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Wednesday, 19 August 2009 14:18

Battle Over Assembly Bill 1200 Intensifies-- Bill’s Author Challenges Collision Repairers' Integrity

The author of AB 1200, a bill that would make it easier for insurers to steer customers,  will chair a legislative hearing on auto body repair fraud on Tuesday, August 25, 2009 at 2 pm in Room 126 of the State Capitol, Sacramento. The CRA---which is opposed to the bill---will request an opportunity to testify before the bill’s author, Assemblywoman Mary Hayashi who runs the powerful Assembly Business and Professions Committee.

“We resent the tone of the author who [implies] that insurers need more control over the repair process because there are too many dishonest collision repairers,” stated Lee Amaradio, CRA president. “ We applaud Congresswoman Jackie Speier for standing in opposition to Assemblywoman Hayashi’s special interest effort to reward insurers by giving them a blank check to strong arm claimants through the claims process. “ Amaradio is asking CRA members to come to the hearing to address any untruths that might be foisted upon committee members.  CRA will issue updates on the hearing on August t as they occur.

Congresswoman Speier wrote on op-ed against the bill while Hayashi countered with a piece that appears to say that Speier, who championed California’s anti-steering law, misunderstands the contents of AB 1200. Hayashi also notes that the CRA’s lobbyist was formerly Speier’s chief-of-staff.

“Assemblywoman Hayashi is trying to steer legislators with the help of insurers,” said Steffen. “Her op-ed doesn’t mention that major consumer protection organizations are opposed to her effort, but she does mention me—go figure!

AB 1200, sponsored by the Personal Insurance Federation of California, was amended this week to further erode consumer protections. The bill now directs that insurers may talk about DRPs at anytime during the claims process, even when a claimant has selected a non-DRP shop.

The op-eds and the bill are below:

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Tuesday, August 18, 2009 (SF Chronicle)

Read this, then read your car insurance policy

by Jackie Speier

 

Let's say you have a brand-new car and you're the victim of an accident or vandalism that requires you to get the car repaired. Fortunately, you have insurance, so you can count on the car being made good as new. Right?

Wrong.

In 2003, while serving in the state Senate, I wrote the law that gives consumers the right to select the collision repair facility of their choice. This law was necessary because insurance companies routinely make deals with preferred shops to use cheaper used or "after-market" parts rather than parts made by the vehicle manufacturer. Sometimes the imitation parts work fine, but too often they don't fit the vehicle or are made of inferior metals and plastics. The law made it illegal for insurers to steer policy holders toward specific shops.

But that's all about to change because of an industry-sponsored bill and a recent legal ruling that are conspiring to make consumers the least important person involved in car repair decisions.

Assemblywoman Mary Hayashi, D-Hayward, has introduced AB1200 to roll back California's consumer protections by allowing your insurance company to pressure you into choosing their shop even after you have selected where you want your vehicle fixed. A major insurer recently directed its shops to stop using factory parts on any vehicle with more than 12,000 miles or more than a year old. Never mind the fact that the non-manufacturer parts could void your warranty if it is deemed to cause some future problem - such as a substandard component of your car's transmission leading to larger transmission failure.

But wait, there's more bad news for California drivers.   Let's say that you are able to withstand your insurer's pressure tactics and demand that your body shop use factory parts. You still may not be protected. Because buried in many policies is a provision where the insurer reserves the right to use either factory or aftermarket parts, whichever is cheaper. This month, a Los AngelesCounty appeals court upheld an insurer's right to limit payment to a claimant who chose not to use a shop favored by the insurer. It is my guess that most drivers in California spend more time writing premium checks than they do reading their insurance policies. Well, I'm afraid we can't afford that luxury anymore. I urge you to go get your policy, pour yourself a cup of coffee and read it. Make sure that you are entitled to new, manufacturer parts whenever your car is repaired and that you can go to the shop of your choice, without arm-twisting from your insurer. If you can't find the language in the policy, call whoever sold it to you and make them go through it with you.

Finding an auto repair facility that you trust isn't always easy, but there are plenty of skilled and honest mechanics and body shops out there. However, they may soon go out of business if insurance companies get their way, squeezed out by the corner cutters and dealmakers.   There are two ways to stop this from happening: Read your policy to make sure your rights are protected, and tell your state lawmakers to stand up for consumers and reject AB1200.

