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Tuesday, 09 November 2021 17:44

Proposed MA Bill Limits Auto Claims Investigations, Shifts Payments to Insurers

Written by Elizabeth Blosfield, Insurance Journal

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A proposed bill was heard in October in the Massachusetts legislature that aims to place a time limit on auto insurance claims investigations and would make investigating insurers responsible for premium payments until the cause of loss is determined.

The bill would limit auto claims investigations to 30 days and require that the insurer notify the insured at the start and conclusion of a claims investigation.

 

During the investigation, the bill would require any ongoing payments of premiums to the financial institution holding title of the insured vehicle be made by the investigating insurance company rather than the insured. If the cause of loss is found to be fraudulent or intentional, payments made by the insurance company during the investigation can then be collectively recovered from the insured.

 

Massachusetts State Rep. Joseph McKenna, who is sponsoring the bill, said this is the first time the legislation has been filed. The hearing on Oct. 20 in the commonwealth’s Joint Committee on Financial Services served as the first time the bill was heard.

 

He told Insurance Journal he believes requiring investigating insurance companies to carry the financial burden of vehicle payments to the lender will incentivize a timely resolution for claims investigations.

 

“[Insurance companies] are certainly not going to want ongoing investigations with the financial risk or liability of having to pay those premiums, with the ability to collect if fraud is discovered,” he said. “And that protects the consumer from basically getting triple damages by having to pay insurance premiums, having to pay their principal on their car and not having the vehicle to use.”

 

The idea for the bill came about during a conversation with his legislative aide, Lori Joubert, regarding a situation several years ago in which her car burst into flames in her driveway due to a defect in the wiring of its heated seats.

 

She stated in written testimony for the bill that on July 16, 2016, she woke up to the sound of her neighbors shouting for her to call 911 and walked outside to find her Toyota RAV4 on fire in her driveway. The police and fire department were called, and the fire was put out.

 

Although it was later discovered that her vehicle fit within the scope of a recall notice issued by Southeast Toyota Distributers for the affected vehicles, her insurer, MAPFRE (formerly, Commerce Insurance Company) initially...


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