2024 -- S 3105 | |
======== | |
LC006156 | |
======== | |
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: Senators Gallo, Pearson, and Ciccone | |
Date Introduced: May 29, 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 |
| LC006156 - Page 2 of 6 |
1 | insurance company submits payment to the rental car company; |
2 | (19) Refusing to honor a "direction to pay" executed by an insured or claimant, indicating |
3 | that the insured or claimant wishes to have the insurance company directly pay their motor vehicle |
4 | repair benefit, as a single party payment, exclusively to the auto body shop of the consumer's |
5 | choice; provided that, the auto body shop is licensed pursuant to § 5-38-4. |
6 | (19)(20) Modifying any published manual, i.e., Motor’s Auto Repair Manual, Mitchells, |
7 | or any automated appraisal system, relating to auto body repair without prior agreement between |
8 | the parties; |
9 | (20)(21) Failing to use a manual or system in its entirety in the appraisal of a motor vehicle; |
10 | (21)(22) Refusing to compensate an auto body shop for its documented charges as |
11 | identified, and based on, the most current version of automotive industry-recognized software |
12 | programs or systems for paint, body, and refinishing materials, utilized in auto body repair, |
13 | including, but not limited to, programs such as Mitchell’s RMC, PMC Logic, Paint, Micromix, or |
14 | other paint manufacturer’s programs. An insurer shall not discount documented charges by failing |
15 | to use a system in its entirety, including an automotive industry standard markup; |
16 | (22)(23) Refusing to acknowledge and compensate an auto body repairer for documented |
17 | procedures identified as necessary required or recommended by the original equipment |
18 | manufacturer, or paint manufacturer, upon the initial request from the auto body shop, such as, but |
19 | not limited to, post collision procedures and components that should not be reused or reinstalled |
20 | when included in the repairer’s appraisal, or when requested by the repairer (i.e., components that |
21 | cannot be reused/reinstalled: requiring clips, retainers, and hardware, and materials); |
22 | (23)(24) Failing to comply with the requirements of § 31-47-12.1; |
23 | (25) Failure of any domestic, foreign, or alien insurers to comply with the requirements of |
24 | § 27-9.1-4, when settling claims on Rhode Island registered vehicle repairs in Rhode Island |
25 | regardless of the state from which the policy paying the claim originates. |
26 | (24)(26) Failure to have an appraisal performed by a licensed appraiser where the motor |
27 | vehicle has sustained damage estimated to exceed two thousand five hundred dollars ($2,500). The |
28 | licensed appraiser referred to herein must be unaffiliated with the repair facility repairing the |
29 | subject motor vehicle; must perform a physical inspection of the damaged motor vehicle; and may |
30 | not perform an appraisal based upon pictures of the damaged motor vehicle; |
31 | (25)(27) Failure of an insurer’s assigned appraiser, or representative, to promptly schedule |
32 | an appointment for an appraisal of a damaged vehicle with the auto body repair shop, at an agreed |
33 | upon date and time, between normal business hours; |
34 | (26)(28) Failure to perform an initial appraisal within three (3) business days after a request |
| LC006156 - Page 3 of 6 |
1 | is received from an auto body repair shop, provided the damaged motor vehicle is on the premises |
2 | of the repair shop when the request is made, and failure to perform a supplemental appraisal |
3 | inspection of a vehicle within four (4) business days after a request is received from an auto body |
4 | repair shop. If the insurer’s appraiser fails to inspect the damaged motor vehicle within the allotted |
5 | number of business days for an initial appraisal or a supplemental appraisal, the insurer shall forfeit |
6 | its right to inspect the damaged vehicle prior to repairs, and negotiations shall be limited to labor |
7 | and the price of parts and shall not, unless objective evidence to the contrary is provided by the |
8 | insurer, involve disputes as to the existence of damage or the chosen manner of repair. The time |
9 | limitations set forth in this subsection may be extended by mutual agreement between the auto body |
10 | repair shop and the insurer; |
11 | (27)(29) Refusing to extend the rental vehicle coverage requirements of an insured or |
12 | claimant proportionally to claim delays caused by the insurer. |
13 | (28)(30) Designating a motor vehicle a total loss if the cost to rebuild or reconstruct the |
14 | motor vehicle to its pre-accident condition is less than seventy-five percent (75%) of the “fair |
