Five automotive insurance-related bills remained pending on May 27 in the Rhode Island State Legislature, just weeks before the adjournment of the legislature’s current session scheduled for June 30.
S. 877 and its companion H. 5572 would add a definition of “fair market value” applying to insurance claims that declare motor vehicles a total loss after accident.
Current law holds “fair market value” to mean the retail value of a motor vehicle set forth in a “current edition” of a “nationally recognized compilation” of retail values commonly used by the automotive industry to set vehicle values.
The definition is important because Rhode Island currently deems it an unfair claims practice for insurance companies to designate vehicles a total loss if the cost to rebuild or reconstruct them falls under 75% of a vehicle’s fair market value immediately prior to collisions or other damage.
The bill would retain Rhode Island law’s current definition for “fair market value” and add a provision for “consumer accessible fair market value” for total loss calculation purposes.
The bill defines consumer-accessible fair market value as a vehicle valuation figure that is publicly available, used commonly by the automotive businesses and consumers, Vehicle Identification Number-specific, and reflective of a vehicle’s “unique and widely available characteristics.” These elements include trim and options, prior damage, prior service and past ownership “event information,” according to the bill.
As of May 20, the Rhode Island Senate Judiciary Committee was holding S. 877 for further study, the latest action taken on either of the two bills.
Another pair of companion bills, S. 902 and H. 6053, would raise Rhode Island’s total loss threshold to 85% of a vehicle’s fair market value.
The bills would also make it an unfair claims practice for insurers to refuse to acknowledge and compensate collision repairers for documented OEM repair procedures, or “collision repair industry recognized programs such as ALLDATA, [OEC] RepairLogic, [or] CCC Repair Methods.”
Insurers must currently order appraisals from licensed professionals if a car’s damage is estimated to exceed $2,500, and must perform initial appraisals within three days after receiving a request from an auto body repair shop.
As of May 20, the Rhode Island Senate Judiciary and House Corporations committees were holding the bills for further study.
Another bill, H. 5571, would increase the estimate level to $5,000 and provide four days’ grace period before an initial appraisal must be done, giving insurers the ability to reject a higher proportion of appraisals and a longer time to complete an initial appraisal following damage claims.
The bill would also provide for “fair market value” and condition adjustments to be set via a current, nationally recognized compilation of retail values commonly used by the insurance industry. Rhode Island law currently allows only retail value compilations used by the automotive industry to influence fair market value and condition adjustments.
Additionally, the bill would allow appraisers to use photos to conduct the appraisal. Current appraisals in Rhode Island must encompass in-person, physical inspections.
The latest action on this bill occurred March 25, when the House Corporations Committee recommended H. 5571 be held for further study.
