Friday, 21 March 2014 21:03

Michigan’s HB 5339 Seeks to Address Steering, Non-OEM Parts, and Parts Procurement

Michigan House Bill 5339, introduced on February 19, 2014, seeks to amend the Michigan Insurance Code of 1956 to restrict insurance companies from numerous actions that irk collision repair facility operators. The broadly-worded bill has not yet been scheduled for hearings.

The bill, as sponsored by representatives Dale W. Zorn ,Greg MacMaster, Anthony G. Forlini, Peter Pettalia, and Michael D. McCready would ban insurance companies from compelling the use of specific collision repair or claim centers, restrict non-original equipment manufacturer (OEM) parts usage, and prohibit an insurer from specifying specific vendors for parts or other materials.

Specifically, the bill would prohibit insurance personnel from the following:

  • Compelling or coercing the insured or claimant to choose a particular repair facility, claim center, or other similar facility regardless of whether the repair facility, claim center, or other similar facility is under the insurer's direct control. This subdivision would not prohibit an insurer from requesting the insured or claimant to take the a particular repair facility, claim center, or other similar facility after informing the insured or claimant that the insured or claimant is not under an obligation to do so.
  • Failing to inform the insured or claimant that the insured or claimant has the freedom to use a repair facility of the insured's or claimant's choosing, or failing to inform the insured or claimant of the insurer's ownership interest in, or agreement with a repair facility, claim center, or other similar facility.
  • Communicating the need to delay the commencement of repair to allow the insurer to inspect the automobile for more than one full business day from when the insured or claimant presented the claim or automobile for loss adjustment or inspection.
  • Disputing coverage of the loss without performing a physical inspection of the automobile.
  • Specifying a non-OEM aftermarket crash part to replace a structural component of an automobile, including, but not limited to, a bumper reinforcement, radiator or core support, or any other part that affects the structural integrity or airbag timing of the automobile.
  • Specifying a non-OEM aftermarket crash part in the repair of the damaged automobile if the part is not certified by a national testing board to guarantee quality, fit, and crashability.
  • Specifying the use of a particular vendor to procure a part or other material necessary for the satisfactory repair of the automobile. This subdivision does not require an insurer to pay more than a reasonable market price for parts.
  • Unilaterally or arbitrarily disregarding a repair operation or cost identified by an estimating system that the insurer and repair facility have agreed to use in determining the cost of repair.
  • Placing a limit on the maximum cost of paint or other materials required to repair the damaged automobile. This subdivision does not require an insurer to pay more than a reasonable market price for paint and materials.
  • Disregarding a repair facility's posted labor rate without proof of the range of posted door rates available to the public in the market.

The bill also would also provide an insured, claimant, repair facility owner, potential repair facility owner, or person aggrieved by this act the ability to bring a civil action against an insurer for a violation of this section. A plaintiff who prevails could receive damages in the amount of three times the actual loss or $500, whichever is greater, as well as attorney fees and costs.

Ray Fisher, executive director of the Automotive Service Association (ASA) of Michigan, said to a media source: “ASA Michigan did not author or introduce this bill, but we are glad that Representative Zorn and the other co-authors have taken a key role in trying to resolve some of the issues that have plagued our collision shops here in Michigan. I have passed this on to our leadership for their review and we are looking forward to working with Representative Zorn as this moves forward. Obviously, he is trying to cure many of the burdens that our collision repairers have faced for quite some time.”

Fisher added, “In conversation, we understand that currently no hearings have been scheduled as yet, but ASA Michigan will encourage these issues to be discussed in the committee as soon as possible.”

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