2024 -- S 2210

========

LC004220

========

     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2024

____________

A N   A C T

RELATING TO INSURANCE -- UNFAIR CLAIMS SETTLEMENT PRACTICES ACT

     

     Introduced By: Senator Roger Picard

     Date Introduced: January 24, 2024

     Referred To: Senate Judiciary

     It is enacted by the General Assembly as follows:

1

     SECTION 1. Section 27-9.1-4 of the General Laws in Chapter 27-9.1 entitled "Unfair

2

Claims Settlement Practices Act" is hereby amended to read as follows:

3

     27-9.1-4. “Unfair claims practices” defined.

4

     (a) Any of the following acts by an insurer, if committed in violation of § 27-9.1-3,

5

constitutes an unfair claims practice:

6

     (1) Misrepresenting to claimants and insured relevant facts or policy provisions relating to

7

coverage at issue;

8

     (2) Failing to acknowledge and act with reasonable promptness upon pertinent

9

communications with respect to claims arising under its policies;

10

     (3) Failing to adopt and implement reasonable standards for the prompt investigation and

11

settlement of claims arising under its policies;

12

     (4) Not attempting in good faith to effectuate prompt, fair, and equitable settlement of

13

claims submitted in which liability has become reasonably clear;

14

     (5) Compelling insured, beneficiaries, or claimants to institute suits to recover amounts due

15

under its policies by offering substantially less than the amounts ultimately recovered in suits

16

brought by them;

17

     (6) Refusing to pay claims without conducting a reasonable investigation;

18

     (7) Failing to affirm or deny coverage of claims within a reasonable time after having

19

completed its investigation related to the claim or claims;

 

1

     (8) Attempting to settle or settling claims for less than the amount that a reasonable person

2

would believe the insured or beneficiary was entitled by reference to written or printed advertising

3

material accompanying or made part of an application;

4

     (9) Attempting to settle or settling claims on the basis of an application that was materially

5

altered without notice to, or knowledge or consent of, the insured;

6

     (10) Making claims payments to an insured or beneficiary without indicating the coverage

7

under which each payment is being made;

8

     (11) Unreasonably delaying the investigation or payment of claims by requiring both a

9

formal proof of loss form and subsequent verification that would result in duplication of

10

information and verification appearing in the formal proof of loss form;

11

     (12) Failing in the case of claims denials or offers of compromise settlement to promptly

12

provide a reasonable and accurate explanation of the basis of those actions;

13

     (13) Failing to provide forms necessary to present claims within ten (10) calendar days of

14

a request with reasonable explanations regarding their use;

15

     (14) Failing to adopt and implement reasonable standards to assure that the repairs of a

16

repairer owned by or required to be used by the insurer are performed in a workmanlike manner;

17

     (15) Misleading a claimant as to the applicable statute of limitations;

18

     (16) Failing to respond to a claim within thirty (30) days, unless the insured shall agree to

19

a longer period;

20

     (17) Engaging in any act or practice of intimidation, coercion, threat, or misrepresentation

21

of consumers rights, for or against any insured person, claimant, or entity to use a particular rental

22

car company for motor vehicle replacement services or products; provided, however, nothing shall

23

prohibit any insurance company, agent, or adjuster from providing to such insured person, claimant,

24

or entity the names of a rental car company with which arrangements have been made with respect

25

to motor vehicle replacement services; provided, that the rental car company is licensed pursuant

26

to § 31-5-33;

27

     (18) Refusing to honor a “direction to pay” executed by an insured, claimant, indicating

28

that the insured or claimant wishes to have the insurance company directly pay his or her motor

29

vehicle replacement vehicle rental benefit to the rental car company of the consumer’s choice;

30

provided, that the rental car company is licensed pursuant to § 31-5-33. Nothing in this section shall

31

be construed to prevent the insurance company’s ability to question or challenge the amount

32

charged, in accordance with its policy provisions, and the requirements of the department of

33

business regulation; provided that, the insurance company promptly notifies the rental car company

34

in writing of the reason. The written notification shall be made at or before the time that the

 

LC004220 - Page 2 of 6

1

insurance company submits payment to the rental car company;

2

     (19) Modifying any published manual, i.e., Motor’s Auto Repair Manual, Mitchells, or any

3

automated appraisal system, relating to auto body repair without prior agreement between the

4

parties;

5

     (20) Failing to use a manual or system in its entirety in the appraisal of a motor vehicle;

6

     (21) Refusing to compensate an auto body shop for its documented charges as identified,

7

and based on, the most current version of automotive industry-recognized software programs or

8

systems for paint, body, and refinishing materials, utilized in auto body repair, including, but not

9

limited to, programs such as Mitchell’s RMC, PMC Logic, Paint, Micromix, or other paint

10

manufacturer’s programs. An insurer shall not discount documented charges by failing to use a

11

system in its entirety, including an automotive industry standard markup;

12

     (22) Refusing to acknowledge and compensate an auto body repairer for documented

13

procedures identified as necessary by the original equipment manufacturer, paint manufacturer,

14

when included in the repairer’s appraisal, or when requested by the repairer (i.e., components that

15

cannot be reused/reinstalled: requiring clips, retainers, and hardware);

16

     (23) Failing to comply with the requirements of § 31-47-12.1;

17

     (24) Failure to have an appraisal performed by a licensed appraiser where the motor vehicle

18

has sustained damage estimated to exceed two thousand five hundred dollars ($2,500) five thousand

19

dollars ($5,000). The licensed appraiser referred to herein must be unaffiliated with the repair

