Auto-Repair Bill Vetoed in Rhode Island
Rhode Island Governor Chafee vetoed House Bill 7782 in late June. This bill sought to change several things in the state’s auto insurance legislation. The first of these provisions would help auto repair shops. It would make it simpler for them to the insurance companies over the pricing of repairs. In addition to this, it would put heavier restrictions on steering practices.
Steering is a practice employed by many insurance companies that essentially leads policyholders to in-network repair shops after they crash. The practice essentially “steers” policyholders to preferred businesses. While policyholders might know of a repair shop that has better rates, sometimes the terms stipulated in a policy force them to go elsewhere.
The third provision of this bill would also have affected when a vehicle is considered a total loss. The bill states that vehicles would not be considered a total loss if the costs of rebuilding the car are less than 75% of the car’s fair market value prior to the crash.
According to OnlineAutoInsurance, Governor Chafee vetoed this legislation stating that it would raise car insurance rates for Rhode Island policyholders.
Governor Chafee states, “With many Rhode Island families continuing to struggle as our state economy recovers, I do not believe it is appropriate to pass on any unnecessary additional costs to consumers.”
Differing Views
While Representative Stephen Ucci, the bill’s author, vouches for its ability to help small business auto repair shops remain competitive, others disagree. The AIA, American Insurance Association, spoke out against the provision that helps auto repair shops sue insurance companies.
They retain that since it will be easier to sue, auto repair shops will do so with more frequency. It is suggested that the insurance companies anticipating losses will pass along the costs to their policyholders.
The PCI, Property Casualty Insurers Association of America, also researched the impact the bill would have on the market, and showed that it would, indeed, raise auto insurance costs for policyholders.
Insurance premiums are a hot-button issue for Rhode Islanders. OnlineAutoInsurance states, “According to the most recent state data from the National Association of Insurance Commissioners, Rhode Island was the seventh most-expensive state in the U.S. for auto policies in 2009.”
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