HSB 529 (LSB 5144YC (2) 87)

HOUSE FILE _____ 

BY  (PROPOSED COMMITTEE ON COMMERCE BILL BY CHAIRPERSON COWNIE)

A BILL FOR

An Act concerning choice of automobile repair facilities under automobile liability insurance policies.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  516B.4  Choice of automobile repair facilities.
   1.  An insurer transacting business in this state, including its producers and adjusters, that issues or renews an automobile liability policy shall not do any of the following:
   a.  Require that a claimant under the policy use a particular automobile repair business or location for an estimate or a repair.
   b.  Engage in any act or practice that intimidates, coerces, or threatens a claimant or that provides an incentive or inducement for a claimant to use a particular automobile repair business or location.
   2.  An insurer transacting business in this state, including its producers and adjusters, that issues or renews an automobile liability policy is entitled to have access to a claimant’s automobile for the purpose of preparing a competitive repair estimate.
   3.  If an insurer has a direct repair program with automobile repair businesses or locations, the insurer shall not limit the number of automobile repair businesses or locations with whom it maintains a direct repair program except that an insurer may limit the number of automobile repair businesses or locations participating in the insurer’s direct repair program to those automobile repair businesses or locations that meet the requirements of subsection 4. An insurer is not required to establish a direct repair program in a particular market area where the insurer’s number of policyholders does not support establishing a direct repair program in that area.
   4.  If an insurer has a direct repair program, the insurer, upon request, shall provide to a claimant, without prejudice or bias, a list of all automobile repair businesses or locations that are reasonably close or convenient to the claimant and willing to provide services and that meet the insurer’s criteria for participation in its direct repair program by:
   a.  Possessing the equipment necessary to undertake repairs.
   b.  Undertaking training of management and technical personnel with respect to repair information and the claims process.
   c.  Agreeing to perform quality repairs at market price and that meet industry quality repair standards.
   d.  Agreeing to warrant the quality of work including refinishing, in writing, to the claimant or insured, for a period of not less than one year from the date of repair.
   e.  Agreeing to inspection of their repairs and services by the insurer and agreeing that the insurer may terminate the direct repair program with the automobile repair business or location if the repair and services provided are below the standards of quality required by the automotive industry.
   f.  If requested, agreeing to execute an agreement with the insurer that may contain additional criteria that are not designed to unfairly limit the number of automobile repair businesses or locations with whom the insurer maintains direct repair programs. The additional criteria may include criteria determined to be necessary by the insurer and designed to ensure that the automobile repair business or location has the necessary estimating systems and programs and equipment to communicate electronically with the insurer and that the automobile repair business or location has taken steps to ensure the privacy of the insurer and the claimant. However, the insurer shall not abrogate the right of an automobile repair business or location to purchase parts or supplies from any vendor, at the sole discretion of the automobile repair business or location.
   5.  An insurer transacting business in this state, including its producers and adjusters, that issues or renews an automobile liability policy shall not abrogate the right of a claimant to use any automobile repair business or location at the claimant’s sole discretion, and the insurer shall pay for the reasonable and necessary cost of the automobile repair services for covered damages, less any deductible under the terms of the policy. This section does not require an insurer to pay more for automobile repair services than the market price.
   6.  For the purposes of this section:
   a.  “Automobile repair business or location” does not include a business or location that exclusively provides automobile glass replacement, glass repair services, or glass products.
   b.  “Claimant” means a person seeking repair of an automobile whether that person is the insured person or a third party making a claim against the insurer.
   c.  (1)  “Market price” means either of the following:
   (a)  The price agreed upon between the insurer and the policyholder or the service provider.
   (b)  The price that is reasonable within the market of the local area where the repair or replacement is being performed.
   (2)  The market price shall not be less than the cost of the repair or replacement work to the service provider.
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 choice of automobile repair facilities under automobile liability policies issued or renewed in this state.
   New Code section 516B.4 prohibits an automobile liability insurer from requiring that a claimant under the policy use a particular automobile repair business or location for an estimate or repair. A claimant may use any automobile repair business or location of the claimant’s choice and the insurer must pay the reasonable and necessary cost of the repair service for covered damages, less any deductible under the terms of the policy. This section does not require an insurer to pay more for repairs than the market price.
   An insurer may have a direct repair program and provide to a claimant, upon request, a list of participants in the direct repair program that are reasonably close or convenient to the claimant and that meet criteria, as specified in the bill, for participation in the program. 
   An insurer is prohibited from infringing on the right of an automobile repair business or location to purchase parts or supplies from a vendor of its choice.
   For the purposes of the bill, “automobile repair business or location” does not include a business or location that exclusively provides automobile glass replacement, glass repair services, or glass products. The bill defines “market price” as either the price agreed upon between the insurer and the policyholder or the service provider, or the price that is reasonable within the market of the local area where the repair or replacement is being performed. The market price cannot be less than the cost of the repair or replacement to the service provider.