Thursday, 21 February 2008 15:16

CA Legislation: SB 1371 makes it Illegal for insurers to Arbitrarily Cap Paint and Materials

On the request of the California Autobody Association (CAA), Senator Lou Correa (from the Santa Ana, California area) has introduced SB 1371, which would prohibit insurers from arbitrary “capping” paint and materials charges associated with automobile insurance.

The California Department of Insurance (DOI) has indicated as far back as 1995, that the practice of arbitrarily capping or limiting cost is illegal. Unfortunately, this practice continues to this day. In the last couple of years, the DOI has held two workshops (August 23, 2006 and August 1, 2007) on the issue, which included various stakeholders to discuss the concerns of illegal capping of Paint and Materials costs.

The DOI is currently meeting with stakeholders to discuss ways to resolve the issue through possible regulations. Some progress has been made and the CAA will continue working through the DOI to address the issue. However, in the meantime, the CAA believes that it is important to have a legislative proposal (SB 1371) in place in case the discussions drag on or negotiations with the DOI breakdown.

SB 1371 attempts to codify current Department of Insurance policy into statute to make clear that capping of paint and materials is illegal. The CAA has expressed willingness to work with all the stakeholders involved, including the insurers to finally resolve this important issue.

“It’s time that this issue gets a definitive resolution,” states David McClune, Executive Director of the California Autobody Association. “What ever it takes, we are going to focus on eliminating the arbitrary capping of paint and materials.”

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