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Friday, 09 October 2020 16:41

AASP/NJ: Citing Section 64 Could Backfire on Insurers

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AASP/NJ Executive Director Charles Bryant, pictured at the New Jersey State House, urges collision repair facilities to fight for their right to be paid fair and reasonable labor rates for the quality repairs they perform. AASP/NJ Executive Director Charles Bryant, pictured at the New Jersey State House, urges collision repair facilities to fight for their right to be paid fair and reasonable labor rates for the quality repairs they perform. Provided courtesy of AASP/NJ

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When asked what type of recourse a shop might have if an insurer attempted to direct the vehicle owner to another shop due to rate disagreements, Bryant said the first thing a shop should do is have the customer sign a proper authorization or contract to repair the vehicle.

 

"The next thing that an educated shop owner should do is make the insurer involved aware of this contract to repair the vehicle in writing," he said. "Then, if the insurer fails to make all reasonable efforts to reach an agreed price to repair the vehicle and convinces the shop’s customer to breach his or her contract, the shop will have the basis for a lawsuit for tortious interference.”

 

Mikhail and BMR v. NJM, a class-action lawsuit filed in June 2019, alleged Prestige Auto Body was forced to substantially reduce its labor and paint charges to meet NJM’s “take it or leave it” pricing model, due to NJM’s failure to negotiate in good faith.

 

NJM responded two months later by filing a motion to dismiss in which the defendant’s lawyer, Michael J. Marone, interpreted Section 64 as a way to “ensure that New Jersey insureds have access to a number of licensed body shops that will perform the requisite work within the established estimates of New Jersey insurance carriers,” while also “preserving an insurer’s ability to obtain competitive prices that benefit the insured, minimize unnecessary costs and prevent excessive inflation of insurance premiums in the state.”

 

Marone also claimed the statute “empower[ed] New Jersey insurance carriers, like NJM, to maintain a list of automobile repair facilities that perform repairs within the carriers’ established estimates.”

 

Commenting on the lawsuit, Bryant said, “The insurer is dictating what it will pay rather than making all reasonable efforts to negotiate an agreed price to repair an automobile as required by the regulations governing fair claim settlement practices, while the New Jersey Department of Banking and Insurance looks the other way.”


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