SSB 3154 (LSB 6159XC (1) 91)

SENATE FILE _____ 

BY  (PROPOSED COMMITTEE ON TRANSPORTATION BILL BY CHAIRPERSON ZUMBACH)

A BILL FOR

An Act relating to standards for settlement of certain motor vehicle insurance claims.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 507B.4, subsection 3, paragraph j, Code 2026, is amended by adding the following new subparagraph:
   NEW SUBPARAGRAPH.  (16)  Failing to comply with section 507B.10.
    Sec. 2.  NEW SECTION.  507B.10  Settled motor vehicle insurance claims involving aftermarket crash parts or original equipment manufacturer parts.
   1.  When a first-party, partial-loss claim relating to a motor vehicle is settled based on a written estimate prepared by or for the insurer that includes payment for aftermarket crash parts, the property insurer shall estimate the cost of repairs and pay the claim based only on the cost of aftermarket crash parts available from a distributor of each such part that is located within one hundred miles of the repair facility designated by the insured to make the repairs. The insurer shall pay the cost of any modifications which may become necessary when repairs are made using aftermarket crash parts or parts salvaged from the crashed vehicle.
   2.  When a third-party, partial-loss claim relating to a motor vehicle is settled based on a written estimate prepared by or for the insurer, the liability insurer shall estimate the cost of repairs and pay the claim based only on the cost of new original equipment manufacturer parts unless all of the following occur:
   a.  The insurer notifies the owner of the owner’s right to have the vehicle repaired based on the cost of using new original equipment manufacturer parts.
   b.  The motor vehicle owner gives express consent in writing that aftermarket crash parts or parts salvaged from the crashed vehicle may be used.
   c.  The insurer expressly agrees to pay the cost of any modifications which may become necessary when repairs are made using aftermarket crash parts or parts salvaged from the crashed vehicle and expressly agrees to defend and indemnify the owner of the motor vehicle and the repair facility against any claims related to repairs made using aftermarket crash parts or parts salvaged from the crashed vehicle.
   3.  As used in this section:
   a.  “Aftermarket crash part” means as defined in section 537B.4.
   b.  “Motor vehicle” means as defined in section 321.1.
   c.  “Repair facility” means as defined in section 537B.4.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill enacts former Iowa administrative code provisions relating to standards for settlement of certain motor vehicle insurance claims.
   The bill requires a property insurer to estimate the cost of repairs for a motor vehicle and pay a claim based only on the cost of aftermarket crash parts available from a distributor of each such part that is located within 100 miles of the repair facility when a first-party, partial-loss claim relating to the motor vehicle is settled based on a written estimate prepared by or for the insurer that includes payment for aftermarket crash parts. The bill requires the insurer to pay the cost of any modifications which may become necessary when repairs are made using aftermarket crash parts or parts salvaged from the crashed vehicle.
   When a third-party, partial-loss claim relating to a motor vehicle is settled based on a written estimate prepared by or for the insurer, the bill requires the liability insurer to estimate the cost of repairs and pay the claim based only on the cost of new original equipment manufacturer parts unless the owner of the motor vehicle gives express consent to use aftermarket crash parts or parts salvaged from the crashed vehicle and the insurer expressly agrees to pay the cost of any modifications which may become necessary when repairs are made using aftermarket crash parts or parts salvaged from the crashed vehicle, and expressly agrees to defend and indemnify the owner of the motor vehicle and the repair facility against any claims related to such repairs.
   A person who violates a provision of the bill is subject to entry of a cease and desist order, may be ordered by the commissioner of insurance to pay a civil penalty ranging from $1,000 to $50,000 under Code section 507B.7, and if the person has a license to operate the person’s business, the license is subject to suspension or revocation.