BILL NUMBER:  S413

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

 PURPOSE :

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. It also prohibits insurers from refusing to pay on
claims, based on any system of price caps or ceilings developed by the
insurer.

 SUMMARY OF PROVISIONS :

Amends Section 2610 of the Insurance Law to prohibit insurers from
establishing price caps for labor, parts, paint or repair materials;
requires that all elements of a claim shall be negotiated with the
insured or his/her designated representative by a duly licensed
appraiser; requires insurers to restore a damaged vehicle to
pre-accident condition; requires insurers to maintain in its files a
statement signed by the claimant showing that the claimant is aware of
the provisions of this section of law.

 JUSTIFICATION :
              

An economic impact report prepared in 2006 by Frederic B. Jennings,
Jr., Ph.D. for the New York State 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 establi Bing 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 blacklisted 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. The bill would further
strengthen the power of the consumer by prohibiting the use of
arbitrary price caps set by insurers to limit the cost of repair.
While the insurer may negotiate with the repair shop as to the cost of
repair, they may not refuse to pay claims where the repair shop's
estimate exceeds the insurer's guidelines.

 LEGISLATIVE HISTORY :

A.7650 of 2005-2006;
S.3763-A/A.392-A of 2007-2008;
S.1517/A.316 of 2009-2010;
S.4642/A.3961 of 2011-2012;
S.338/A.483 of 2013-2014;
S.2916-A.1537 of 2015-2016

 FISCAL IMPLICATIONS :

None.

 EFFECTIVE DATE :
The first January next succeeding the date on which it becomes a law.