 

Jackie Speier, a Democrat, represents San Mateo and San Francisco counties in the U.S. House of Representatives. ----------------------------------------------------------------------

Copyright 2009 SF Chronicle

 

Tuesday, August 18, 2009 (SF Chronicle)

Consumers need help finding auto body shops

Mary Hayashi

 

As chair of the Assembly Business and Professions Committee, which ultimately has jurisdiction over the Bureau of Automotive Repair and the Department of Consumer Affairs, I would not support, much less carry a bill that would threaten consumer protection.

Like so many in the Bay Area, I highly respect Rep. Jackie Speier, D-Hillsborough. She has been a champion for consumers, and established California's anti-steering law to protect our right to select the auto body repair shop used in an insurance claim.

AB1200 does not undo this important anti-steering statute. It does not allow insurance companies to force a particular body shop on a claimant. Rather, it serves to provide consumers with more choices so that they may make an informed decision when considering auto body repair shops.

Many consumers involved in an auto accident have little or no source of information to rely upon when looking for a repair shop. Phonebook ads or Internet searches provide little reliability in an industry challenged by fraud and misrepresentation. In 2003 alone, the Bureau of Automotive Repair reported that 42 percent of the vehicles it inspected had fraudulent parts or labor listed on the repair invoice.

AB 1200 will give consumers information about auto repair shops from a company they have entrusted to insure them in times of need. Insurers often have direct repair programs involving a network of auto repair shops that provide benefits such as warranties on repair work, guaranteed prices and the anticipated time to repair the damaged vehicle.

AB1200 will allow insurers to discuss these programs while maintaining the requirement that a claimant be informed in writing of the clear and unmistakable right to select his or her auto repair shop of choice.   Unfortunately, AB1200 has been subject to a disinformation campaign led by those who have a vested interest in not allowing insurers to discuss these options with their claimants. These include trial lawyers who sometimes file questionable or frivolous lawsuits related to auto body shop repair.

Additionally, one opposition leader, Richard Steffen, who served as Speier's chief of staff during her time in the state Legislature, is now employed by and is representing auto body shop organizations that have an interest in maintaining inflated auto repair prices for consumers.

There is no doubt that bad businesses exist, and that's why people need information and why we need to enforce consumer protection laws. AB1200 stands on the belief that an informed consumer can make the best choice. While allowing insurers to describe their direct repair programs, the bill takes the steps to ensure that the choice stays in the hands of the consumer.

The bill strikes a fair balance between giving consumers a complete picture about their auto repair options, and respecting California's anti-steering law. That is why AB1200 passed with bipartisan support on the Assembly floor with 78 ayes and zero no votes.

 

Mary Hayashi, a Democrat, represents Hayward in the state Assembly.

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Copyright 2009 SF Chronicle

 

AB 1200 Assembly Bill - AMENDEDBILL NUMBER: AB 1200    AMENDED

BILL TEXT

 

AMENDED IN SENATE  AUGUST 18, 2009

AMENDED IN SENATE  JULY 14, 2009

AMENDED IN SENATE  JUNE 25, 2009

AMENDED IN ASSEMBLY  APRIL 29, 2009

 

INTRODUCED BY   Assembly Member Hayashi

 

FEBRUARY 27, 2009

 

An act to amend Section 758.5 of the Insurance Code, relating to

motor vehicle insurance.

 

 

LEGISLATIVE COUNSEL'S DIGEST

 

 

AB 1200, as amended, Hayashi. Motor vehicle insurance: direct

repair programs.

Existing law prohibits insurers from requiring that an automobile

be repaired at a specific automotive repair dealer. Under existing

law, an insurer may suggest or recommend a specific automotive repair

dealer under certain specified circumstances.

This bill would authorize an insurer to provide a claimant with

specific truthful and nondeceptive information regarding the services

and benefits available to the claimant during the claims process

pursuant to the policy  , 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.    The Legislature finds and declares

all of the following:

(a) Claimants whose vehicles have been damaged in accidents should

be fully informed regarding the benefits and services offered by

insurance companies as part of the claims process. Those benefits and

services include, but are not limited to, policy terms regarding

repair warranties, the type of replacement parts used in the repair,

the anticipated time to repair the damaged vehicle, the anticipated

costs associated with the repairs, and the quality of the

workmanship.

(b) Claimants benefit because being informed about the benefits

and services offered by insurance companies allows them to make

meaningful choices regarding the repair process and the automotive

repair dealer to be used.

