HB2330 94TH GENERAL ASSEMBLY

LRB094 08411 LJB 38613 b

94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006
HB2330

Introduced 2/16/2005, by Rep. Thomas Holbrook

SYNOPSIS AS INTRODUCED:

215 ILCS 5/155.42 new

Amends the Illinois Insurance Code. Prohibits insurers from requiring vehicles to be repaired at specific repair facilities. Requires that, before an insurer recommends a specific repair facility, the claimant must request a referral. Requires the insurer to prominently display any suggestion or recommendation of a repair facility in the insurance contract and to not limit or discount the reasonable basis of repair costs if the insured chooses another repair facility. Grants powers to the Secretary to enforce this Section. Provides civil penalties. Provides non-exclusive examples of violations. Makes insurers liable to claimants and repair facilities for damages from violations.

A BILL FOR

AN ACT concerning insurance.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Insurance Code is amended by adding Section 155.42 as follows:

(215 ILCS 5/155.42 new)

Sec. 155.42. Auto collision repair facilities.

(a) No insurer shall require that a motor vehicle be repaired at a specific repair facility, as defined in subsection (b) of Section 155.29 of this Code.

(b) No insurer shall suggest or recommend that a motor vehicle be repaired at a specific repair facility unless a referral is expressly requested by the claimant. If a recommendation is requested and is accepted by the claimant, the insurer shall cause the damaged vehicle to be restored to its condition prior to the loss at no additional cost to the claimant other than as stated in the policy or as otherwise allowed by law.

If the recommendation of an automotive repair facility is made orally, and if the oral recommendation is accepted by the claimant, the insurer shall provide the information contained in the written notice required by this paragraph to the claimant at the time the recommendation is made. The insurer shall send the written notice required by this paragraph to the claimant within 5 calendar days from acceptance of the oral recommendation. The written notice required by this paragraph shall include the following statement plainly printed in no less than 10-point type:

"WE ARE PROHIBITED BY LAW FROM REQUIRING THAT REPAIRS BE DONE AT A SPECIFIC AUTOMOTIVE REPAIR FACILITY. YOU ARE ENTITLED TO SELECT THE AUTO BODY REPAIR FACILITY TO REPAIR DAMAGE COVERED BY US. WE HAVE RECOMMENDED AN AUTOMOTIVE REPAIR FACILITY THAT WILL REPAIR YOUR DAMAGED MOTOR VEHICLE. IF YOU AGREE TO USE OUR RECOMMENDED AUTOMOTIVE REPAIR FACILITY, WE WILL CAUSE THE DAMAGED MOTOR VEHICLE TO BE RESTORED TO ITS CONDITION PRIOR TO THE LOSS AT NO ADDITIONAL COST TO YOU OTHER THAN AS STATED IN THE INSURANCE POLICY OR OTHERWISE ALLOWED BY LAW. IF YOU EXPERIENCE A PROBLEM WITH THE REPAIR OF YOUR MOTOR VEHICLE, PLEASE CONTACT US IMMEDIATELY FOR ASSISTANCE.".

(c) Except as provided in this Section, after the claimant has chosen a repair facility, the insurer shall not suggest or recommend that the claimant select a different automotive repair facility.

(d) An insurer that suggests or recommends in the insurance contract that a motor vehicle be repaired at a particular repair facility (i) shall prominently disclose the contractual provision in writing to the insured at the time the insurance is applied for and at the time the claim is acknowledged by the insurer and (ii) if the claimant elects to have the motor vehicle repaired at the repair facility of his or her choice in his or her relevant market area, the insurer shall not limit or discount the reasonable basis of repair costs as defined in paragraph 6 of Section 70 of the Automotive Collision Repair Act based on charges that would have been incurred had the motor vehicle been repaired by the insurer's suggested or recommended repair facility.

(e) For purposes of this Section:

"Any person" or "person" means any person who is employed by or subcontracted by an insurance company or agent or adjusting firm involved in handling the insurance claim.

"Claimant" means a first party claimant or insured or a third party claimant who asserts a right of recovery for motor vehicle repairs under an insurance policy.

"Relevant market area" for an automotive collision repairer licensed under Section 5-301 of the Illinois Vehicle Code means the area within 10 miles of the established place of business of the repairer located in a county with a population of 300,000 or more or the area within 15 miles of the established place of business of the repairer located in a county with a population of less than 300,000.

(f) The powers of the Secretary to enforce this Section shall include those granted in Section 425 of this Code.

(g) Any person who engages in any activity that violates this Section is liable to the State for a civil penalty to be determined by the Secretary not to exceed $5,000 for each violation or, if the act or practice is willful, a civil penalty not to exceed $10,000 for each violation. The Secretary shall have the discretion to establish what constitutes a violation. When violations resulting from the issuance, amendment, or servicing of a policy or endorsement are inadvertent, all of those violations shall be a single violation for the purposes of this Section.

A violation of this Section shall include, but is not limited to:

(1) Alluding to or suggesting that the insurer shall participate in the warranty of or guarantee the repairs by a recommended repair facility, unless the insurer has in writing expressly exercised the option to repair as allowed in the insurance policy. Once the insurer has exercised the option to repair, the insurer shall then assume full warranty and liability for the repairs.

(2) Implying or suggesting that an auto body repair shop chosen by the claimant is somehow inferior or inconvenient to a repair shop on the insurance company's list of repair shops.

(3) Tying of services. Unless it is in accordance with the insurance policy or applicable law, no person shall imply, suggest, or allude that the insurance company's option to pay for the claimant's losses in money shall be compromised or in any way diminished if the claimant chooses to use the repair facility of his or her choice.

(4) Failure to disclose to the claimant at the time that the insurer or third party representative recommends the use of a designated repair facility in connection with settling or paying any claim arising under a policy or policies of insurance that the insurer or third party representative has agreed to discounts or concessions in parts, labor, materials, or procedures as specified by the insurer that is not transferable to the claimant, if the concessions or discounts do exist.

(5) Engagement in any act of coercion or intimidation causing or intending to cause any licensed automobile repair shop to violate the Automotive Collision Repair Act as a requirement to join or remain on any insurance company referral list.

(h) Violators of this Section are liable for any damages suffered by the claimant or repair facility, including attorney fees.