicle, or imposing DRP pricing on non-DRP shops.

The bill, backed by the Wisconsin Auto Collision Technicians Association, Ltd., has four main provisions. It would:

1 require disclosure to consumers (on estimates, shop signage and insurance cards, as well as orally by insurers) of their right to use the shop of their choice;

2. prohibit insurers from suggesting that if repairs are not made at a particular shop, the repairs will cost more, be delayed, or not be guaranteed;

3. require an insurer to pay for the repair at the same rate that the general public pays, unless the insurer and repair facility have an agreement otherwise; and,

4. prohibit insurers from preparing an estimate, or altering an estimate that was prepared by another party, without first making a physical inspection of the damage to the vehicle.

In Maryland this summer, the legislature is looking into issues raised this spring after a bill was introduced that would appoint an independent auditor to annually establish average market rates for collision labor, parts, paint and materials. A hearing on the bill included discussion of other issues, such as steering of work by insurers, and non-OEM parts.

Maryland lawmaker Rick Impallaria said that based on this summer’s discussion, he envisions perhaps three bills being introduced in that state next year: one dealing with improving the existing steering law, one examining contractual agreements between shops and insurers (which Impallaria believes are illegal), and one focusing on labor rates.

Some efforts stalled

With efforts at the federal level to pass “Right to Repair” legislation seeming to have stalled earlier this year, similar bills were introduced in a number of states, including Oklahoma, Florida, Maine, Massachusetts, New Jersey and Nevada. The legislation would require automakers to make vehicle repair information available to consumers and independent repairers, something that some groups, most notably the Automotive Service Association (ASA), say is already happening through a voluntary agreement with the automakers.

While a state “Right to Repair” bill was still alive in Massachusetts after a hearing in late June, lawmakers in Florida, New Jersey and Oklahoma declined to move the bills forward in their states. Nevada passed a resolution simply encouraging the automakers to work with the National Automotive Service Task Force, the organization overseeing the voluntary efforts by automakers to make the information available.

But despite a lack of success at the state level, backers of the federal “Right to Repair” legislation were heartened this summer when it was finally reintroduced (as HR 2694) by six members of Congress including Reps. Edolphus Towns (D-NY), Anna Eshoo (D-CA) and George Miller (D-CA).

Meanwhile, legislation introduced in several states (including Washington, Rhode Island and Nevada) to prohibit insurer-owned shops did not appear to be gaining much traction this year.

Whether Texas’ ban on insurers owning additional shops in that state will ever go into effect is still in the courts. This past May, the U.S. Court of Appeals, 5th Circuit, heard arguments from both sides in the case as part of Allstate’s lawsuit seeking to have the law found unconstitutional. It is unknown when the court will issue its decision in the case.

John Yoswick is a freelance writer based in Portland, Oregon, who has been writing about the automotive industry since 1988.

 

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