2024 -- S 2681 SUBSTITUTE A | |
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LC005342/SUB A | |
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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: Senators Burke, McKenney, Tikoian, and LaMountain | |
Date Introduced: March 01, 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) Refusing to honor a "direction to pay" executed by an insured, claimant, indicating |
3 | that the insured or claimant wishes to have the insurance company directly pay the insured's |
4 | property damage benefit to the restoration company of the consumer's choice; provided, however, |
5 | that the amount of the claim to be paid directly to the restoration company shall be no greater than |
6 | five thousand dollars ($5,000), and that the restoration company is licensed pursuant to § 5-65-3. |
7 | Nothing in this section shall be construed to: |
8 | (i) Prevent the insurance company's ability to question or challenge whether the services |
9 | billed for are covered by the policy, related to an occurrence covered by the policy, or the amount |
10 | charged, in accordance with its policy provisions, and the requirements of the department of |
11 | business regulation; or |
12 | (ii) Adversely affect the right of any mortgagee or other person with an interest in the policy |
13 | unless such mortgagee or other person has also executed the "direct to pay"; |
14 | (19)(20) Modifying any published manual, i.e., Motor’s Auto Repair Manual, Mitchells, |
15 | or any automated appraisal system, relating to auto body repair without prior agreement between |
16 | the parties; |
17 | (20)(21) Failing to use a manual or system in its entirety in the appraisal of a motor vehicle; |
18 | (21)(22) Refusing to compensate an auto body shop for its documented charges as |
19 | identified, and based on, the most current version of automotive industry-recognized software |
20 | programs or systems for paint, body, and refinishing materials, utilized in auto body repair, |
21 | including, but not limited to, programs such as Mitchell’s RMC, PMC Logic, Paint, Micromix, or |
22 | other paint manufacturer’s programs. An insurer shall not discount documented charges by failing |
23 | to use a system in its entirety, including an automotive industry standard markup; |
24 | (22)(23) Refusing to acknowledge and compensate an auto body repairer for documented |
25 | procedures identified as necessary by the original equipment manufacturer, paint manufacturer, |
26 | when included in the repairer’s appraisal, or when requested by the repairer (i.e., components that |
27 | cannot be reused/reinstalled: requiring clips, retainers, and hardware); |
28 | (23)(24) Failing to comply with the requirements of § 31-47-12.1; |
29 | (24)(25) Failure to have an appraisal performed by a licensed appraiser where the motor |
30 | vehicle has sustained damage estimated to exceed two thousand five hundred dollars ($2,500). The |
31 | licensed appraiser referred to herein must be unaffiliated with the repair facility repairing the |
32 | subject motor vehicle; must perform a physical inspection of the damaged motor vehicle; and may |
33 | not perform an appraisal based upon pictures of the damaged motor vehicle; |
34 | (25)(26) Failure of an insurer’s assigned appraiser, or representative, to promptly schedule |
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1 | an appointment for an appraisal of a damaged vehicle with the auto body repair shop, at an agreed |
2 | upon date and time, between normal business hours; |
3 | (26)(27) Failure to perform an initial appraisal within three (3) business days after a request |
4 | is received from an auto body repair shop, provided the damaged motor vehicle is on the premises |
5 | of the repair shop when the request is made, and failure to perform a supplemental appraisal |
6 | inspection of a vehicle within four (4) business days after a request is received from an auto body |
7 | repair shop. If the insurer’s appraiser fails to inspect the damaged motor vehicle within the allotted |
8 | number of business days for an initial appraisal or a supplemental appraisal, the insurer shall forfeit |
9 | its right to inspect the damaged vehicle prior to repairs, and negotiations shall be limited to labor |
10 | and the price of parts and shall not, unless objective evidence to the contrary is provided by the |
11 | insurer, involve disputes as to the existence of damage or the chosen manner of repair. The time |
12 | limitations set forth in this subsection may be extended by mutual agreement between the auto body |
13 | repair shop and the insurer; |
14 | (27)(28) Refusing to extend the rental vehicle coverage requirements of an insured or |
15 | claimant proportionally to claim delays caused by the insurer. |
16 | (28)(29) Designating a motor vehicle a total loss if the cost to rebuild or reconstruct the |
17 | motor vehicle to its pre-accident condition is less than seventy-five percent (75%) of the “fair |
18 | market value” of the motor vehicle immediately preceding the time it was damaged: |
19 | (i) For the purposes of this subdivision, “fair market value” means the retail value of a |
20 | motor vehicle as set forth in a current edition of a nationally recognized compilation of retail values |
21 | commonly used by the automotive industry to establish values of motor vehicles; |
22 | (ii) Nothing herein shall be construed to require a vehicle be deemed a total loss if the total |
23 | cost to rebuild or reconstruct the motor vehicle to its pre-accident condition is greater than seventy- |
24 | five percent (75%) of the fair market value of the motor vehicle immediately preceding the time it |
