senate Bill S338

Prohibits insurers from limiting payment on claims based on pricing caps and from recommending a particular repair facility, and requires notice to insureds

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 09 / Jan / 2013
    • REFERRED TO INSURANCE
  • 08 / Jan / 2014
    • REFERRED TO INSURANCE
  • 20 / Jun / 2014
    • COMMITTEE DISCHARGED AND COMMITTED TO RULES
  • 20 / Jun / 2014
    • ORDERED TO THIRD READING CAL.1689
  • 20 / Jun / 2014
    • PASSED SENATE
  • 20 / Jun / 2014
    • DELIVERED TO ASSEMBLY
  • 23 / Jun / 2014
    • REFERRED TO INSURANCE

Summary

Prohibits insurers from limiting payment on claims for damage to motor vehicles based on pricing caps for labor, parts, paint or repair materials; prohibits insurers from recommending a particular repair facility; and requires insurers to provide and retain a signed notice to claimants in relation to insured's right to have a vehicle repaired in the shop of his/her choice.

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Bill Details

See Assembly Version of this Bill:
A483
Versions:
S338
Legislative Cycle:
2013-2014
Current Committee:
Assembly Insurance
Law Section:
Insurance Law
Laws Affected:
Amd ยง2610, Ins L
Versions Introduced in Previous Legislative Cycles:
2011-2012: S4642, A3961
2009-2010: S1517, A316
2007-2008: A392A

Sponsor Memo

BILL NUMBER:S338

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:

Amends Section 2610 of the Insurance Law to prohibit insurers from
establishing price caps for labor, parts, paint or repair materials;
requires that all elements of a claim shall be negotiated with the
insured or his/her designated representative by a duly licensed
appraiser; requires insurers to restore a damaged vehicle to
pre-accident condition; requires insurers to maintain in its files a
statement signed by the claimant showing that the claimant is aware
of the provisions of this section of law.

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-A/A.392-A of 2007-2008
S.1517/A.316 of 2009-2010
S.4642/A.3961 of 2011-2012

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
The first January next succeeding the date on which it
becomes a law.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                   338

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 9, 2013
                               ___________

Introduced  by  Sen.  DeFRANCISCO -- read twice and ordered printed, and
  when printed to be committed to the Committee on Insurance

AN ACT to amend the insurance law, in relation to collision  or  compre-
  hensive coverage on motor vehicles

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Section 2610 of the insurance law is amended  by  adding  a
new subsection (c) to read as follows:
  (C)(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. THE INSURER SHALL MAINTAIN IN ITS FILE, A  STATEMENT,
SIGNED  BY  THE CLAIMANT, PLAINLY PRINTED IN NO LESS THAN 10 POINT TYPE:
"PURSUANT TO SECTION 2610 OF THE INSURANCE LAW, AN INSURANCE COMPANY MAY
NOT LIMIT PAYMENT BASED ON PRICING  CAPS  FOR  LABOR,  PARTS,  PAINT  OR
REPAIR  MATERIALS.  AN  INSURER CANNOT REQUIRE THAT REPAIRS BE MADE TO A
MOTOR VEHICLE IN A PARTICULAR PLACE OR REPAIR SHOP. YOU HAVE  THE  RIGHT
TO HAVE YOUR VEHICLE REPAIRED IN THE SHOP OF YOUR CHOICE".
  S  2. This act shall take effect on the first of January next succeed-
ing the date on which it shall have become a law and shall apply to  all

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD01477-01-3

S. 338                              2

policies  and contracts issued, renewed, modified, altered or amended on
or after such effective date; provided, however,  that  effective  imme-
diately, 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.

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