H.F. _____ Section 1. NEW SECTION . 516B.4 Choice of automobile repair 1 facilities. 2 1. An insurer transacting business in this state, 3 including its producers and adjusters, that issues or renews an 4 automobile liability policy shall not do any of the following: 5 a. Require that a claimant under the policy use a particular 6 automobile repair business or location for an estimate or a 7 repair. 8 b. Engage in any act or practice that intimidates, coerces, 9 or threatens a claimant or that provides an incentive or 10 inducement for a claimant to use a particular automobile repair 11 business or location. 12 2. An insurer transacting business in this state, 13 including its producers and adjusters, that issues or renews 14 an automobile liability policy is entitled to have access 15 to a claimant’s automobile for the purpose of preparing a 16 competitive repair estimate. 17 3. If an insurer has a direct repair program with automobile 18 repair businesses or locations, the insurer shall not limit the 19 number of automobile repair businesses or locations with whom 20 it maintains a direct repair program except that an insurer may 21 limit the number of automobile repair businesses or locations 22 participating in the insurer’s direct repair program to 23 those automobile repair businesses or locations that meet the 24 requirements of subsection 4. An insurer is not required to 25 establish a direct repair program in a particular market area 26 where the insurer’s number of policyholders does not support 27 establishing a direct repair program in that area. 28 4. If an insurer has a direct repair program, the insurer, 29 upon request, shall provide to a claimant, without prejudice or 30 bias, a list of all automobile repair businesses or locations 31 that are reasonably close or convenient to the claimant 32 and willing to provide services and that meet the insurer’s 33 criteria for participation in its direct repair program by: 34 a. Possessing the equipment necessary to undertake repairs. 35 -1- LSB 5144YC (2) 87 gh/rn 1/ 4

H.F. _____ b. Undertaking training of management and technical 1 personnel with respect to repair information and the claims 2 process. 3 c. Agreeing to perform quality repairs at market price and 4 that meet industry quality repair standards. 5 d. Agreeing to warrant the quality of work including 6 refinishing, in writing, to the claimant or insured, for a 7 period of not less than one year from the date of repair. 8 e. Agreeing to inspection of their repairs and services by 9 the insurer and agreeing that the insurer may terminate the 10 direct repair program with the automobile repair business or 11 location if the repair and services provided are below the 12 standards of quality required by the automotive industry. 13 f. If requested, agreeing to execute an agreement with 14 the insurer that may contain additional criteria that are not 15 designed to unfairly limit the number of automobile repair 16 businesses or locations with whom the insurer maintains direct 17 repair programs. The additional criteria may include criteria 18 determined to be necessary by the insurer and designed to 19 ensure that the automobile repair business or location has 20 the necessary estimating systems and programs and equipment 21 to communicate electronically with the insurer and that the 22 automobile repair business or location has taken steps to 23 ensure the privacy of the insurer and the claimant. However, 24 the insurer shall not abrogate the right of an automobile 25 repair business or location to purchase parts or supplies from 26 any vendor, at the sole discretion of the automobile repair 27 business or location. 28 5. An insurer transacting business in this state, 29 including its producers and adjusters, that issues or renews 30 an automobile liability policy shall not abrogate the right of 31 a claimant to use any automobile repair business or location 32 at the claimant’s sole discretion, and the insurer shall pay 33 for the reasonable and necessary cost of the automobile repair 34 services for covered damages, less any deductible under the 35 -2- LSB 5144YC (2) 87 gh/rn 2/ 4

H.F. _____ terms of the policy. This section does not require an insurer 1 to pay more for automobile repair services than the market 2 price. 3 6. For the purposes of this section: 4 a. “Automobile repair business or location” does not include 5 a business or location that exclusively provides automobile 6 glass replacement, glass repair services, or glass products. 7 b. “Claimant” means a person seeking repair of an automobile 8 whether that person is the insured person or a third party 9 making a claim against the insurer. 10 c. (1) “Market price” means either of the following: 11 (a) The price agreed upon between the insurer and the 12 policyholder or the service provider. 13 (b) The price that is reasonable within the market of the 14 local area where the repair or replacement is being performed. 15 (2) The market price shall not be less than the cost of the 16 repair or replacement work to the service provider. 17 EXPLANATION 18 The inclusion of this explanation does not constitute agreement with 19 the explanation’s substance by the members of the general assembly. 20 This bill relates to choice of automobile repair facilities 21 under automobile liability policies issued or renewed in this 22 state. 23 New Code section 516B.4 prohibits an automobile liability 24 insurer from requiring that a claimant under the policy use 25 a particular automobile repair business or location for an 26 estimate or repair. A claimant may use any automobile repair 27 business or location of the claimant’s choice and the insurer 28 must pay the reasonable and necessary cost of the repair 29 service for covered damages, less any deductible under the 30 terms of the policy. This section does not require an insurer 31 to pay more for repairs than the market price. 32 An insurer may have a direct repair program and provide to a 33 claimant, upon request, a list of participants in the direct 34 repair program that are reasonably close or convenient to the 35 -3- LSB 5144YC (2) 87 gh/rn 3/ 4

H.F. _____ claimant and that meet criteria, as specified in the bill, for 1 participation in the program. 2 An insurer is prohibited from infringing on the right of an 3 automobile repair business or location to purchase parts or 4 supplies from a vendor of its choice. 5 For the purposes of the bill, “automobile repair business 6 or location” does not include a business or location that 7 exclusively provides automobile glass replacement, glass repair 8 services, or glass products. The bill defines “market price” 9 as either the price agreed upon between the insurer and the 10 policyholder or the service provider, or the price that is 11 reasonable within the market of the local area where the repair 12 or replacement is being performed. The market price cannot be 13 less than the cost of the repair or replacement to the service 14 provider. 15 -4- LSB 5144YC (2) 87 gh/rn 4/ 4