SF 2023 (LSB 5130XS (5) 85)

SENATE FILE 2023

BY  ZAUN

A BILL FOR

An Act relating to unfair motor vehicle repair practices in the practice of insurance and providing penalties.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  507B.3A  Unfair or deceptive motor vehicle repair practices.
   1.  An adjuster, appraiser, insurance producer, insurer, or employee of an insurer shall not do any of the following in regard to the repair of property damage to a motor vehicle covered by a motor vehicle insurance policy:
   a.  Recommend the use of a specific repair facility or source for the repair of property damage to or replacement of parts on a motor vehicle without informing the claimant or insured that the claimant or insured is not required to use the recommended repair facility or source.
   b.  Require that an appraisal of damage to or repair of a motor vehicle be made in a specific repair facility.
   c.  Require that a claimant or insured use a specific contractor or repair facility for a repair service or repair product.
   d.  Require a repair facility to use a specific vendor or process for the procurement of parts or other materials necessary for the repair of a motor vehicle.
   e.  Intimidate, coerce, or threaten a claimant or insured to use a specific contractor or repair facility for a repair service or repair product.
   2.  An adjuster or appraiser shall not accept a gratuity or other form of remuneration from a repair facility for recommending that repair facility to a claimant or insured.
   3.  An insurer that issues or delivers a policy of motor vehicle liability insurance in this state that provides coverage for the repair of property damage to an insured motor vehicle shall do all of the following:
   a.  Authorize repairs to be made to the insured motor vehicle using genuine crash parts sufficient to maintain the manufacturer’s warranty for fit, finish, structural integrity, corrosion resistance, dent resistance, and crash performance.
   b.  Shall not require repairs to be made to the insured motor vehicle using aftermarket crash parts.
   4.  Notwithstanding subsection 3, an insured may consent in writing at the time of repair of the insured motor vehicle to the use of aftermarket crash parts.
   5.  This section applies to repairs made to an insured motor vehicle during the five-year period after the date of the vehicle’s manufacture.
   6.  A violation of this section is an unfair or deceptive act or practice in the business of insurance as provided in section 507B.4, subsection 3.
   7.  As used in this section:
   a.  “Adjuster” or “appraiser” means a person that is employed by an insurer as, solicits business as, or represents to an insured that the person is an adjuster or appraiser of claims for loss or damage covered by a motor vehicle insurance policy.
   b.  “Aftermarket crash parts” means crash parts that are all of the following:
   (1)  Manufactured by a person other than the original manufacturer of the motor vehicle to be repaired.
   (2)  For which the original manufacturer of the motor vehicle has not authorized the use of its name or trademark by the manufacturer of the crash parts.
   c.  “Crash parts” means exterior or interior sheet metal or fiberglass panels and parts that form the superstructure or body of a motor vehicle, including all of the following:
   (1)  Fenders.
   (2)  Bumpers.
   (3)  Door panels.
   (4)  Hoods.
   (5)  Grills.
   (6)  Wheel wells.
   (7)  Front and rear lamp display panels.
   d.  “Genuine crash parts” means crash parts that are all of the following:
   (1)  Manufactured by or for the original manufacturer of the motor vehicle to be repaired.
   (2)  Authorized to carry the name or trademark of the original manufacturer of the motor vehicle.
    Sec. 2.  Section 507B.6, subsection 1, Code 2014, is amended to read as follows:
   1.  Whenever the commissioner believes that any person has been engaged or is engaging in this state in any unfair method of competition or any unfair or deceptive act or practice whether or not defined in section 507B.3A, 507B.4, 507B.4A, or 507B.5 and that a proceeding by the commissioner in respect to such method of competition or unfair or deceptive act or practice would be in the public interest, the commissioner shall issue and serve upon such person a statement of the charges in that respect and a notice of a hearing on such charges to be held at a time and place fixed in the notice, which shall not be less than ten days after the date of the service of such notice.
    Sec. 3.  Section 507B.12, unnumbered paragraph 1, Code 2014, is amended to read as follows:

   The commissioner may, after notice and hearing, promulgate reasonable rules, as are necessary or proper to identify specific methods of competition or acts or practices which are prohibited by section 507B.3A, 507B.4, 507B.4A, or 507B.5, but the rules shall not enlarge upon or extend the provisions of such sections. Such rules shall be subject to review in accordance with chapter 17A.
EXPLANATION
The inclusion of this explanation does not constitute agreement with

the explanation’s substance by the members of the general assembly.
   This bill relates to certain unfair or deceptive motor vehicle repair practices. The bill prohibits an adjuster, appraiser, insurance producer, insurer, or employee of an insurer from recommending the use of a specific repair facility or source for the repair or replacement of property damage to a motor vehicle without informing the claimant or insured that use of the recommended facility or source is not required; requiring that an appraisal of damage or repair to a motor vehicle be made in a specific repair facility; requiring a repair facility to use a specific vendor or process for procurement of parts or other materials necessary for the repair; or intimidating, coercing, or threatening a claimant or insured to use a specific contractor or repair facility.
   An adjuster or appraiser is prohibited from accepting a gratuity or other form of remuneration from a repair facility for recommending that repair facility to a claimant or insured.
   An insurer that issues or delivers a policy of motor vehicle liability insurance in this state that provides coverage for the repair of property damage to an insured motor vehicle is required to authorize repairs using genuine crash parts sufficient to maintain the manufacturer’s warranty on the vehicle and is prohibited from requiring that repairs be made using aftermarket crash parts.
   The bill applies to repairs made to an insured motor vehicle during the five-year period after the date of the vehicle’s manufacture.
   The bill defines who is an “adjuster” or “appraiser” for purposes of the bill. The bill also defines “crash parts” as those parts that form the superstructure or body of a motor vehicle. “Genuine crash parts” are crash parts that are manufactured by or for the original manufacturer of the insured motor vehicle and are authorized to carry the name or trademark of the vehicle’s original manufacturer. “Aftermarket crash parts” are manufactured by a person other than the original manufacturer of the vehicle and are not authorized to use the manufacturer’s name or trademark.
   A violation of the bill’s provisions is an unfair or deceptive act or practice in the business of insurance under Code section 507B.4(3). The cease and desist orders and civil penalties available under Code chapter 507B are applicable to violations of the bill’s provisions. Such civil penalties may not exceed $1,000 for each act, not exceeding an aggregate of $10,000. For a knowing violation a civil penalty of not more than $5,000 for each act or violation, not exceeding an aggregate of $50,000 is possible.