The Total Loss Bill, also known as House Bill 5263 and Senate Bill 465, prohibits insurers from declaring a vehicle to be a total loss if the damage amounts to less than 75% of the vehicle’s fair market value, unless they obtain the owner’s consent. Though insurers can still declare a total loss on vehicles if repairs would cost more than 75% of the value, the bill was introduced because insurers were totaling cars damaged at only 50% of value because they were receiving high salvage prices. While this was cheaper for the insurance companies, consumers were losing vehicles that could have been safely repaired.
Petrarca explains, “this is 100% a bill for consumers; it’s all about protecting the consumer. Consumers value their vehicles, so we wanted to put the control in declaring a total loss into the vehicle owners’ hands. Before, the insurer had the final say, but this bill gave that decision to the consumer, not to the collision repair facility. Contrary to some insurers’ claims, this bill was not about driving in more business for repair shops.”
Nationally, the industry standard to declare a total loss coincides with the 75% threshold dictated by ABARI’s bill, but the Total Loss Bill served to quantify and regulate that standard in their state. The bill also discusses how to obtain fair market value of the damaged vehicle, through a third-party entity, such as Kelly’s Blue Book.
Not surprisingly, insurers objected to the bill, claiming it was a ploy to generate more repairs for body shops, but this is not true—the decision to declare a vehicle as a total loss is left up to the vehicle owner, not the repairer. Insurers also claimed that the bill would cause insurance rates to increase, but Petrarca states that this is a common claim by insurance companies whenever ABARI supports a legislative action; “in reality, rates in RI have been decreasing over the past eight years.”
Though Governor Chaffee listened to the insurers’ objections, he ultimately ruled in ABARI’s favor because he recognized how important the bill is to the consumer, his constituents. According to Petrarca, “everything we’ve done is for the consumers. They need to be protected, but since they don’t have a voice for these types of issues, ABARI tries to provide a voice for them. What’s good for the consumer is good for business. Many of our laws in RI promote consumer education, and many dedicated member shops are engaged in encouraging this process.”
ABARI is so focused on providing the best possible services to their members’ customers that they passed a self-imposed regulation which requires technicians to be certified. Petrarca explains, “the consumer knows that certification means something. It’s an additional expense to the shops, but we felt that it was necessary, and I cannot say enough how important this is to ABARI.”
The collision repair industry in RI has been very proactive in passing laws to protect consumers and repairers, such as their Right to Choose and Anti-Steering laws. One major challenge that RI collision repairers continue to face is related to labor rate reimbursements, and this battle has spanned the past several decades. “This affects profitability and the ability to stay in business for many shops. It’s the spider that creates the spider web; a lot of other issues spring from the labor rate problem, but these would vanish if the labor rate issues were resolved,” Petrarca explains.
ABARI continues to propose possible legislative solutions to eliminate the concerns with labor rates, and though their efforts thus far have been unsuccessful, Petrarca insists they will just keep trying again and again until they rectify the situation.
Though State Farm does not write policies in RI and therefore PartsTrader does not impact ABARI’s members, ABARI does not support the concept of programs like PartsTrader because they are not pro-consumer or pro-business; these programs are only pro-insurer, and they will not result in any improvements, Petrarca believes.
Regarding the PARTS Act, ABARI’s Board of Directors wrote a letter to their senator in support of the aftermarket parts industry and the availability of aftermarket parts. Although not all of their members use aftermarket parts in their repairs, ABARI believes that aftermarket parts have a place in the market. They believe that the length of time OEMs can hold a patent inhibits free trade, and decreasing this time will make aftermarket parts more widely available. ABARI supports the Right to Repair because they believe “anything that creates a monopoly isn’t good for the consumer,” Petrarca states.
ABARI was founded approximately 50 years ago, and they were very active with legislative and arbitration issues in the 1960s and 1970s. There are around 100 members currently involved with the association, but very few member shops have DRP relationships. In fact, until a few years ago, ABARI only accepted independent shops to their membership, and they still limit their membership to shops with four or less DRP contracts.
As part of the benefits members receive from joining the association, ABARI lobbies for legislative changes and files complaints on members’ behalves with local business regulators. They’ve also established a close-knit, helpful community so that if a member has a question about certain aspects of their business, they can call ABARI to seek advice from members with more experience in that subject. As with most associations, the biggest challenges ABARI faces is in keeping members engaged at a high level and educating members on new legislation, regulations and products. One way they combat these problems is by holding quarterly meetings, in addition to their legislative activities.
ABARI offers their full support to members and consumers. Their mission is to protect consumers and small businesses, which is the category that most of their members fall into. Petrarca notes, “everyone has the same interests, so there is little conflict because we all want to benefit the consumer.”
Over the past 15 years, ABARI has worked to protect consumers and to promote healthy competition between small businesses. They are currently writing a code of ethics which members will be required to comply with if they wish to continue their affiliation with ABARI. ABARI also has their own dispute mechanism on their website where consumers can lodge complaints against member shops and ABARI will attempt to facilitate a resolution.
Jina Petrarca has served as legal counsel for ABARI since 2007, but her father has been involved with the collision repair industry for over 40 years and was ABARI’s president for some time in the past. Petrarca states, “my family and I feel very strongly about ABARI. We are just trying to do the right thing and find reasonable solutions to the problems facing this industry.”
Auto Body Association of RI (ABARI)
330 Silver Spring Street
Providence, RI 02904, 401-467-7575, www.abari.net