25 | was damaged; |
26 | (iii) Nothing herein shall prohibit an insurance company from agreeing to deem a vehicle |
27 | a total loss at the vehicle owner’s request and with the vehicle owner’s express written authorization |
28 | if the cost to rebuild or reconstruct the motor vehicle to its pre-accident condition is less than |
29 | seventy-five percent (75%) of the “fair market value” of the motor vehicle immediately preceding |
30 | the time it was damaged; |
31 | (iv) If condition adjustments are made to the retail value of a motor vehicle designated a |
32 | total loss, all such adjustments must be in accordance with the standards set forth in the current |
33 | edition of a nationally recognized compilation of retail values, commonly used by the automotive |
34 | industry, used by the insurer to determine the retail value of the vehicle; and all such adjustments, |
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1 | including prior damage deductions, must be itemized, fair, and reasonable; and |
2 | (v) When a vehicle is deemed a total loss, if the insurer is not retaining the salvage, the |
3 | insurer must notify the owner of the vehicle in writing of the requirements of obtaining both a |
4 | salvage title and a reconstructed title from the department of motor vehicles pursuant to chapter 1 |
5 | of title 31, and must obtain, in writing, the owner’s consent and acknowledgement that the insurer |
6 | is not retaining the salvage and include a statement of the owner’s obligation and potential costs to |
7 | dispose of or otherwise retain the salvage; |
8 | (29)(30) Negotiating, or effecting the settlement of, a claim for loss or damage covered by |
9 | an insurance contract with an unlicensed public adjuster acting on behalf of an insured. Nothing |
10 | contained in this section shall be construed to preclude an insurer from dealing with any individual |
11 | or entity that is not required to be licensed under chapter 10 of title 27; |
12 | (30)(31) Refusing to pay an auto body repair shop for documented necessary sublet |
13 | services paid out to vendors or incurred by the auto body repair shop, for specialty or unique |
14 | services performed in the overall repair process, including costs and labor incurred to research, |
15 | coordinate, administrate, or facilitate the necessary sublet service, and an automotive industry |
16 | standard markup. Examples of sublet services include, but are not limited to, towing, transportation, |
17 | suspension, alignments, electronic calibrations, diagnostic work, mechanical work, and paid |
18 | charges to release a vehicle; |
19 | (32)(i) When a claim is settled, or partially settled, where the named insured is represented |
20 | by a public adjuster licensed pursuant to § 27-10-5, failing to obey a direction to pay letter directing |
21 | the insurer to issue a check or checks payable to the public adjuster for the public adjuster's fee, but |
22 | not more than ten percent (10%) of the total amount of the settlement, and a separate check payable |
23 | to the named insured or any loss payee or mortgagee, or both, whichever is appropriate, for the |
24 | balance; provided that, the direction to pay letter is signed or electronically signed and dated or |
25 | electronically dated by the named insured and contains the following information: |
26 | (A) Name of insured(s); |
27 | (B) The claim number (if obtained); |
28 | (C) The date or approximate date of the loss; |
29 | (D) The public adjuster's name; |
30 | (E) The name of the insurer; |
31 | (F) The public adjuster's fee; and |
32 | (G) The addresses to which each check shall be sent. |
33 | (ii) Nothing in this subsection shall be construed to: |
34 | (A) Prevent the insurance company's ability to question or challenge whether the services |
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1 | billed for are covered by the policy, related to an occurrence covered by the policy, or the amount |
2 | charged, in accordance with its policy provisions, and the requirements of the department of |
3 | business regulation; or |
4 | (B) Adversely affect the right of any mortgagee or other person with an interest in the |
5 | policy unless such mortgagee or other person has also executed the "direct to pay". |
6 | (b)(1) Nothing contained in subsections (a)(19), (a)(20), and (a)(21) of this section shall be |
7 | construed to interfere with an auto body repair facility’s contract with an insurance company. |
8 | (2) If an insurance company and auto body repair facility have contracted under a direct |
9 | repair program or any similar program thereto, the provisions of subsections (a)(19), (a)(20), and |
10 | (a)(21) of this section shall not apply. |
11 | (3) If the insured or claimant elects to have the vehicle repaired at a shop of his or her |
12 | choice, the insurer shall not limit or discount the reasonable repair costs based upon the charges |
13 | that would have been incurred had the vehicle been repaired by the insurer’s chosen shop(s). |
14 | SECTION 2. This act shall take effect on January 1, 2025. |
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LC005342/SUB A | |
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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 provide that any insurer refusing to honor a "direction to pay" executed by |
2 | an insured for payment on a property damage benefit would constitute an unfair claims practice. |
3 | This act would take effect on January 1, 2025. |
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LC005342/SUB A | |
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