Rhode Island 2025 Regular Session

Rhode Island House Bill H5572 Compare Versions

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

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5	5	2025 -- H 5572
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7	7	LC001979
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9	9	S T A T E O F R H O D E I S L A N D
10	10	IN GENERAL ASSEMBLY
11	11	JANUARY SESSION, A.D. 2025
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 Cotter, Ajello, and Potter
17	17	Date Introduced: February 26, 2025
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. [Effective January 1, 2025.] 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
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42	42
43	43	LC001979 - Page 2 of 8
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: 27
71	71	(i) An insured, claimant, indicating that the insured or claimant wishes to have the 28
72	72	insurance company directly pay the insured’s or claimant’s motor vehicle replacement vehicle 29
73	73	rental benefit to the rental car company of the consumer’s choice; provided, that the rental car 30
74	74	company is licensed pursuant to § 31-5-33. Nothing in this section shall be construed to prevent 31
75	75	the insurance company’s ability to question or challenge the amount charged, in accordance with 32
76	76	its policy provisions, and the requirements of the department of business regulation; provided that, 33
77	77	the insurance company promptly notifies the rental car company in writing of the reason. The 34
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80	80	LC001979 - Page 3 of 8
81	81	written notification shall be made at or before the time that the insurance company submits payment 1
82	82	to the rental car company; 2
83	83	(ii) An insured or claimant, indicating that the insured or claimant wishes to have the 3
84	84	insurance company directly pay the insured’s or claimant’s motor vehicle repair benefit, as a single 4
85	85	party payment exclusively to the auto body shop of the consumer’s choice; provided that, the auto 5
86	86	body shop is licensed pursuant to § 5-38-4; 6
87	87	(19) Refusing to honor a “direction to pay” executed by an insured, claimant, indicating 7
88	88	that the insured or claimant wishes to have the insurance company directly pay the insured’s 8
89	89	property damage benefit to the restoration company of the consumer’s choice; provided, however, 9
90	90	that the amount of the claim to be paid directly to the restoration company shall be no greater than 10
91	91	five thousand dollars ($5,000), and that the restoration company is licensed pursuant to § 5-65-3. 11
92	92	Nothing in this section shall be construed to: 12
93	93	(i) Prevent the insurance company’s ability to question or challenge whether the services 13
94	94	billed for are covered by the policy, related to an occurrence covered by the policy, or the amount 14
95	95	charged, in accordance with its policy provisions, and the requirements of the department of 15
96	96	business regulation; or 16
97	97	(ii) Adversely affect the right of any mortgagee or other person with an interest in the policy 17
98	98	unless such mortgagee or other person has also executed the “direction to pay”; 18
99	99	(20) Modifying any published manual, i.e., Motor’s Auto Repair Manual, Mitchells, or any 19
100	100	automated appraisal system, relating to auto body repair without prior agreement between the 20
101	101	parties; 21
102	102	(21) Failing to use a manual or system in its entirety in the appraisal of a motor vehicle; 22
103	103	(22) Refusing to compensate an auto body shop for its documented charges as identified, 23
104	104	and based on, the most current version of automotive industry-recognized software programs or 24
105	105	systems for paint, body, and refinishing materials, utilized in auto body repair, including, but not 25
106	106	limited to, programs such as Mitchell's RMC, PMC Logic, Paint, Micromix, or other paint 26
107	107	manufacturer's programs. An insurer shall not discount documented charges by failing to use a 27
108	108	system in its entirety, including an automotive industry standard markup; 28
109	109	(23) Refusing to acknowledge and compensate an auto body repairer for documented 29
110	110	procedures identified as required or recommended by the original equipment manufacturer, or paint 30
111	111	manufacturer, upon the initial request from the auto body shop, such as, but not limited to, post 31
112	112	collision procedures and components that should not be reused or reinstalled, when included in the 32
113	113	repairer’s appraisal, or when requested by the repairer (i.e., components that cannot be 33
114	114	reused/reinstalled: requiring clips, retainers, hardware, and materials); 34
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118	118	(24) Failing to comply with the requirements of § 31-47-12.1; 1
119	119	(25) Failure to have an appraisal performed by a licensed appraiser where the motor vehicle 2
