What's happening
The bill prohibits auto insurers from imposing pricing caps on repairs and requires them to fully restore vehicles if they recommend a repair shop.
Why it matters
Protects consumers from insurer-imposed cost limitations. by prohibiting auto insurance companies from setting maximum payment amounts (pricing caps) for labor, parts, paint, or repair materials, which may help ensure repairs are not shortchanged for cost reasons.
Strengthens negotiation rights. for vehicle owners by requiring that all aspects of a repair claim be negotiated with the insured (or their representative) and a licensed appraiser, potentially giving consumers more say in the repair process.
Holds insurers accountable for repair quality. if they recommend a repair shop—mandating that the vehicle must be restored to its pre-accident condition at no extra charge to the claimant (beyond standard policy deductibles). If the insurer’s chosen shop does not deliver, the insurer must pay for repairs at a shop of the claimant’s choice, ensuring consumers aren’t left with incomplete or substandard repairs.
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Who cares
Headline styles
Stop Insurer Repair Payment Limits
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to insurance
- Print number 413a
- Amend and recommit to insurance
- Referred to insurance
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Protect Auto Repair Choices
In Assembly Committee · Insurance · Sponsor William Magnarelli
Full text
1 pageUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
413--A
2017-2018 Regular Sessions
IN SENATE (Prefiled)
January 4, 2017
Introduced by Sen. DeFRANCISCO -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee
AN ACT to amend the insurance law, in relation to collision or comprehensive coverage on motor vehicles
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Section 2610 of the insurance law is amended by adding a new subsection (d) to read as follows:
(d)(1) No insurer in processing any such claim, shall limit the payment of such claim for damage to a motor vehicle repair based on pricing caps for labor, parts, paint or repair materials. All elements of such a claim for damages shall be negotiated with the insured, or his or her designated representative, by a duly licensed appraiser.
(2) If a recommendation or suggestion of an automotive repair facility is made by the insurer, and accepted by the claimant, the insurer shall cause the damaged vehicle to be restored to its condition immediately prior to the loss at no additional cost to the claimant other than deductions stated in the policy. Should the insurer fail to restore the vehicle to its condition immediately prior to the loss, the insurer shall at no additional expense to the claimant cause the vehicle to be restored to its condition immediately prior to the loss at a shop of the claimant's choice.
§ 2. This act shall take effect on the first of January next succeeding the date on which it shall have become a law and shall apply to all policies and contracts issued, renewed, modified, altered or amended on or after such effective date; provided, however, that effective immediately, the addition, amendment and/or repeal of any rule or regulation necessary for the implementation of this act on its effective date are authorized and directed to be made and completed on or before such effective date.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD00569-05-7
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the insurance law, in relation to collision or comprehensive coverage on motor vehicles
Purpose
The bill would protect the rights of insured motorists to have their vehicles repaired at the shop of their choice. It does this by requiring insurance companies to inform the insured of their rights under the law. It also prohibits insurers from refusing to pay on claims, based on any system of price caps or ceilings developed by the insurer.
Summary of provisions
Section 1 - Amends Section 2610 of the Insurance law by adding a new subsection (d) Section 2- Effective date
Justification
An economic impact report prepared in 2006 by Frederic B. Jennings, Jr., Ph.D. for the New York State Auto Collision Technicians Association, Inc., provides evidence that automobile insurance companies in New York State are artificially suppressing payment for labor rates paid to auto body repair shops, and are thereby jeopardizing the safety of drivers on New York roads. The report argues that suppression of labor rates has reduced the quality of repairs completed in many auto body repair shops, and therefore, has jeopardized driver safety.
In an effort to reduce costs, automobile insurance companies enter into "preferred" shop agreements with auto body repair shops, such that the preferred shop provides a discount to individuals insured by that insurance company. Automobile insurance companies may then refer claimants to those shops when asked for a referral. Under current law, insurance companies are permitted to pay the lowest price estimate on repairs, as long as the repairs restore the vehicle to pre-accident condition.
The president of the Auto Collision Technicians Association asserts that member shops regularly see customers in need of re-repairs for a poor job done by another body shop, generally the "preferred shop" recommended by the insurance company. In most instances, the insurance company must pay for the cost of the re-repair after significant hassle and legal negotiation on the part of the consumer. The Association estimates that this need for regular re-repairs to fix poor initial repair jobs actually has the effect of increasing auto insurance premiums, despite the claims of auto insurance companies that suppression of labor rates reduces monthly premiums to customers.
Preferred shops establish relationships with the insurers by agreeing to complete repair work within the price guidelines set by the insurance companies. This practice of establishing rigid price guidelines or caps goes beyond the legitimate right of the insurer to negotiate the price of repair. It has the effect of limiting consumer choices by dividing repair shops into two groups: the cut-rate shops preferred by the insurers, and independent shops which can be effectively blacklisted by insurance company policies and procedures.
The proposed legislation would require insurers to inform customers of their right to select a repair shop and to make decisions regarding the type of repair done to their vehicle. The bill would further strengthen the power of the consumer by prohibiting the use of arbitrary price caps set by insurers to limit the cost of repair. While the insurer may negotiate with the repair shop as to the cost of repair, they may not refuse to pay claims where the repair shop's estimate exceeds the insurer's guidelines.
Legislative history
A.7650 of 2005-2006; S .3763-AJA.392-A of 2007-2008; S .1517/A.316 of 2009-2010; S.4642/A.3961 of 2011-2012; S.338/A.483 of 2013-2014; S.2916-A.1537 of 2015-2016
Fiscal implications
None.
Effective date
The first January next succeeding the date on which it becomes a law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.