Rhode Island 2025 Regular Session

Rhode Island Senate Bill S0902 Compare Versions

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

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5	5	2025 -- S 0902
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7	7	LC002599
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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: Senators Gallo, Tikoian, Lawson, LaMountain, DiPalma, and Sosnowski
17	17	Date Introduced: March 27, 2025
18	18	Referred To: Senate Judiciary
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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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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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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, 30
111	111	manufacturer’s program, or collision repair industry recognized programs such as Alldata, 31
112	112	Repairlogic, CCC Repair Methods, or paint manufacturer, upon the initial request from the auto 32
113	113	body shop, such as, but not limited to, post collision procedures and components that should not be 33
114	114	reused or reinstalled, when included in the repairer’s appraisal, or when requested by the repairer 34
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118	118	(i.e., components that cannot be reused/reinstalled: requiring clips, retainers, hardware, and 1
119	119	materials); 2
120	120	(24) Failing to comply with the requirements of § 31-47-12.1; 3
121	121	(25) Failure to have an appraisal performed by a licensed appraiser where the motor vehicle 4
122	122	has sustained damage estimated to exceed two thousand five hundred dollars ($2,500). The licensed 5
123	123	appraiser referred to herein must be unaffiliated with the repair facility repairing the subject motor 6
124	124	vehicle; must perform a physical inspection of the damaged motor vehicle; and may not perform 7
125	125	an appraisal based upon pictures of the damaged motor vehicle; 8
126	126	(26) Failure of an insurer’s assigned appraiser, or representative, to promptly schedule an 9
127	127	appointment for an appraisal of a damaged vehicle with the auto body repair shop, at an agreed 10
128	128	upon date and time, between normal business hours; 11
129	129	(27) Failure to perform an initial appraisal within three (3) business days after a request is 12
130	130	received from an auto body repair shop, provided the damaged motor vehicle is on the premises of 13
131	131	the repair shop when the request is made, and failure to perform a supplemental appraisal inspection 14
132	132	of a vehicle within four (4) business days after a request is received from an auto body repair shop. 15
133	133	If the insurer’s appraiser fails to inspect the damaged motor vehicle within the allotted number of 16
134	134	business days for an initial appraisal or a supplemental appraisal, the insurer shall forfeit its right 17
135	135	to inspect the damaged vehicle prior to repairs, and negotiations shall be limited to labor and the 18
136	136	price of parts and shall not, unless objective evidence to the contrary is provided by the insurer, 19
137	137	involve disputes as to the existence of damage or the chosen manner of repair. The time limitations 20
138	138	set forth in this subsection may be extended by mutual agreement between the auto body repair 21
139	139	shop and the insurer; 22
140	140	(28) Refusing to extend the rental vehicle coverage requirements of an insured or claimant 23
141	141	proportionally to claim delays caused by the insurer; 24
142	142	(29) Designating a motor vehicle a total loss if the cost to rebuild or reconstruct the motor 25
143	143	vehicle to its pre-accident condition is less than seventy-five percent (75%) eighty-five percent 26
144	144	(85%) of the “fair market value” of the motor vehicle immediately preceding the time it was 27
145	145	damaged: 28
146	146	(i) For the purposes of this subdivision, “fair market value” means the retail value of a 29
147	147	motor vehicle as set forth in a current edition of a nationally recognized compilation of retail values 30
148	148	commonly used by the automotive industry to establish values of motor vehicles; 31
149	149	(ii) Nothing herein shall be construed to require a vehicle be deemed a total loss if the total 32
150	150	cost to rebuild or reconstruct the motor vehicle to its pre-accident condition is greater than seventy-33
151	151	five percent (75%) eighty-five percent (85%) of the fair market value of the motor vehicle 34
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155	155	immediately preceding the time it was damaged; 1
156	156	(iii) Nothing herein shall prohibit an insurance company from agreeing to deem a vehicle 2
157	157	a total loss at the vehicle owner’s request and with the vehicle owner’s express written authorization 3
158	158	if the cost to rebuild or reconstruct the motor vehicle to its pre-accident condition is less than 4
159	159	seventy-five percent (75%) eighty-five percent (85%) of the “fair market value” of the motor 5
160	160	vehicle immediately preceding the time it was damaged; 6
161	161	(iv) If condition adjustments are made to the retail value of a motor vehicle designated a 7
162	162	total loss, all such adjustments must be in accordance with the standards set forth in the current 8
163	163	edition of a nationally recognized compilation of retail values, commonly used by the automotive 9
164	164	industry, used by the insurer to determine the retail value of the vehicle; and all such adjustments, 10
