Collision repair shops in Illinois could gain a structured way to challenge insurer claim valuations under legislation that cleared a key committee vote last week.
House Bill 4160, which would require every auto insurance policy sold in Illinois to include a right-to-appraisal provision, passed the House Insurance Committee 10-4 on March 18. It has been placed on the House calendar for a second reading. The bill is sponsored by Rep. Tracy Katz Muhl (D-28).
The legislation would amend the Illinois Insurance Code to create a defined process for resolving disagreements over what an insurer owes on a claim — whether the dispute involves the value of a totaled vehicle, the cost of a repairable loss, or a settlement amount offered to a third-party claimant, according to the bill's legislative synopsis.
The process would work as follows: if a dispute arises, either side could invoke the appraisal by notifying the other party in writing. Each would then appoint an appraiser. If the two appraisers cannot reach agreement, an umpire would be brought in, and a decision by any two of the three would be binding.
One provision addresses who bears the cost. If the final appraisal amount exceeds the insurer's last written offer by 10% or more, the insurer would be responsible for all fees associated with the process. Noncompliance could result in civil penalties up to $5,000 per occurrence. The bill also provides for attorney's fees and appraisal costs if an insurer is found to have delayed or obstructed the process in bad faith.
Sen. Julie A. Morrison (D-29) filed a companion measure, SB 2708, in the Senate last October. That bill has not advanced beyond the Assignments Committee.
Timelines and cost provisions address common shop frustrations
Currently, when a shop or vehicle owner disagrees with an insurer's payout on a collision claim, options for resolution can be limited. The bill would create a defined path for both sides to have the dispute evaluated independently, rather than leaving the insurer's offer as the final word absent litigation.
The Alliance of Automotive Service Providers of Illinois has supported the legislation, along with more than a dozen individual collision repair shops listed as proponents in the committee record. The American Property Casualty Insurance Association has registered opposition. Both Allstate and State Farm are headquartered in Illinois.
For collision repairers, the bill's defined timelines may be as significant as the appraisal right itself. When claim disputes lack a structured resolution process, vehicles can sit in shops for extended periods while shops absorb storage costs and wait for insurer responses. The bill's requirement that each step in the appraisal process occur within specified timeframes is designed to prevent that kind of delay.
Right-to-appraisal laws gaining ground in other states
Illinois joins a growing list of states where right-to-appraisal legislation has gained traction. Washington and Texas both enacted similar laws in recent years after extended lobbying campaigns by collision repair industry groups.
The bill also creates an Automotive Appraisal Standards Advisory Board that would advise the Illinois Department of Insurance on rulemaking, enforcement priorities, and best practices related to the appraisal process. The board would meet at least quarterly.
Separate rate review bill also advancing in Illinois
HB 4160 is moving through the legislature at the same time as a separate, broader insurance reform package. A bill giving the Illinois Department of Insurance authority to review and approve both homeowner and auto insurance rates passed the full House on March 19 and now awaits Senate action.
That measure was prompted in part by State Farm's announcement of a 27.2% rate increase in Illinois, which led Gov. JB Pritzker and legislative leaders to question whether the company was shifting losses from other states onto Illinois consumers.
The conjunction of the two measures reflects a broader push in the Illinois legislature to increase regulatory oversight and consumer protections in the auto insurance market.
