BILL NUMBER:  S5639A

 TITLE OF BILL :

An act to amend the insurance law, in relation to collision or
comprehensive coverage on motor vehicles

 PURPOSE OR GENERAL IDEA OF BILL :

The bill would protect the rights of insured motorists to have their
vehicles repaired at the shop of their choice. It does this by
requiring insurance companies to inform the insured of their rights
under the law.

 SUMMARY OF SPECIFIC PROVISIONS :

Amends Section 2610 of the Insurance Law to require insurers to place
in the repair estimate a statement informing the insured of their
right to have their vehicle repaired at a shop of their choice.

 JUSTIFICATION :

An economic impact report prepared in 2006 by Frederic B. Jennings,
Jr., Ph.D. for the NYS Auto Collision Technicians Association, Inc.,
provides evidence that automobile insurance companies in New York
State are artificially suppressing payment for labor rates paid to
              

auto body repair shops, and are thereby jeopardizing the safety of
drivers on New York roads. The report argues that suppression of labor
rates has reduced the quality of repairs completed in many auto body
repair shops, and therefore has jeopardized driver safety.

In an effort to reduce costs, automobile insurance companies enter
into "preferred" shop agreements with auto body repair shops, such
that the preferred shop provides a discount to individuals insured by
that insurance company. Automobile insurance companies may then refer
claimants to those shops when asked for a referral. Under current law,
insurance companies are permitted to pay the lowest price estimate on
repairs, as long as the repairs restore the vehicle to pre-accident
condition.

The President of the Auto Collision Technicians Association asserts
that member shops regularly see customers in need of re-repairs for a
poor job done by another body shop, generally the "preferred shop"
recommended by the insurance company. In most instances, the insurance
company must pay for the cost of the re-repair after significant
hassle and legal negotiation on the part of the consumer. The
Association estimates that this need for regular re-repairs to fix
poor initial repair jobs actually has the effect of increasing auto
insurance premiums, despite the claims of auto insurance companies
that suppression of labor rates reduces monthly premiums to customers.

Preferred shops establish relationships with the insurers by agreeing
to complete repair work within the price guidelines set by the
insurance companies. This practice of establishing rigid price
guidelines or caps goes beyond the legitimate right of the insurer to
negotiate the price of repair. It has the effect of limiting consumer
choices by dividing repair shops into two groups: the cut-rate shops
preferred by the insurers, and independent shops which can be
effectively black-listed by insurance company policies and procedures.

The proposed legislation would require insurers to inform customers of
their right to select a repair shop and to make decisions regarding
the type of repair done to their vehicle.

 PRIOR LEGISLATIVE HISTORY :

New bill. Similar to A.1537 of 2015.

 FISCAL IMPLICATIONS :

None.

 EFFECTIVE DATE :
180 days after becoming law.