120	120	has sustained damage estimated to exceed two thousand five hundred dollars ($2,500). The licensed 3
121	121	appraiser referred to herein must be unaffiliated with the repair facility repairing the subject motor 4
122	122	vehicle; must perform a physical inspection of the damaged motor vehicle; and may not perform 5
123	123	an appraisal based upon pictures of the damaged motor vehicle; 6
124	124	(26) Failure of an insurer’s assigned appraiser, or representative, to promptly schedule an 7
125	125	appointment for an appraisal of a damaged vehicle with the auto body repair shop, at an agreed 8
126	126	upon date and time, between normal business hours; 9
127	127	(27) Failure to perform an initial appraisal within three (3) business days after a request is 10
128	128	received from an auto body repair shop, provided the damaged motor vehicle is on the premises of 11
129	129	the repair shop when the request is made, and failure to perform a supplemental appraisal inspection 12
130	130	of a vehicle within four (4) business days after a request is received from an auto body repair shop. 13
131	131	If the insurer’s appraiser fails to inspect the damaged motor vehicle within the allotted number of 14
132	132	business days for an initial appraisal or a supplemental appraisal, the insurer shall forfeit its right 15
133	133	to inspect the damaged vehicle prior to repairs, and negotiations shall be limited to labor and the 16
134	134	price of parts and shall not, unless objective evidence to the contrary is provided by the insurer, 17
135	135	involve disputes as to the existence of damage or the chosen manner of repair. The time limitations 18
136	136	set forth in this subsection may be extended by mutual agreement between the auto body repair 19
137	137	shop and the insurer; 20
138	138	(28) Refusing to extend the rental vehicle coverage requirements of an insured or claimant 21
139	139	proportionally to claim delays caused by the insurer; 22
140	140	(29) Designating a motor vehicle a total loss if the cost to rebuild or reconstruct the motor 23
141	141	vehicle to its pre-accident condition is less than seventy-five percent (75%) of the “fair market 24
142	142	value” of the motor vehicle immediately preceding the time it was damaged: 25
143	143	(i) For the purposes of this subdivision, “fair market value” means the retail value of a 26
144	144	motor vehicle as set forth in a current edition of a nationally recognized compilation of retail values 27
145	145	commonly used by the automotive industry to establish values of motor vehicles or as established 28
146	146	in subsection (vi) of this section; 29
147	147	(ii) Nothing herein shall be construed to require a vehicle be deemed a total loss if the total 30
148	148	cost to rebuild or reconstruct the motor vehicle to its pre-accident condition is greater than seventy-31
149	149	five percent (75%) of the fair market value of the motor vehicle immediately preceding the time it 32
150	150	was damaged; 33
151	151	(iii) Nothing herein shall prohibit an insurance company from agreeing to deem a vehicle 34
152	152
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154	154	LC001979 - Page 5 of 8
155	155	a total loss at the vehicle owner’s request and with the vehicle owner’s express written authorization 1
156	156	if the cost to rebuild or reconstruct the motor vehicle to its pre-accident condition is less than 2
157	157	seventy-five percent (75%) of the “fair market value” of the motor vehicle immediately preceding 3
158	158	the time it was damaged; 4
159	159	(iv) If condition adjustments are made to the retail value of a motor vehicle designated a 5
160	160	total loss, all such adjustments must be in accordance with the standards set forth in the current 6
161	161	edition of a nationally recognized compilation of retail values, commonly used by the automotive 7
162	162	industry, used by the insurer to determine the retail value of the vehicle; and all such adjustments, 8
163	163	including prior damage deductions, must be itemized, fair, and reasonable; and 9
164	164	(v) When a vehicle is deemed a total loss, if the insurer is not retaining the salvage, the 10
165	165	insurer must notify the owner of the vehicle in writing of the requirements of obtaining both a 11
166	166	salvage title and a reconstructed title from the department of motor vehicles pursuant to chapter 1 12
167	167	of title 31, and must obtain, in writing, the owner’s consent and acknowledgement that the insurer 13
168	168	is not retaining the salvage and include a statement of the owner’s obligation and potential costs to 14
169	169	dispose of or otherwise retain the salvage; and 15
170	170	(vi) A “consumer accessible fair market value” is a vehicle valuation figure that meets the 16
171	171	following requirements: 17
172	172	(A) Publicly available or accessible via electronic or print published means by consumers; 18
173	173	(B) Commonly used by the automotive industry and car-buying public; 19