165	165	including prior damage deductions, must be itemized, fair, and reasonable; and 11
166	166	(v) When a vehicle is deemed a total loss, if the insurer is not retaining the salvage, the 12
167	167	insurer must notify the owner of the vehicle in writing of the requirements of obtaining both a 13
168	168	salvage title and a reconstructed title from the department of motor vehicles pursuant to chapter 1 14
169	169	of title 31, and must obtain, in writing, the owner’s consent and acknowledgement that the insurer 15
170	170	is not retaining the salvage and include a statement of the owner’s obligation and potential costs to 16
171	171	dispose of or otherwise retain the salvage; 17
172	172	(30) Negotiating, or effecting the settlement of, a claim for loss or damage covered by an 18
173	173	insurance contract with an unlicensed public adjuster acting on behalf of an insured. Nothing 19
174	174	contained in this section shall be construed to preclude an insurer from dealing with any individual 20
175	175	or entity that is not required to be licensed under chapter 10 of title 27; 21
176	176	(31) Refusing to pay an auto body repair shop for documented necessary sublet services 22
177	177	paid out to vendors or incurred by the auto body repair shop, for specialty or unique services 23
178	178	performed in the overall repair process, including costs and labor incurred to research, coordinate, 24
179	179	administrate, or facilitate the necessary sublet service, and an automotive industry standard markup. 25
180	180	Examples of sublet services include, but are not limited to, towing, transportation, suspension, 26
181	181	alignments, electronic calibrations, diagnostic work, mechanical work, and paid charges to release 27
182	182	a vehicle; 28
183	183	(32) Failure of any domestic, foreign, or alien insurers to comply with the requirements of 29
184	184	this section; when settling claims on Rhode Island registered vehicles repaired in Rhode Island, 30
185	185	regardless of the state where the insurance policy was issued or originates; 31
186	186	(33)(i) When a claim is settled, or partially settled, where the named insured is represented 32
187	187	by a public adjuster licensed pursuant to § 27-10-5, failing to obey a direction to pay letter directing 33
188	188	the insurer to issue a check or checks payable to the public adjuster for the public adjuster’s fee, 34
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192	192	but not more than ten percent (10%) of the total amount of the settlement, and a separate check 1
193	193	payable to the named insured or any loss payee or mortgagee, or both, whichever is appropriate, 2
194	194	for the balance; provided that, the direction to pay letter is signed or electronically signed and dated 3
195	195	or electronically dated by the named insured and contains the following information: 4
196	196	(A) Name of insured(s); 5
197	197	(B) The claim number (if obtained); 6
198	198	(C) The date or approximate date of the loss; 7
199	199	(D) The public adjuster’s name; 8
200	200	(E) The name of the insurer; 9
201	201	(F) The public adjuster’s fee; and 10
202	202	(G) The addresses to which each check shall be sent. 11
203	203	(ii) Nothing in this subsection shall be construed to: 12
204	204	(A) Prevent the insurance company’s ability to question or challenge whether the services 13
205	205	billed for are covered by the policy, related to an occurrence covered by the policy, or the amount 14
206	206	charged, in accordance with its policy provisions, and the requirements of the department of 15
207	207	business regulation; or 16
208	208	(B) Adversely affect the right of any mortgagee or other person with an interest in the 17
209	209	policy unless such mortgagee or other person has also executed the “direction to pay”. 18
210	210	(b)(1) Nothing contained in subsections (a)(20), (a)(21), and (a)(22) of this section shall be 19
211	211	construed to interfere with an auto body repair facility’s contract with an insurance company. 20
212	212	(2) If an insurance company and auto body repair facility have contracted under a direct 21
213	213	repair program or any similar program thereto, the provisions of subsections (a)(20), (a)(21), and 22
214	214	(a)(22) of this section shall not apply. 23
215	215	(3) If the insured or claimant elects to have the vehicle repaired at a shop of the insured’s 24
216	216	or claimant’s choice, the insurer shall not limit or discount the reasonable repair costs based upon 25
217	217	the charges that would have been incurred had the vehicle been repaired by the insurer’s chosen 26
218	218	shop(s). 27
219	219	SECTION 2. This act shall take effect upon passage. 28
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226	226	EXPLANATION
227	227	BY THE LEGISLATIVE COUNCIL
228	228	OF
229	229	A N A C T
230	230	RELATING TO INSURANCE -- UNFAIR CLAIMS SETTLEMENT PRACTICES ACT
231	231	***
232	232	This act would make it an unfair claims practice for an insurer to designate a motor vehicle 1
233	233	a total loss if the cost to rebuild or reconstruct the motor vehicle to its pre-accident condition is less 2
234	234	than eighty-five percent (85%) of the fair market value of the motor vehicle immediately preceding 3
235	235	the time it was damaged. This act would also require an insurer to compensate an autobody repairer 4
236	236	for procedures recommended by the OEM's program or collision repair industry programs such as 5
237	237	Alldata, Repairlogic or CCC Repair Methods. 6
238	238	This act would take effect upon passage. 7
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