S.F. 81 Section 1. NEW SECTION . 507B.3A Unfair or deceptive motor 1 vehicle repair practices. 2 1. An adjuster, appraiser, insurance producer, insurer, 3 or employee of an insurer shall not do any of the following 4 in regard to the repair of property damage to a motor vehicle 5 covered by a motor vehicle insurance policy: 6 a. Recommend the use of a specific repair facility or source 7 for the repair of property damage to or replacement of parts on 8 a motor vehicle without informing the claimant or insured that 9 the claimant or insured is not required to use the recommended 10 repair facility or source. 11 b. Require that an appraisal of damage to or repair of a 12 motor vehicle be made in a specific repair facility. 13 c. Require that a claimant or insured use a specific 14 contractor or repair facility for a repair service or repair 15 product. 16 d. Require a repair facility to use a specific vendor 17 or process for the procurement of parts or other materials 18 necessary for the repair of a motor vehicle. 19 e. Intimidate, coerce, or threaten a claimant or insured 20 to use a specific contractor or repair facility for a repair 21 service or repair product. 22 2. An adjuster or appraiser shall not accept a gratuity 23 or other form of remuneration from a repair facility for 24 recommending that repair facility to a claimant or insured. 25 3. An insurer that issues or delivers a policy of motor 26 vehicle liability insurance in this state that provides 27 coverage for the repair of property damage to an insured motor 28 vehicle shall do all of the following: 29 a. Authorize repairs to be made to the insured motor 30 vehicle using genuine crash parts sufficient to maintain the 31 manufacturer’s warranty for fit, finish, structural integrity, 32 corrosion resistance, dent resistance, and crash performance. 33 b. Shall not require repairs to be made to the insured motor 34 vehicle using aftermarket crash parts. 35 -1- LSB 1580XS (2) 87 av/nh 1/ 4

S.F. 81 4. Notwithstanding subsection 3, an insured may consent in 1 writing at the time of repair of the insured motor vehicle to 2 the use of aftermarket crash parts. 3 5. This section applies to repairs made to an insured motor 4 vehicle during the five-year period after the date of the 5 vehicle’s manufacture. 6 6. A violation of this section is an unfair or deceptive act 7 or practice in the business of insurance as provided in section 8 507B.4, subsection 3. 9 7. As used in this section: 10 a. “Adjuster” or “appraiser” means a person who is employed 11 by an insurer as, solicits business as, or represents to an 12 insured that the person is an adjuster or appraiser of claims 13 for loss or damage covered by a motor vehicle insurance policy. 14 b. “Aftermarket crash parts” means crash parts that are all 15 of the following: 16 (1) Manufactured by a person other than the original 17 manufacturer of the motor vehicle to be repaired. 18 (2) For which the original manufacturer of the motor vehicle 19 has not authorized the use of its name or trademark by the 20 manufacturer of the crash parts. 21 c. “Crash parts” means exterior or interior sheet metal or 22 fiberglass panels and parts that form the superstructure or 23 body of a motor vehicle, including all of the following: 24 (1) Fenders. 25 (2) Bumpers. 26 (3) Door panels. 27 (4) Hoods. 28 (5) Grills. 29 (6) Wheel wells. 30 (7) Front and rear lamp display panels. 31 d. “Genuine crash parts” means crash parts that are all of 32 the following: 33 (1) Manufactured by or for the original manufacturer of the 34 motor vehicle to be repaired. 35 -2- LSB 1580XS (2) 87 av/nh 2/ 4

S.F. 81 (2) Authorized to carry the name or trademark of the 1 original manufacturer of the motor vehicle. 2 Sec. 2. Section 507B.6, subsection 1, Code 2017, is amended 3 to read as follows: 4 1. Whenever the commissioner believes that any person has 5 been engaged or is engaging in this state in any unfair method 6 of competition or any unfair or deceptive act or practice 7 whether or not defined in section 507B.3A, 507B.4 , 507B.4A , or 8 507B.5 and that a proceeding by the commissioner in respect 9 to such method of competition or unfair or deceptive act or 10 practice would be in the public interest, the commissioner 11 shall issue and serve upon such person a statement of the 12 charges in that respect and a notice of a hearing on such 13 charges to be held at a time and place fixed in the notice, 14 which shall not be less than ten days after the date of the 15 service of such notice. 16 Sec. 3. Section 507B.12, unnumbered paragraph 1, Code 2017, 17 is amended to read as follows: 18 The commissioner may, after notice and hearing, promulgate 19 reasonable rules, as are necessary or proper to identify 20 specific methods of competition or acts or practices which are 21 prohibited by section 507B.3A, 507B.4 , 507B.4A , or 507B.5 , 22 but the rules shall not enlarge upon or extend the provisions 23 of such sections. Such rules shall be subject to review in 24 accordance with chapter 17A . 25 EXPLANATION 26 The inclusion of this explanation does not constitute agreement with 27 the explanation’s substance by the members of the general assembly. 28 This bill relates to certain unfair or deceptive motor 29 vehicle repair practices. The bill prohibits an adjuster, 30 appraiser, insurance producer, insurer, or employee of an 31 insurer from recommending the use of a specific repair facility 32 or source for the repair or replacement of property damage to a 33 motor vehicle without informing the claimant or insured that 34 use of the recommended facility or source is not required; 35 -3- LSB 1580XS (2) 87 av/nh 3/ 4

S.F. 81 requiring that an appraisal of damage or repair to a motor 1 vehicle be made in a specific repair facility; requiring 2 a repair facility to use a specific vendor or process for 3 procurement of parts or other materials necessary for the 4 repair; or intimidating, coercing, or threatening a claimant or 5 insured to use a specific contractor or repair facility. 6 An adjuster or appraiser is prohibited from accepting a 7 gratuity or other form of remuneration from a repair facility 8 for recommending that repair facility to a claimant or insured. 9 An insurer that issues or delivers a policy of motor vehicle 10 liability insurance in this state that provides coverage for 11 the repair of property damage to an insured motor vehicle 12 is required to authorize repairs using genuine crash parts 13 sufficient to maintain the manufacturer’s warranty on the 14 vehicle and is prohibited from requiring that repairs be made 15 using aftermarket crash parts. 16 The bill applies to repairs made to an insured motor vehicle 17 during the five-year period after the date of the vehicle’s 18 manufacture. 19 A violation of the bill’s provisions is an unfair or 20 deceptive act or practice in the business of insurance under 21 Code section 507B.4(3). The cease and desist orders and civil 22 penalties available under Code chapter 507B are applicable to 23 violations of the bill’s provisions. Such civil penalties may 24 not exceed $1,000 for each act, not exceeding an aggregate 25 of $10,000. For a knowing violation a civil penalty of not 26 more than $5,000 for each act or violation, not exceeding an 27 aggregate of $50,000 is possible. 28 -4- LSB 1580XS (2) 87 av/nh 4/ 4