Monday, 14 June 2021 22:52

Rhode Island Collision Repairers Seek to Clarify Concerns with 2 House Bills

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Last month, the Rhode Island House Corporations Committee heard from collision repairers advocating for House Bill 6234 and House Bill 6235, both introduced by Reps. William O'Brien, Scott Slater, Jacquelyn Baginski, Raymond Hull, Camille Vella-Wilkinson and Gregg Amore.

House Bill 6234 seeks to update Rhode Island General Laws §27-9.1-4, the state’s Unfair Claims Settlement Practices Act, by addressing issues related to paint and materials charges, vehicle abandonment and sublets.


House Bill 6235 would require insurers using recycled parts to choose parts that are “at least equal in kind and quality to the OEM parts in terms of fit, quality, performance and warranty, and be from a vehicle of the same year or newer and have the same or less mileage than the vehicle receiving the used part.”


House Bills 6234 and 6235 were reviewed simultaneously during the Rhode Island House Corporations Committee hearing. O’Brien, the House Corporations Committee vice chairman, said the main reason he sponsored the bill was related to a constituent’s experience where their insurer abandoned a total loss, accumulating $1,000 in storage fees, which, he said, the insurer was responsible for.


The National Association of Mutual Insurance Companies Northeast has “no objection to the total loss notification provisions,” according to Rory Whelan, northeast regional vice president, though the group opposes the other two amendments proposed by the bill.


Rep. Robert Craven Sr. supports House Bill 6234 because of “the general frustration that the auto body shops are having dealing with the insurers, but most importantly, the consumer who pays for this insurance policy and doesn’t get what he or she expects to get.”


Craven indicated insurers object to paying for items as simple as taping windows before painting, though it is part of the process required. Policyholders pay for the insurance company to return their vehicle to its original state after an accident, according to Craven, who also specified...

...it’s some, not all, insurers who have “decided they’re going to cut corners,” leaving auto body shops to eat the cost.


“It’s not fair. We’re not paying auto body shops to do anything other than fix our cars, but we are paying insurance companies to cover the loss,” he said. “It’s time to tell the insurance industry that writes collision insurance, ‘You’ve got to stop this.’ […] This isn’t an anti-insurance bill; it’s a consumer bill. It’s irritating to see people ripped off by this kind of nitpicky practice.”


Frank O’Brien, vice president of state government relations for American Property Casualty Insurance Association, opposed both bills, arguing it “costs more to repair a car in Rhode Island than anywhere else,” and Rhode Island “has more detailed restrictions in place than any other state,” blaming those factors for the high cost of auto insurance in the state.


Referencing House Bill 6235, which he claimed “constitutes nothing less than a constructive ban on the use of recycled parts” as written, Frank O’Brien noted, “While we have no issues with the provisions of the bill which deal with the use of appropriate parts, what we do object to are the nonsensical requirements in the bill which would require and limit our ability to source parts beyond a certain geographic area.”


Objecting to legislation that “keeps diving into the nitty gritty of these issues,” Frank O’Brien added, “Enough is enough with these bills. How far is the General Assembly supposed to get into the weeds with all this stuff?”


Randy Botella, owner of Reliable Collision in West Warwick, RI, argued materials used are not considered overhead; instead, they are materials, such as primer, body filler and buffing pads, meant to be used on a specific vehicle. He also acknowledged most insurers reimburse markup, but the bill is meant to address the matter with those who “won’t adhere to the law.”


The first portion of House Bill 6234 expands on current requirements related to paint and materials charges, updating §27-9.1-4(21) as follows: “Refusing to compensate an auto body shop for their documented charges as identified through the most current version of automotive industry-recognized software programs or systems for paint, body and refinishing materials in auto body repair claims, including, but not limited to...

...programs such as Mitchell's RMC, PMC Logic, Paint, Micromix or a paint manufacturer's programs. An insurer shall not discount documented charges by failing to use a system in its entirety, including an automotive industry standard markup.”


§27-9.1-4(25)(v) says: "When a vehicle is deemed a total loss, if the insurer is not retaining the salvage, the insurer must notify the owner of the vehicle in writing of the requirements of obtaining both a salvage title and a reconstructed title from the department of motor vehicles pursuant to chapter 1 of title 31," and would be amended to add: "and must obtain, in writing, the owner's consent and acknowledgement that the insurer is not retaining the salvage and include a statement of the owner's obligation and potential costs to dispose of or otherwise retain the salvage.”


Lastly, the Rhode Island Unfair Claims Settlement Practices Act would be expanded to add, “(27) Refusing to pay an auto body repair shop for documented necessary sublet services paid out to vendors or incurred by the auto body repair shop, for specialty or unique services performed in the overall repair process, including costs and labor incurred to research, coordinate, administrate or facilitate the necessary sublet service, and an automotive industry standard markup. Examples of sublet services include, but are not limited to, towing, transportation, suspension, alignments, electronic calibrations, diagnostic work, mechanical work and paid charges to release a vehicle.”


House Bill 6235 seeks to add six standards to Section 27-10.2-1 of the General Laws in Chapter 27-10.2, "Motor Vehicle Replacement Parts,” related to used parts insurance companies request during the collision repair.


First, HB 6235 includes a definition of used parts: “a motor vehicle replacement part that is a used original equipment manufacturer part.” It would then amend Chapter 27-10.2 to include the following:


“27-10.2-4. Standards for use of used parts. Whenever used parts are used for repairs to physically damaged motor vehicles, the following standards shall apply:


"(1) The used parts shall be at least equal in kind and quality to the OEM parts in terms of fit, quality, performance and warranty, and be from...

...a vehicle of the same year or newer and have the same or less mileage than the vehicle receiving the used part;


"(2) To the extent practical, an insurance company shall not require the use of multiple parts distributors to provide parts for a single repair and shall limit the distance of the sourced parts to fifty (50) miles, and provide delivery unless agreed to by the vehicle owner;


"(3) Insurers specifying the use of used parts shall make allowances for the reasonable cost of any modifications to the parts which may become necessary when making the repair, and for the cost of fitting, removing and/or handling of used parts which do not result in the vehicle being repaired to its condition prior to the loss;


"(4) If the used part specified by the insurer does not result in the vehicle being repaired to its condition prior to the loss, the insurer shall then specify the use of an OEM part;


"(5) The automobile body shop shall promptly notify the appraiser if the used part specified by the insurer does not result in the vehicle being repaired to its condition prior to the loss and permit the appraiser to reinspect the vehicle and make appropriate supplemental authorizations, if necessary; and


"(6) The automobile body shop shall provide documentation of used parts, which do not meet the requirements of this section, as reasonably requested by the insurer. The insurer shall be permitted to exercise any available rights of recovery against the used parts distributor.”


The Rhode Island House Corporations Committee voted to hold House Bills 6234 and 6235 for further study. Concerned collision repair professionals and consumers can contact their Rhode Island representatives or senators to urge them to support this legislation.


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