174	174	(C) VIN-specific; and 20
175	175	(D) One whose results reflect a vehicle’s unique and widely available characteristics, 21
176	176	including, but not limited to, trim and options, prior damage, prior service and prior ownership 22
177	177	event information; 23
178	178	(30) Negotiating, or effecting the settlement of, a claim for loss or damage covered by an 24
179	179	insurance contract with an unlicensed public adjuster acting on behalf of an insured. Nothing 25
180	180	contained in this section shall be construed to preclude an insurer from dealing with any individual 26
181	181	or entity that is not required to be licensed under chapter 10 of title 27; 27
182	182	(31) Refusing to pay an auto body repair shop for documented necessary sublet services 28
183	183	paid out to vendors or incurred by the auto body repair shop, for specialty or unique services 29
184	184	performed in the overall repair process, including costs and labor incurred to research, coordinate, 30
185	185	administrate, or facilitate the necessary sublet service, and an automotive industry standard markup. 31
186	186	Examples of sublet services include, but are not limited to, towing, transportation, suspension, 32
187	187	alignments, electronic calibrations, diagnostic work, mechanical work, and paid charges to release 33
188	188	a vehicle; 34
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190	190
191	191	LC001979 - Page 6 of 8
192	192	(32) Failure of any domestic, foreign, or alien insurers to comply with the requirements of 1
193	193	this section; when settling claims on Rhode Island registered vehicles repaired in Rhode Island, 2
194	194	regardless of the state where the insurance policy was issued or originates; and 3
195	195	(33)(i) When a claim is settled, or partially settled, where the named insured is represented 4
196	196	by a public adjuster licensed pursuant to § 27-10-5, failing to obey a direction to pay letter directing 5
197	197	the insurer to issue a check or checks payable to the public adjuster for the public adjuster’s fee, 6
198	198	but not more than ten percent (10%) of the total amount of the settlement, and a separate check 7
199	199	payable to the named insured or any loss payee or mortgagee, or both, whichever is appropriate, 8
200	200	for the balance; provided that, the direction to pay letter is signed or electronically signed and dated 9
201	201	or electronically dated by the named insured and contains the following information: 10
202	202	(A) Name of insured(s); 11
203	203	(B) The claim number (if obtained); 12
204	204	(C) The date or approximate date of the loss; 13
205	205	(D) The public adjuster’s name; 14
206	206	(E) The name of the insurer; 15
207	207	(F) The public adjuster’s fee; and 16
208	208	(G) The addresses to which each check shall be sent. 17
209	209	(ii) Nothing in this subsection shall be construed to: 18
210	210	(A) Prevent the insurance company’s ability to question or challenge whether the services 19
211	211	billed for are covered by the policy, related to an occurrence covered by the policy, or the amount 20
212	212	charged, in accordance with its policy provisions, and the requirements of the department of 21
213	213	business regulation; or 22
214	214	(B) Adversely affect the right of any mortgagee or other person with an interest in the 23
215	215	policy unless such mortgagee or other person has also executed the “direction to pay”. 24
216	216	(b)(1) Nothing contained in subsections (a)(20), (a)(21), and (a)(22) of this section shall be 25
217	217	construed to interfere with an auto body repair facility’s contract with an insurance company. 26
218	218	(2) If an insurance company and auto body repair facility have contracted under a direct 27
219	219	repair program or any similar program thereto, the provisions of subsections (a)(20), (a)(21), and 28
220	220	(a)(22) of this section shall not apply. 29
221	221	(3) If the insured or claimant elects to have the vehicle repaired at a shop of the insured’s 30
222	222	or claimant’s choice, the insurer shall not limit or discount the reasonable repair costs based upon 31
223	223	the charges that would have been incurred had the vehicle been repaired by the insurer’s chosen 32
224	224	shop(s). 33
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228	228	SECTION 2. This act shall take effect upon passage. 1
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230	230	LC001979
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234	234	LC001979 - Page 8 of 8
235	235	EXPLANATION
236	236	BY THE LEGISLATIVE COUNCIL
237	237	OF
238	238	A N A C T
239	239	RELATING TO INSURANCE -- UNFAIR CLAIMS SETTLEMENT PRACTICES ACT
240	240	***
241	241	This act would define a “consumer accessible fair market value” for a vehicle valuation 1
242	242	figure. 2
243	243	This act would take effect upon passage. 3
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245	245	LC001979
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