Rhode Island 2023 Regular Session

Rhode Island House Bill H5536 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1
2	2
3	3
4	4
5	5	2023 -- H 5536
6	6	========
7	7	LC000620
8	8	========
9	9	S TATE OF RHODE IS LAND
10	10	IN GENERAL ASSEMBLY
11	11	JANUARY SESSION, A.D. 2023
12	12	____________
13	13
14	14	A N A C T
15	15	RELATING TO INSURANCE -- UNFAIR CLAIMS SETTLEMENT PRACTICES ACT
16	16	Introduced By: Representatives Batista, Alzate, and Felix
17	17	Date Introduced: February 15, 2023
18	18	Referred To: House Corporations
19	19
20	20
21	21	It is enacted by the General Assembly as follows:
22	22	SECTION 1. Section 27-9.1-4 of the General Laws in Chapter 27-9.1 entitled "Unfair 1
23	23	Claims Settlement Practices Act" is hereby amended to read as follows: 2
24	24	27-9.1-4. “Unfair claims practices” defined. 3
25	25	(a) Any of the following acts by an insurer, if committed in violation of § 27-9.1-3, 4
26	26	constitutes an unfair claims practice: 5
27	27	(1) Misrepresenting to claimants and insured relevant facts or policy provisions relating to 6
28	28	coverage at issue; 7
29	29	(2) Failing to acknowledge and act with reasonable promptness upon pertinent 8
30	30	communications with respect to claims arising under its policies; 9
31	31	(3) Failing to adopt and implement reasonable standards for the prompt investigation and 10
32	32	settlement of claims arising under its policies; 11
33	33	(4) Not attempting in good faith to effectuate prompt, fair, and equitable settlement of 12
34	34	claims submitted in which liability has become reasonably clear; 13
35	35	(5) Compelling insured, beneficiaries, or claimants to institute suits to recover amounts due 14
36	36	under its policies by offering substantially less than the amounts ultimately recovered in suits 15
37	37	brought by them; 16
38	38	(6) Refusing to pay claims without conducting a reasonable investigation; 17
39	39	(7) Failing to affirm or deny coverage of claims within a reasonable time after having 18
40	40	completed its investigation related to the claim or claims; 19
41	41
42	42
43	43	LC000620 - Page 2 of 6
44	44	(8) Attempting to settle or settling claims for less than the amount that a reasonable person 1
45	45	would believe the insured or beneficiary was entitled by reference to written or printed advertising 2
46	46	material accompanying or made part of an application; 3
47	47	(9) Attempting to settle or settling claims on the basis of an application that was materially 4
48	48	altered without notice to, or knowledge or consent of, the insured; 5
49	49	(10) Making claims payments to an insured or beneficiary without indicating the coverage 6
50	50	under which each payment is being made; 7
51	51	(11) Unreasonably delaying the investigation or payment of claims by requiring both a 8
52	52	formal proof of loss form and subsequent verification that would result in duplication of 9
53	53	information and verification appearing in the formal proof of loss form; 10
54	54	(12) Failing in the case of claims denials or offers of compromise settlement to promptly 11
55	55	provide a reasonable and accurate explanation of the basis of those actions; 12
56	56	(13) Failing to provide forms necessary to present claims within ten (10) calendar days of 13
57	57	a request with reasonable explanations regarding their use; 14
58	58	(14) Failing to adopt and implement reasonable standards to assure that the repairs of a 15
59	59	repairer owned by or required to be used by the insurer are performed in a workmanlike manner; 16
60	60	(15) Misleading a claimant as to the applicable statute of limitations; 17
61	61	(16) Failing to respond to a claim within thirty (30) days, unless the insured shall agree to 18
62	62	a longer period; 19
63	63	(17) Engaging in any act or practice of intimidation, coercion, threat, or misrepresentation 20
64	64	of consumers rights, for or against any insured person, claimant, or entity to use a particular rental 21
65	65	car company for motor vehicle replacement services or products; provided, however, nothing shall 22
66	66	prohibit any insurance company, agent, or adjuster from providing to such insured person, claimant, 23
