2013 -- S 0465

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LC01167

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

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A N A C T

RELATING TO INSURANCE - UNFAIR CLAIMS PRACTICES

     Introduced By: Senators Goodwin, and Ruggerio

     Date Introduced: February 28, 2013

     Referred To: Senate Judiciary

It is enacted by the General Assembly as follows:

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     SECTION 1. Section 27-9.1-4 of the General Laws in Chapter 27-9.1 entitled "Unfair

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Claims Settlement Practices Act" is hereby amended to read as follows:

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     27-9.1-4. "Unfair claims practices" defined. -- (a) Any of the following acts by an

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insurer, if committed in violation of section 27-9.1-3, constitutes an unfair claims practice:

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      (1) Misrepresenting to claimants and insured relevant facts or policy provisions relating

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to coverage at issue;

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      (2) Failing to acknowledge and act with reasonable promptness upon pertinent

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communications with respect to claims arising under its policies;

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      (3) Failing to adopt and implement reasonable standards for the prompt investigation and

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settlement of claims arising under its policies;

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      (4) Not attempting in good faith to effectuate prompt, fair, and equitable settlement of

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claims submitted in which liability has become reasonably clear;

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      (5) Compelling insured, beneficiaries, or claimants to institute suits to recover amounts

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due under its policies by offering substantially less than the amounts ultimately recovered in suits

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brought by them;

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      (6) Refusing to pay claims without conducting a reasonable investigation;

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      (7) Failing to affirm or deny coverage of claims within a reasonable time after having

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completed its investigation related to the claim or claims;

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      (8) Attempting to settle or settling claims for less than the amount that a reasonable

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person would believe the insured or beneficiary was entitled by reference to written or printed

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advertising material accompanying or made part of an application;

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      (9) Attempting to settle or settling claims on the basis of an application that was

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materially altered without notice to, or knowledge or consent of, the insured;

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      (10) Making claims payments to an insured or beneficiary without indicating the

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coverage under which each payment is being made;

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      (11) Unreasonably delaying the investigation or payment of claims by requiring both a

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formal proof of loss form and subsequent verification that would result in duplication of

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information and verification appearing in the formal proof of loss form;

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      (12) Failing in the case of claims denials or offers of compromise settlement to promptly

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provide a reasonable and accurate explanation of the basis of those actions;

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      (13) Failing to provide forms necessary to present claims within ten (10) calendar days

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of a request with reasonable explanations regarding their use;

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      (14) Failing to adopt and implement reasonable standards to assure that the repairs of a

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repairer owned by or required to be used by the insurer are performed in a workmanlike manner;

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      (15) Misleading a claimant as to the applicable statute of limitations;

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      (16) Failing to respond to a claim within thirty (30) days, unless the insured shall agree

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to a longer period;

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      (17) Engaging in any act or practice of intimidation, coercion, threat or

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misrepresentation of consumers rights, for or against any insured person, claimant, or entity to

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use a particular rental car company for motor vehicle replacement services or products; provided,

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however, nothing shall prohibit any insurance company, agent or adjuster from providing to such

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insured person, claimant or entity the names of a rental car company with which arrangements

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have been made with respect to motor vehicle replacement services; provided, that the rental car

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company is licensed pursuant to Rhode Island general laws section 31-5-33; or

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      (18) Refusing to honor a "direction to pay" executed by an insured, claimant, indicating

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that the insured or claimant, wishes to have the insurance company directly pay his or her motor

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vehicle replacement vehicle rental benefit to the rental car company of the consumer's choice;

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provided, that the rental car company is licensed pursuant to Rhode Island general laws section

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31-5-33. Nothing in this section shall be construed to prevent the insurance company's ability to

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question or challenge the amount charged, in accordance with its policy provisions, and the

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requirements of the department of business regulation;

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      (19) Modifying any published manual (i.e. motors, mitchells, or any automated appraisal

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system) relating to auto body repair without prior agreement between the parties;

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      (20) Failing to use a manual or system in its entirety in the appraisal of a motor vehicle;

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      (21) Refusing to compensate an auto body shop for documented charges as identified

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through industry recognized software programs or systems for paint and refinishing materials in

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auto body repair claims; and/or

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      (22) Failing to comply with the requirements of Rhode Island General Laws section 31-

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47-12.1.

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      (23) Failure to have an appraisal performed by a licensed appraiser where the motor

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vehicle has sustained damage estimated to exceed two thousand five hundred dollars ($2,500).

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Said licensed appraiser referred to herein must be unaffiliated with the repair facility repairing the

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subject motor vehicle.

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      (24) Failure to perform a supplemental appraisal inspection of a vehicle within four (4)

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business days after a request is received from an auto body repair shop.

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      (25) Designating a motor vehicle a total loss if the cost to rebuild or reconstruct the

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motor vehicle to its pre-accident condition in less than seventy-five percent (75%) of the "fair

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market value" of the motor vehicle immediately preceding the time it was damaged:

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     (i) For the purposes of this subdivision, "fair market value" means the retail value of a

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motor vehicle as set forth in a current edition of a nationally recognized compilation of retail

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values commonly used by the automotive industry to establish values of motor vehicles;

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     (ii) Nothing herein shall be construed to require a vehicle be deemed a total loss if the

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total cost to rebuild or reconstruct the motor vehicle to its pre-accident condition is greater than

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seventy-five percent (75%) of the fair market value of the motor vehicle immediately preceding

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the time it was damaged; and

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     (iii) Nothing herein shall prohibit an insurance company from agreeing to deem a vehicle

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a total loss at the vehicle owner's request and with the vehicle owner's express written

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authorization, if the cost to rebuild or reconstruct the motor vehicle to its pre-accident condition is

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less than seventy-five percent (75%) of the "fair market value" of the motor vehicle immediately

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preceding the time it was damaged.

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     (b) (1) Nothing contained in subsections 27-9.1-4(a)(19), (20), & (21) of this chapter

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shall be construed to interfere with an auto body repair facility's contract with an insurance

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company.

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      (2) If an insurance company and auto body repair facility have contracted under a direct

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repair program or any similar program thereto the provisions of subsections 27-9.1-4(a)(19), (20)

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& (21) shall not apply.

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      (3) If the insured or claimant elects to have the vehicle repaired at a shop of his or her

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choice, the insurer shall not limit or discount the reasonable repair costs based upon the charges

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that would have been incurred had the vehicle been repaired by the insurer's chosen shop(s).

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     SECTION 2. This act shall take effect upon passage.

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LC01167

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO INSURANCE - UNFAIR CLAIMS PRACTICES

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     This act would designate as an unfair claims practice, designating a motor vehicle to be a

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total loss if the cost to rebuild or reconstruct the vehicle to its pre-accident condition is less than

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seventy-five percent (75%) of fair market value.

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     This act would take effect upon passage.

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LC01167

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