The governor of Rhode Island has vetoed a number of proposed bills that would have affected the way insurance companies handle appraisals, as well as the operation of direct repair programs in the state. On July 3, Republican Gov. Donald Carcieri vetoed several pieces of legislation that would have amended the existing Unfair Claims Settlement Practices Act and established new protections for consumers and body shops.
House Bill 5547 would have allowed claimants and insured parties to use the car rental company of their choice, and clarified insurance card notice relating to the consumer's right to choose an auto body repair shop. Another measure (H 5549) would have made it an unfair practice for an insurance company not to follow all components of a repair manual when appraising a damaged vehicle.
That bill also would have amended the existing unfair claims settlement law to define as an unfair practice the modifying of any published manual relating to the repair without prior agreement between the parties; failing to use the manual or system in its entirety for the appraisal; and refusing to pay adequate compensation with respect to paint and refinishing materials. The amendment made exceptions for shops with existing contracts with insurance companies.
Carcieri also vetoed a measure (H 5550) that would have provided that a customer of a body shop may designate a representative to authorize repairs to their vehicle, but that the designee could not be an insurer or the auto body repair shop, or an employee or agent of either.
Earlier this year, the Rhode Island legislature passed Senate Bill 516, which requires repair shops to inform customers about their right to have original equipment manufacturer (OEM) parts used in the repair of their vehicle. This amended version of existing statute states that auto repair shops must comply with the customer's choice of parts (either OEM or non-OEM), and that insurers must pay for the services rendered by the shop.
After passing the state senate and house, the bill was sent to Gov. Carcieri on June 28.
All of these measures were supported by the Auto Body Association of Rhode Island (ABARI). Last year, ABARI scored a victory when the legislature passed new labor rate survey rules over the objections of the governor and the insurance industry. Carcieri has had several vetoes overridden by the largely Democratic state assembly, and has been at odds with the legislature on insurance-related issues.
The Property Casualty Insurers Association of America (PCI) came out against the current legislative package, claiming the bills would harm consumers.
"When you're involved in an accident, you want a quick, hassle-free way of getting your vehicle expertly repaired. You want to make an informed decision. And, you want options that keep you in control of your repair costs and insurance costs," said Frank O'Brien, vice president and regional manager for PCI.
Several other related bills are still in committee. One (H 5544) would require that "any vehicle determined to be a total loss by an insurance company shall have its title stamped on all paper and electronic copies "for salvage parts only.' " That measure was referred to the Senate Constitutional and Regulatory Issues committee in May, as was H 5546, which would add an appraisal requirement to the Unfair Claims Settlement Practices Act. Under the proposal, failing to require an appraiser to perform an independent appraisal on a vehicle that has suffered more than $500 in physical damage would fall under that law.
In March, the House also held another bill (H 5548) over for further study, which would make insurers liable for three times the amount of damages sustained by an insured or third-party claimant as a result of "improper or unsafe repairs performed on the insured's vehicle by a body shop that is a member of that insurer's direct repair network or preferred-shop list."