67	67	or entity the names of a rental car company with which arrangements have been made with respect 24
68	68	to motor vehicle replacement services; provided, that the rental car company is licensed pursuant 25
69	69	to § 31-5-33; 26
70	70	(18) Refusing to honor a “direction to pay” executed by an insured, claimant, indicating 27
71	71	that the insured or claimant wishes to have the insurance company directly pay his or her motor 28
72	72	vehicle replacement vehicle rental benefit to the rental car company of the consumer’s choice; 29
73	73	provided, that the rental car company is licensed pursuant to § 31-5-33. Nothing in this section shall 30
74	74	be construed to prevent the insurance company’s ability to question or challenge the amount 31
75	75	charged, in accordance with its policy provisions, and the requirements of the department of 32
76	76	business regulation; 33
77	77	(19) Modifying any published manual, i.e., Motor’s Auto Repair Manual, Mitchells, or any 34
78	78
79	79
80	80	LC000620 - Page 3 of 6
81	81	automated appraisal system, relating to auto body repair without prior agreement between the 1
82	82	parties; 2
83	83	(20) Failing to use a manual or system in its entirety in the appraisal of a motor vehicle; 3
84	84	(21) Refusing to compensate an auto body shop for its documented charges as identified 4
85	85	through the most current version of automotive industry-recognized software programs or systems 5
86	86	for paint, body, and refinishing materials in auto body repair claims, including, but not limited to, 6
87	87	programs such as Mitchell’s RMC, PMC Logic, Paint, Micromix, or a paint manufacturer’s 7
88	88	programs. An insurer shall not discount documented charges by failing to use a system in its 8
89	89	entirety, including an automotive industry standard markup; 9
90	90	(22) Failing to comply with the requirements of § 31-47-12.1; 10
91	91	(23) Failure to have an appraisal performed by a licensed appraiser where the motor vehicle 11
92	92	has sustained damage estimated to exceed two thousand five hundred dollars ($2,500) five thousand 12
93	93	dollars ($5,000). The licensed appraiser referred to herein must be unaffiliated with the repair 13
94	94	facility repairing the subject motor vehicle; must perform a physical inspection of the damaged 14
95	95	motor vehicle; and may not perform an appraisal based upon pictures of the damaged motor vehicle; 15
96	96	(24) Failure to perform an initial appraisal within three (3) four (4) business days after a 16
97	97	request is received from an auto body repair shop, provided the damaged motor vehicle is on the 17
98	98	premises of the repair shop when the request is made, and failure to perform a supplemental 18
99	99	appraisal inspection of a vehicle within four (4) business days after a request is received from an 19
100	100	auto body repair shop. The time limitations set forth in this subsection may be extended by mutual 20
101	101	agreement between the auto body repair shop and the insurer; 21
102	102	(25) Designating a motor vehicle a total loss if the cost to rebuild or reconstruct the motor 22
103	103	vehicle to its pre-accident condition is less than seventy-five percent (75%) of the “fair market 23
104	104	value” of the motor vehicle immediately preceding the time it was damaged: 24
105	105	(i) For the purposes of this subdivision, “fair market value” means the retail value of a 25
106	106	motor vehicle as set forth in a current edition of a nationally recognized compilation of retail values 26
107	107	commonly used by the automotive or insurance industry to establish values of motor vehicles; 27
108	108	(ii) Nothing herein shall be construed to require a vehicle be deemed a total loss if the total 28
109	109	cost to rebuild or reconstruct the motor vehicle to its pre-accident condition is greater than seventy-29
110	110	five percent (75%) of the fair market value of the motor vehicle immediately preceding the time it 30
111	111	was damaged; 31
112	112	(iii) Nothing herein shall prohibit an insurance company from agreeing to deem a vehicle 32
113	113	a total loss at the vehicle owner’s request and with the vehicle owner’s express written authorization 33
