NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A7738A
TITLE OF BILL: An act to amend the insurance law, in relation to
collision or comprehensive coverage on motor vehicles
PURPOSE OR GENERAL IDEA OF BILL:
The bill would protect the rights of insured motorists 'to have their
vehicles repaired at the shop of their choice. It does this by requiring
insurance companies to inform the insured of their rights under the law.
SUMMARY OF SPECIFIC PROVISIONS:
Amends Section 2610 of the Insurance LaWto require insurers to place in
the repair estimate a statement informing.the insured of their right to
have their vehicle repaired at a shop of their choice.
An economic impact report prepared in 2006 by Frederic B. Jennings, Jr.,
Ph.D. for the NYS Auto Collision Technicians Association, Inc., provides
evidence that automobile insurance companies in New York State are arti-
ficially suppressing payment for labor rates paid to auto body repair
shops, and are thereby jeopardizing the safety of drivers on New York
roads. The report argues that suppression of labor rates has reduced the
quality of repairs completed in many auto body repair shops, and there-
fore has jeopardized driver safety.
In an effort to reduce costs, automobile insurance companies enter into
"preferred" shop agreements with auto body repair shops, such that the
preferred shop provides a discount to individuals insured by that insur-
ance company. Automobile insurance companies may then refer claimants to
those shops when asked for a referral-Under current law, insurance
companies are permitted to pay the lowest price estimate on repairs, as
long, as the repairs restore the vehicle to pre-accident condition.
The President of the Auto Collision- Technicians Association asserts
that member shops regularly see customers in need of re-repairs-for a•
poor job done by another body shop, generally the "preferred shop"
recommended by the insurance company: In most instances, the insurance
company must pay for the cost of the re-repair after significant hassle
and legal negotiation on the part of the consumer. The Association
estimates that this need for regular re-repairs to fix poor initial
repair jobs actually has the effect of increasing auto insurance premi-
ums, despite the claims of auto insurance companies that suppression of
labor rates reduces monthly premiums to customers.
Preferred shops establish relationships with the insurers by agreeing to
complete repair work within the.price guidelines set by the insurance
companies. This practice Of establishing rigid price guidelines or caps
goes beyond the legitimate right of the insurer to negotiate the price
of repair. It has the effect of limiting consumer choices by dividing
repair shops into two groups: the cut-rate shops preferred by the insur-
ers, and independent shops which can be effectively black-listed by
insurance company policies and procedures.
The proposed legislation would require insurers to inform customers of
their right to select a repair shop and to make decisions regarding the
type of repair done to their vehicle.
PRIOR LEGISLATIVE HISTORY:
New bill. Similar to A.1537 of 2015.
180 days after becoming law.
STATE OF NEW YORK
Cal. No. 678
2015-2016 Regular Sessions
May 26, 2015
Introduced by M. of A. MAGNARELLI, McDONALD -- read once and referred to
the Committee on Insurance -- recommitted to the Committee on Insur-
ance in accordance with Assembly Rule 3, sec. 2 -- reported and
referred to the Committee on Codes -- reported from committee,
advanced to a third reading, amended and ordered reprinted, retaining
its place on the order of third reading
AN ACT to amend the insurance law, in relation to collision or compre-
hensive coverage on motor vehicles
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Section 2610 of the insurance law is amended by adding a
2 new subsection (c) to read as follows:
3 (c) The insurer shall provide a copy of its repair estimate to the
4 insured that includes the following disclosure, plainly printed in no
5 less than 12 point type: "PURSUANT TO SECTION 2610 OF THE INSURANCE LAW,
6 AN INSURANCE COMPANY CANNOT REQUIRE THAT REPAIRS BE MADE TO A MOTOR
7 VEHICLE IN A PARTICULAR PLACE OR REPAIR SHOP. YOU HAVE THE RIGHT TO HAVE
8 YOUR VEHICLE REPAIRED IN THE SHOP OF YOUR CHOICE".
9 § 2. This act shall take effect on the one hundred eightieth day after
10 it shall have become a law and shall apply to all policies and contracts
11 issued, renewed, modified, altered or amended on or after such effective
12 date; provided, however, that effective immediately, the addition,
13 amendment and/or repeal of any rule or regulation necessary for the
14 implementation of this act on its effective date are authorized and
15 directed to be made and completed on or before such effective date.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
 is old law to be omitted.