20

facility repairing the subject motor vehicle; must perform a physical inspection of the damaged

21

motor vehicle; and may not perform an appraisal based upon pictures of the damaged motor vehicle;

22

     (25) Failure of an insurer’s assigned appraiser, or representative, to promptly schedule an

23

appointment for an appraisal of a damaged vehicle with the auto body repair shop, at an agreed

24

upon date and time, between normal business hours;

25

     (26) Failure to perform an initial appraisal within three (3) four (4) business days after a

26

request is received from an auto body repair shop, provided the damaged motor vehicle is on the

27

premises of the repair shop when the request is made, and failure to perform a supplemental

28

appraisal inspection of a vehicle within four (4) business days after a request is received from an

29

auto body repair shop. If the insurer’s appraiser fails to inspect the damaged motor vehicle within

30

the allotted number of business days for an initial appraisal or a supplemental appraisal, the insurer

31

shall forfeit its right to inspect the damaged vehicle prior to repairs, and negotiations shall be limited

32

to labor and the price of parts and shall not, unless objective evidence to the contrary is provided

33

by the insurer, involve disputes as to the existence of damage or the chosen manner of repair. The

34

time limitations set forth in this subsection may be extended by mutual agreement between the auto

 

LC004220 - Page 3 of 6

1

body repair shop and the insurer;

2

     (27) Refusing to extend the rental vehicle coverage requirements of an insured or claimant

3

proportionally to claim delays caused by the insurer.

4

     (28) Designating a motor vehicle a total loss if the cost to rebuild or reconstruct the motor

5

vehicle to its pre-accident condition is less than seventy-five percent (75%) of the “fair market

6

value” of the motor vehicle immediately preceding the time it was damaged:

7

     (i) For the purposes of this subdivision, “fair market value” means the retail value of a

8

motor vehicle as set forth in a current edition of a nationally recognized compilation of retail values

9

commonly used by the automotive or insurance industry to establish values of motor vehicles;

10

     (ii) Nothing herein shall be construed to require a vehicle be deemed a total loss if the total

11

cost to rebuild or reconstruct the motor vehicle to its pre-accident condition is greater than seventy-

12

five percent (75%) of the fair market value of the motor vehicle immediately preceding the time it

13

was damaged;

14

     (iii) Nothing herein shall prohibit an insurance company from agreeing to deem a vehicle

15

a total loss at the vehicle owner’s request and with the vehicle owner’s express written authorization

16

if the cost to rebuild or reconstruct the motor vehicle to its pre-accident condition is less than

17

seventy-five percent (75%) of the “fair market value” of the motor vehicle immediately preceding

18

the time it was damaged;

19

     (iv) If condition adjustments are made to the retail value of a motor vehicle designated a

20

total loss, all such adjustments must be in accordance with the standards set forth in the current

21

edition of a nationally recognized compilation of retail values, commonly used by the automotive

22

or insurance industry, used by the insurer to determine the retail value of the vehicle; and all such

23

adjustments, including prior damage deductions, must be itemized, fair, and reasonable; and

24

     (v) When a vehicle is deemed a total loss, if the insurer is not retaining the salvage, the

25

insurer must notify the owner of the vehicle in writing of the requirements of obtaining both a

26

salvage title and a reconstructed title from the department of motor vehicles pursuant to chapter 1

27

46 of title 31, and must obtain, in writing, the owner’s consent and acknowledgement that the

28

insurer is not retaining the salvage and include a statement of the owner’s obligation and potential

29

costs to dispose of or otherwise retain the salvage;

30

     (29) Negotiating, or effecting the settlement of, a claim for loss or damage covered by an

31

insurance contract with an unlicensed public adjuster acting on behalf of an insured. Nothing

32

contained in this section shall be construed to preclude an insurer from dealing with any individual

33

or entity that is not required to be licensed under chapter 10 of title 27;

34

     (30) Refusing to pay an auto body repair shop for documented necessary sublet services

 

LC004220 - Page 4 of 6

1

paid out to vendors or incurred by the auto body repair shop, for specialty or unique services

2

performed in the overall repair process, including costs and labor incurred to research, coordinate,

3

administrate, or facilitate the necessary sublet service, and an automotive industry standard markup.

4

Examples of sublet services include, but are not limited to, towing, transportation, suspension,

5

alignments, electronic calibrations, diagnostic work, mechanical work, and paid charges to release

6

a vehicle.

7

     (b)(1) Nothing contained in subsections (a)(19), (a)(20), and (a)(21) of this section shall be

8

construed to interfere with an auto body repair facility’s contract with an insurance company.

9

     (2) If an insurance company and auto body repair facility have contracted under a direct

10

repair program or any similar program thereto, the provisions of subsections (a)(19), (a)(20), and

11

(a)(21) of this section shall not apply.

12

     (3) If the insured or claimant elects to have the vehicle repaired at a shop of his or her

13

choice, the insurer shall not limit or discount the reasonable repair costs based upon the charges

14

that would have been incurred had the vehicle been repaired by the insurer’s chosen shop(s).

15

     SECTION 2. This act shall take effect upon passage.

========

LC004220

========

 

LC004220 - Page 5 of 6

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO INSURANCE -- UNFAIR CLAIMS SETTLEMENT PRACTICES ACT

***

1

     This act would clarify the definitions of unfair claims practices pertaining to insurers with

2

regard to appraisals and total losses. It also corrects a citation regarding salvage and reconstructed

3

titles.

4

     This act would take effect upon passage.

========

LC004220

========

 

LC004220 - Page 6 of 6