114	114	if the cost to rebuild or reconstruct the motor vehicle to its pre-accident condition is less than 34
115	115
116	116
117	117	LC000620 - Page 4 of 6
118	118	seventy-five percent (75%) of the “fair market value” of the motor vehicle immediately preceding 1
119	119	the time it was damaged; 2
120	120	(iv) If condition adjustments are made to the retail value of a motor vehicle designated a 3
121	121	total loss, all such adjustments must be in accordance with the standards set forth in the current 4
122	122	edition of a nationally recognized compilation of retail values, commonly used by the automotive 5
123	123	or insurance industry, used by the insurer to determine the retail value of the vehicle; and all such 6
124	124	adjustments, including prior damage deductions, must be itemized, fair, and reasonable; and 7
125	125	(v) When a vehicle is deemed a total loss, if the insurer is not retaining the salvage, the 8
126	126	insurer must notify the owner of the vehicle in writing of the requirements of obtaining both a 9
127	127	salvage title and a reconstructed title from the department of motor vehicles pursuant to chapter 1 10
128	128	46 of title 31, and must obtain, in writing, the owner’s consent and acknowledgement that the 11
129	129	insurer is not retaining the salvage and include a statement of the owner’s obligation and potential 12
130	130	costs to dispose of or otherwise retain the salvage; 13
131	131	(26) Negotiating, or effecting the settlement of, a claim for loss or damage covered by an 14
132	132	insurance contract with an unlicensed public adjuster acting on behalf of an insured. Nothing 15
133	133	contained in this section shall be construed to preclude an insurer from dealing with any individual 16
134	134	or entity that is not required to be licensed under chapter 10 of title 27; 17
135	135	(27) Refusing to pay an auto body repair shop for documented necessary sublet services 18
136	136	paid out to vendors or incurred by the auto body repair shop, for specialty or unique services 19
137	137	performed in the overall repair process, including costs and labor incurred to research, coordinate, 20
138	138	administrate, or facilitate the necessary sublet service, and an automotive industry standard markup. 21
139	139	Examples of sublet services include, but are not limited to, towing, transportation, suspension, 22
140	140	alignments, electronic calibrations, diagnostic work, mechanical work, and paid charges to release 23
141	141	a vehicle. 24
142	142	(b)(1) Nothing contained in subsections (a)(19), (a)(20), and (a)(21) of this section shall be 25
143	143	construed to interfere with an auto body repair facility’s contract with an insurance company. 26
144	144	(2) If an insurance company and auto body repair facility have contracted under a direct 27
145	145	repair program or any similar program thereto, the provisions of subsections (a)(19), (a)(20), and 28
146	146	(a)(21) of this section shall not apply. 29
147	147	(3) If the insured or claimant elects to have the vehicle repaired at a shop of his or her 30
148	148	choice, the insurer shall not limit or discount the reasonable repair costs based upon the charges 31
149	149	that would have been incurred had the vehicle been repaired by the insurer’s chosen shop(s). 32
150	150
151	151
152	152	LC000620 - Page 5 of 6
153	153	SECTION 2. This act shall take effect upon passage. 1
154	154	========
155	155	LC000620
156	156	========
157	157
158	158
159	159	LC000620 - Page 6 of 6
160	160	EXPLANATION
161	161	BY THE LEGISLATIVE COUNCIL
162	162	OF
163	163	A N A C T
164	164	RELATING TO INSURANCE -- UNFAIR CLAIMS SETTLEMENT PRACTICES ACT
165	165	***
166	166	This act would increase the amount requiring that an appraisal be performed by a licensed 1
167	167	appraiser when a vehicle sustains damage from two thousand five hundred dollars ($2,500) in 2
168	168	excess of five thousand dollars ($5,000). This act would also correct a citation regarding salvage 3
169	169	and reconstructed titles. 4
170	170	This act would take effect upon passage. 5
171	171	========
172	172	LC000620
173	173	========