Chapter 504
2013 -- H 5263
Enacted 07/17/13
A N A C T
RELATING TO
INSURANCE - UNFAIR CLAIMS PRACTICES
Introduced By: Representatives Corvese, Winfield, Ucci, Silva, and Trillo
Date Introduced: February 06, 2013
It is enacted by the General
Assembly as follows:
SECTION 1. Section 27-9.1-4 of the General Laws in Chapter
27-9.1 entitled "Unfair
Claims Settlement Practices
Act" is hereby amended to read as follows:
27-9.1-4.
"Unfair claims practices" defined. -- (a) Any
of the following acts by an
insurer, if committed in violation of section 27-9.1-3,
constitutes an unfair claims practice:
(1) Misrepresenting to
claimants and insured relevant facts or policy provisions relating
to coverage at issue;
(2) Failing to
acknowledge and act with reasonable promptness upon pertinent
communications with respect to claims arising under its policies;
(3) Failing to adopt
and implement reasonable standards for the prompt investigation and
settlement of claims arising under its policies;
(4) Not attempting in
good faith to effectuate prompt, fair, and equitable settlement of
claims submitted in which liability has become reasonably
clear;
(5) Compelling insured,
beneficiaries, or claimants to institute suits to recover amounts
due under its policies by offering substantially less
than the amounts ultimately recovered in suits
brought by them;
(6) Refusing to pay
claims without conducting a reasonable investigation;
(7) Failing to affirm or
deny coverage of claims within a reasonable time after having
completed its investigation related to the claim or claims;
(8) Attempting to
settle or settling claims for less than the amount that a reasonable
person would believe the insured or beneficiary was entitled
by reference to written or printed
advertising material accompanying or made part of an application;
(9) Attempting to
settle or settling claims on the basis of an application that was
materially altered without notice to, or knowledge or consent
of, the insured;
(10) Making claims
payments to an insured or beneficiary without indicating the
coverage under which each payment is being made;
(11) Unreasonably delaying
the investigation or payment of claims by requiring both a
formal proof of loss form and subsequent verification that
would result in duplication of
information and verification appearing in the formal proof of
loss form;
(12) Failing in the
case of claims denials or offers of compromise settlement to promptly
provide a reasonable and accurate explanation of the basis of
those actions;
(13) Failing to provide
forms necessary to present claims within ten (10) calendar days
of a request with reasonable explanations regarding
their use;
(14) Failing to adopt
and implement reasonable standards to assure that the repairs of a
repairer owned by or required to be used by the insurer are
performed in a workmanlike manner;
(15) Misleading a
claimant as to the applicable statute of limitations;
(16) Failing to respond
to a claim within thirty (30) days, unless the insured shall agree
to a longer period;
(17) Engaging in any
act or practice of intimidation, coercion, threat or
misrepresentation of consumers rights, for or against any insured
person, claimant, or entity to
use a particular rental car company for motor vehicle
replacement services or products; provided,
however, nothing shall prohibit any insurance company, agent
or adjuster from providing to such
insured person, claimant or entity the names of a rental car
company with which arrangements
have been made with respect to motor vehicle replacement
services; provided, that the rental car
company is licensed pursuant to
(18) Refusing to honor
a "direction to pay" executed by an insured, claimant, indicating
that the insured or claimant, wishes to have the insurance
company directly pay his or her motor
vehicle replacement vehicle rental benefit to the rental car
company of the consumer's choice;
provided, that the rental car company is licensed pursuant to
31-5-33. Nothing in this
section shall be construed to prevent the insurance company's ability to
question or challenge the amount charged, in accordance with
its policy provisions, and the
requirements of the department of business regulation;
(19) Modifying any
published manual (i.e. motors, mitchells,
or any automated appraisal
system) relating to auto body repair without prior agreement
between the parties;
(20) Failing to use a
manual or system in its entirety in the appraisal of a motor vehicle;
(21) Refusing to compensate
an auto body shop for documented charges as identified
through industry recognized software programs or systems for
paint and refinishing materials in
auto body repair claims; and/or
(22) Failing to comply
with the requirements of Rhode Island General Laws
section 31-
47-12.1.
(23) Failure to have an
appraisal performed by a licensed appraiser where the motor
vehicle has sustained damage estimated to exceed two thousand
five hundred dollars ($2,500).
Said licensed appraiser referred to herein must be
unaffiliated with the repair facility repairing the
subject motor vehicle.
(24) Failure to perform
a supplemental appraisal inspection of a vehicle within four (4)
business days after a request is received from an auto body
repair shop.
(25) Designating a
motor vehicle a total loss if the cost to rebuild or reconstruct the motor
vehicle to its pre-accident condition is less than
seventy-five percent (75%) of the "fair market
value" of the motor vehicle immediately preceding the
time it was damaged:
(i)
For the purposes of this subdivision, "fair market value" means the
retail value of a
motor vehicle as set forth in a current edition of a
nationally recognized compilation of retail
values commonly used by the automotive industry to establish
values of motor vehicles;
(ii) Nothing herein
shall be construed to require a vehicle be deemed a total loss if the
total cost to rebuild or reconstruct the motor vehicle to
its pre-accident condition is greater than
seventy-five percent (75%) of the fair market value of the
motor vehicle immediately preceding
the time it was damaged; and
(iii) Nothing herein
shall prohibit an insurance company from agreeing to deem a vehicle
a total loss at the vehicle owner's request and with
the vehicle owner's express written
authorization, if the cost to rebuild or reconstruct the motor
vehicle to its pre-accident condition is
less than seventy-five percent (75%) of the "fair
market value" of the motor vehicle immediately
preceding the time it was damaged.
(b) (1) Nothing
contained in subsections 27-9.1-4(a)(19), (20), &
(21) of this chapter
shall be construed to interfere with an auto body repair
facility's contract with an insurance
company.
(2) If an insurance
company and auto body repair facility have contracted under a direct
repair program or any similar program thereto the provisions
of subsections 27-9.1-4(a)(19), (20)
& (21) shall not apply.
(3) If the insured or
claimant elects to have the vehicle repaired at a shop of his or her
choice, the insurer shall not limit or discount the
reasonable repair costs based upon the charges
that would have been incurred had the vehicle been
repaired by the insurer's chosen shop(s).
SECTION 2. This act shall take effect upon passage.
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LC00865
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