(c) Insurers should present that information in a truthful and

nondeceptive manner.

SEC. 2.   SECTION 1.   Section 758.5 of

the Insurance Code is amended to read:

758.5.  (a) No insurer shall require that an automobile be

repaired at a specific automotive repair dealer, as defined in

Section 9880.1 of the Business and Professions Code.

(b) (1) No insurer shall suggest or recommend that an automobile

be repaired at a specific automotive repair dealer unless either of

the following applies:

(A) A referral is expressly requested by the claimant.

(B) The claimant has been informed in writing of the right to

select the automotive repair dealer.

(2) An insurer may provide the claimant with specific truthful and

nondeceptive information regarding the services and benefits

available to the claimant during the claims process  pursuant

to the policy  . This may include, but is not limited to,

information about the repair warranties offered, the type of

replacement parts to be used, the anticipated time to repair the

damaged vehicle, and the quality of the workmanship available to the

claimant.

(3) If an insurer's recommendation of an automotive repair dealer

is accepted by the claimant, the insurer shall cause the damaged

vehicle to be restored to its condition prior to the loss at no

additional cost to the claimant other than as stated in the policy or

as is otherwise allowed by law. If the recommendation of an

automotive repair dealer is done orally, and if the oral

recommendation is accepted by the claimant, the insurer shall provide

the information contained in this paragraph, as noted in the

statement below, to the claimant at the time the recommendation is

made. The insurer shall mail or provide the notice required by this

paragraph within five calendar days from the acceptance of the

recommendation. The written notice required by this paragraph shall

include the following statement plainly printed in no less than

10-point type in a separate and freestanding document:

 

"WE ARE PROHIBITED BY LAW FROM REQUIRING THAT REPAIRS BE DONE AT A

SPECIFIC AUTOMOTIVE REPAIR DEALER. YOU ARE ENTITLED TO SELECT THE

AUTO BODY REPAIR SHOP TO REPAIR DAMAGE COVERED BY US. WE HAVE

RECOMMENDED AN AUTOMOTIVE REPAIR DEALER THAT WILL REPAIR YOUR DAMAGED

VEHICLE. WE RECOMMEND YOU CONTACT ANY OTHER AUTOMOTIVE REPAIR DEALER

YOU ARE CONSIDERING TO CLARIFY ANY QUESTIONS YOU MAY HAVE REGARDING

SERVICES AND BENEFITS. IF YOU AGREE TO USE OUR RECOMMENDED AUTOMOTIVE

REPAIR DEALER, WE WILL CAUSE THE DAMAGED VEHICLE TO BE RESTORED TO

ITS CONDITION PRIOR TO THE LOSS AT NO ADDITIONAL COST TO YOU OTHER

THAN AS STATED IN THE INSURANCE POLICY OR AS OTHERWISE ALLOWED BY

LAW. IF YOU EXPERIENCE A PROBLEM WITH THE REPAIR OF YOUR VEHICLE,

PLEASE CONTACT US IMMEDIATELY FOR ASSISTANCE."

 

(c) Except as provided in subparagraph (A) of paragraph (1) of

subdivision (b), or as to information of the kind authorized by

paragraph (2) of subdivision (b), after the claimant has chosen an

automotive repair dealer, the insurer shall not suggest or recommend

that the claimant select a different automotive repair dealer.

(d) Any insurer that, by the insurance contract, suggests or

recommends that an automobile be repaired at a particular automotive

repair dealer shall also do both of the following:

(1) Prominently disclose the contractual provision in writing to

the insured at the time the insurance is applied for and at the time

the claim is acknowledged by the insurer.

(2) If the claimant elects to have the vehicle repaired at the

shop of his or her choice, the insurer shall not limit or discount

the reasonable repair costs based on charges that would have been

incurred had the vehicle been repaired by the insurer's chosen shop.

(e) For purposes of this section, "claimant" means a first-party

claimant or insured, or a third-party claimant who asserts a right of

recovery for automotive repairs under an insurance policy.

(f) The powers of the commissioner to enforce this section shall

include those granted in Article 6.5 (commencing with Section 790) of

Chapter 1 of Part 2 of Division 1.

(g) The changes to this section made by the act enacted during

the 2009-10 Regular Session that amended this section shall only

apply to actions filed on or after January 1, 2010.

 

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