2024 -- S 2210 | |
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LC004220 | |
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STATE OF RHODE ISLAND | |
IN GENERAL ASSEMBLY | |
JANUARY SESSION, A.D. 2024 | |
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A N A C T | |
RELATING TO INSURANCE -- UNFAIR CLAIMS SETTLEMENT PRACTICES ACT | |
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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; |
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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 |
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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 |
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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 |
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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. |
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LC004220 | |
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EXPLANATION | |
BY THE LEGISLATIVE COUNCIL | |
OF | |
A N A C T | |
RELATING TO INSURANCE -- UNFAIR CLAIMS SETTLEMENT PRACTICES ACT | |
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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. |
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LC004220 | |
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