15 | market value” of the motor vehicle immediately preceding the time it was damaged: |
16 | (i) For the purposes of this subdivision, “fair market value” means the retail value of a |
17 | motor vehicle as set forth in a current edition of a nationally recognized compilation of retail values |
18 | commonly used by the automotive industry to establish values of motor vehicles; |
19 | (ii) Nothing herein shall be construed to require a vehicle be deemed a total loss if the total |
20 | cost to rebuild or reconstruct the motor vehicle to its pre-accident condition is greater than seventy- |
21 | five percent (75%) of the fair market value of the motor vehicle immediately preceding the time it |
22 | was damaged; |
23 | (iii) Nothing herein shall prohibit an insurance company from agreeing to deem a vehicle |
24 | a total loss at the vehicle owner’s request and with the vehicle owner’s express written authorization |
25 | if the cost to rebuild or reconstruct the motor vehicle to its pre-accident condition is less than |
26 | seventy-five percent (75%) of the “fair market value” of the motor vehicle immediately preceding |
27 | the time it was damaged; |
28 | (iv) If condition adjustments are made to the retail value of a motor vehicle designated a |
29 | total loss, all such adjustments must be in accordance with the standards set forth in the current |
30 | edition of a nationally recognized compilation of retail values, commonly used by the automotive |
31 | industry, used by the insurer to determine the retail value of the vehicle; and all such adjustments, |
32 | including prior damage deductions, must be itemized, fair, and reasonable; and |
33 | (v) When a vehicle is deemed a total loss, if the insurer is not retaining the salvage, the |
34 | insurer must notify the owner of the vehicle in writing of the requirements of obtaining both a |
| LC006156 - Page 4 of 6 |
1 | salvage title and a reconstructed title from the department of motor vehicles pursuant to chapter 1 |
2 | of title 31, and must obtain, in writing, the owner’s consent and acknowledgement that the insurer |
3 | is not retaining the salvage and include a statement of the owner’s obligation and potential costs to |
4 | dispose of or otherwise retain the salvage; |
5 | (29)(31) Negotiating, or effecting the settlement of, a claim for loss or damage covered by |
6 | an insurance contract with an unlicensed public adjuster acting on behalf of an insured. Nothing |
7 | contained in this section shall be construed to preclude an insurer from dealing with any individual |
8 | or entity that is not required to be licensed under chapter 10 of title 27; |
9 | (30)(32) Refusing to pay an auto body repair shop for documented necessary sublet |
10 | services paid out to vendors or incurred by the auto body repair shop, for specialty or unique |
11 | services performed in the overall repair process, including costs and labor incurred to research, |
12 | coordinate, administrate, or facilitate the necessary sublet service, and an automotive industry |
13 | standard markup. Examples of sublet services include, but are not limited to, towing, transportation, |
14 | suspension, alignments, electronic calibrations, diagnostic work, mechanical work, and paid |
15 | charges to release a vehicle. |
16 | (b)(1) Nothing contained in subsections (a)(19), (a)(20), and (a)(21) of this section shall be |
17 | construed to interfere with an auto body repair facility’s contract with an insurance company. |
18 | (2) If an insurance company and auto body repair facility have contracted under a direct |
19 | repair program or any similar program thereto, the provisions of subsections (a)(19), (a)(20), and |
20 | (a)(21) of this section shall not apply. |
21 | (3) If the insured or claimant elects to have the vehicle repaired at a shop of his or her |
22 | choice, the insurer shall not limit or discount the reasonable repair costs based upon the charges |
23 | that would have been incurred had the vehicle been repaired by the insurer’s chosen shop(s). |
24 | SECTION 2. This act shall take effect upon passage. |
======== | |
LC006156 | |
======== | |
| LC006156 - 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 expand the definition of "unfair claims practices". It would prevent |
2 | insurance carriers from refusing to honor "a direction to pay" executed by an insured or claimant. |
3 | It would also require insurance for vehicles repaired in Rhode Island, to be bound by the "unfair |
4 | claims practices act" regardless of where the insurance policy paying the claim originates. |
5 | This act would take effect upon passage. |
======== | |
LC006156 | |
======== | |
| LC006156 - Page 6 of 6 |