Minnesota bill HF1322 and its companion in the Senate aim to amend current law to mandate that auto insurance companies pay the full costs to repair vehicles to their pre-loss condition.

According to the bills, it would be considered unfair settlement practices for insurers, adjusters, or a self-insured or self-insurance administrator​ to not “assume all costs or offer a cash settlement sufficient to pay all costs, including​ reasonable towing and storage costs” on policies that provide for “the adjustment and settlement of an​ automobile partial loss on the basis of repair or replacement with like kind and quality” when the insured isn’t an automobile dealer.

The Alliance of Automotive Service Providers Minnesota (AASP-MN) has worked closely with the legislators to draft the bills. Executive Director Linden Wicklund said this will be the third time the bill has been introduced; however, the focus now is geared more toward insurance companies having to substantiate why they’re denying X, Y, and Z based on policy provisions rather than solely quoting a provision.

“What we were hearing from civil servants and elected officials was that ‘people get what they pay for in insurance, ‘ as if it was a consumer’s fault that they just picked a bad policy but we’re seeing that the policies themselves are substantially the same.

“Shops will have eight, 10 supplements that they’re just sending back the same information again and again. This is now a much broader look at the overarching problem… and how do we call that out? Not just how do we put a Bandaid on it that seems like an administrative headache. That’s how the insurance industry was referring to it at first.”

Repair/repair operations are also defined in the bill as “the procedures​ carried out by a collision shop or vendor that is engaged in returning a vehicle to pre-loss​ condition [and] includes but is not limited to diagnostic and repair​ verification steps taken in accordance with manufacturer or supplier recommendations and​ industry standards.”

While the bill doesn’t specifically require certain repair operations, AASP-MN told Repairer Driven News that including the steps that repair processes entail, such as diagnostic and repair verification, would mitigate pushback from insurers to not pay for those operations.

“In defining the repair operations in the definitions part of the bill, what we’re really highlighting is that diagnostic and repair verification steps are part of repairs,” Wicklund said. “Because we find insurance companies will say, ‘Oh, well, scanning the car isn’t something that you do to repair it. It’s just a step you have to get to doing the repairs, and we only owe for the repairs.’”

Via the bills, “pre-loss condition” would be added to current language in Minnesota law that mandates coverage of costs by insurers to repair obvious and hidden damages caused by claim incidents.

“The assumption of cost may be reduced only by an applicable policy provision provided in​ writing to the insured or claimant, as applicable, and the repair facility at the time the loss​ is adjusted,” the bills state.

“The specific policy provision being applied and the supporting reasoning must​ be included in the written submission. A reduction in the settlement amount is prohibited​ if the repair or cost was caused by the incident giving rise to the claim and is related to the​ vehicle’s safety or operation. A settlement or settlement offer that deviates from this clause​ must be documented and justified in detail.”

The settlement would have to be explained to the insured in writing and include:

• • “An itemized list of the repairs or costs recommended by the repair facility or in​ accordance with manufacturer’s recommendations;​
  • “The offer for settlement, specifically identifying any recommended repairs or costs​ that have been denied, including but not limited to any denial related to vehicle safety​ systems, safety restraint and air bag systems, braking systems, structural components, and​ assisted driving or driver management systems; and​
  • “Confirmation that a denied repair or cost is not material to the vehicle’s safe operation​ and that the insurer assumes liability for a denied repair or cost that directly causes a safety​ hazard.”

The bills also state that the following “intentional or negligent delay by the insurer or adjuster” would be unfair settlement practices”

• • Repeatedly requesting substantially similar information from the insured, claimant,​ or repair facility;
  • Failing to accurately estimate a claim in a manner that results in a settlement​ underpayment or less than the necessary repairs; or​
  • Failing to review and approve or deny, in part or full, a repair supplement for a​ vehicle repair within three business days of the date the repair supplement is submitted by​ a repair shop engaged to repair the insured’s or claimant’s vehicle.

The bills also seek to address private right of action, which Wicklund said AASP-MN has found isn’t being upheld.

“That needs to be addressed,” she said. “We just had our Lobby Day… and we were surprised by the amount of support from lawmakers to have that private right of action so that there is a legal pathway outside of using the government fining process to make sure there’s accountability to the law.”

The House bill is co-sponsored by Reps. John Huot (DFL-District 56B), Kelly Moller (DFL-District 40A), and Amanda Hemmingsen-Jaeger (DFL-District 47A). The companion bill is sponsored by Sen. Nathan Wesenberg (R-District 10).

Both bills have been referred to a committee in each house and haven’t yet been scheduled for hearings.

Images

Featured stock image credit: baranozdemir/iStock

Alliance of Automotive Service Providers Minnesota (AASP-MN) at this year’s Lobby Day. (Provided by AASP-MN)

Share This:

Related