For over 25 years, the Auto Body Association of Rhode Island has advocated on behalf of consumers. We are proud to support the Unfair Claims Practices Act (H6324 and S870) which provides important protections for Rhode Island consumers. Gov. McKee recognized this, but vetoed the bill based on erroneous concerns that certain provisions would add to the cost of auto insurance. In his veto message, the governor cited concerns that the bill would add two types of costs (“markup” and “sublet services”) that insurers would be required to pay when repairing a vehicle covered by insurance.
The act does not add any new costs at all. Payment of industry standard markup and sublet services have always been honored by most insurance companies. A small number of mostly out-of-state insurers take their customer’s premium payments, but want to get away without paying for what is necessary to repair the vehicle.
These rogue insurance companies pick and choose what necessary services they want to pay for. The bill codifies the industry practice of requiring insurance companies to be responsible for the cost of a customer’s repairs as outlined in automotive industry software programs used in their entirety.
Repairing automobiles is increasingly complex and specialty services are sometimes needed in the overall repair process. This is where sublet services come in. Auto body shops spend their own money to pay vendors for specialty services such as towing, suspension alignments, electronic calibrations, and specialty mechanical work. In addition, the shops hire staff and spend resources to research, coordinate and administer these services. Again, most insurers reimburse the shops for necessary sublet service and an industry standard markup. The act codifies this practice and makes these responsibilities between the parties clear.
We transact with many good insurance companies that follow proper procedures for repairs as recommended by the vehicle manufacturers. These companies have always fairly compensated the shops for necessary services, including markup and sublet services. All insurance companies should be following these same standards. Lastly, the act extends further protections to consumers where an insurer deems a vehicle a total loss. Vehicle owners are not always aware they may have a responsibility to dispose of the vehicle, or the cost of doing so. The act protects consumers by requiring insurers to obtain the owner’s consent and acknowledgment of the additional costs they could incur if they decide to keep the total loss vehicle.
The act levels the playing field somewhat for small, family-owned businesses who fight against giant insurance companies on behalf of their customers. Consumers need their cars repaired in a prompt manner. Payment disputes caused by lack of transparency slow the repair process. The General Assembly passed the act overwhelmingly, and we hope that the Assembly will enact it into law by voting to override the governor’s veto.
Casale’s Auto Body