HB 0573

AN ACT relative to motor vehicle insurance.

SPONSORS: Rep. Artz, Hills 64; Rep. L. Christiansen, Hills 66; Rep. Marple, Merr 37; Sen. Johnson, Dist 2; Sen. O'Hearn, Dist 12

This bill specifies unfair business practices in regard to motor vehicle repairs and coverage under motor vehicle insurance policies.

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 New Paragraph; Unfair Business Practices; Motor Vehicle Insurance. Amend RSA 417:4 by inserting after paragraph XXI the following new paragraph:

XXII.(a) LIMITATIONS ON COVERAGE FOR MOTOR VEHICLE REPAIRS. An insurer shall not, under any motor vehicle insurance policy delivered, issued for delivery, or renewed in this state, covering damages to a motor vehicle, directly or indirectly limit the policy's coverage, by specifying the brand, type, kind, age, vendor, supplier, or condition of parts or products including body repair and refinishing materials, that may be used to repair the vehicle or by limiting the beneficiary of the policy from selecting a repair person or facility to repair damage to the motor vehicle covered under the policy.

(b) In connection with the repair of damage to a motor vehicle covered under a motor vehicle insurance policy, an insurer, an adjuster, an employee of an insurer, an agent of an insurer, a solicitor of insurance for an insurer, an insurance appraiser, or an entity that employs an insurance adjuster shall not:

(1) Solicit or accept a referral fee or gratuity in exchange for referring a beneficiary or claimant to a repair person or facility to repair the damage;

(2) State or suggest, either orally or in writing, to a beneficiary that a specific repair person or facility or a repair person or facility identified on a preferred list compiled by an insurer is required to be used by a beneficiary for the damage repair or parts replacement to be covered by the policy; or

(3) Restrict a beneficiary's or claimant's right to choose a repair person or facility by requiring the beneficiary or claimant to travel an unreasonable distance to repair the damage.

(c) A contract between an insurer and a repair person or facility, including an agreement under which the repair person or facility agrees to extend discounts for parts or labor to the insurer in exchange for referrals by the insurer, shall not result in a reduction of coverage under the insured's motor vehicle insurance policy.

(d) An insurer shall not prohibit a repair person or facility from providing a beneficiary or claimant with information that states the description, manufacturer, or source of the parts used and the amount charged to the insurer for the parts and related labor.

(e) At the time a vehicle is presented to an insurer or an insurance adjuster or other person in connection with a claim for damage repair, the insurer or insurance adjuster or other person shall provide to the beneficiary or claimant notice of the provisions of this paragraph. The commissioner shall establish the method or methods insurers shall use to comply with the notice provisions in this subparagraph.

(f) Any beneficiary, claimant, or repair person or facility may submit a written, documented complaint to the insurance department with respect to any violation of this paragraph.

(g) In the settlement of liability claims by a third party against an insured for property damage claimed by the third party, an insurer shall not require the third party claimant to have repairs made by a particular repair person or facility or to use a particular brand, type, kind, age, vendor, supplier, or condition of parts or products.

(h) Any rule adopted pursuant to subparagraph (i) shall be clearly and prominently displayed on the face of the policy or certificate in lieu of a policy and the insured shall give written consent to such a limitation, following both oral and written notification of any limitation at the time the policy is purchased.

(i) The commissioner shall adopt rules, pursuant to RSA 541-A, to implement this paragraph.

The Insurance Department has determined this bill may increase state revenue by an indeterminable amount in FY 2004 and each year thereafter. There will be no fiscal impact on county and local revenue or on state, county and local expenditures.

The Department stated they are unable to determine the present use of after-market parts or used parts in the repair of motor vehicles. This includes both the extent to which insurance companies offer this option, as well as the degree to which it is accepted on the part of the consumer. The use of after-market or used parts acts to hold down the cost of repair. Without their use, the Department would expect a rise in repair costs. Eventually, the insurance companies would reflect this in higher premium charges, which would generate higher premium tax revenue paid to the state.