BP BHEAD INT S [atlas:bill]

AN ACT Relating to consumer choices in automotive insurance and repairs; amending RCW 48.30A.015; adding new sections to chapter 48.30 RCW; and prescribing penalties.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature finds and declares that:

(1) The state of Washington regulates the insurance industry and has a significant interest in upholding the fiduciary obligation of insurers to their insured, defining methods of competition, and eliminating business practices that are unfair or deceptive;

(2) The state of Washington recognizes the existence of circumstances in which this fiduciary obligation may come into conflict with the insurers' interests in holding down claim processing and payment costs of both third and first-party claims for automobile losses and that these conflicts are particularly prevalent in first-party claim situations where the insurer directs and controls the repair of the automobile without exercising its contract right of repair;

(3) The state of Washington recognizes that improved and accurate communications between insurers and first and third-party claimants will increase consumer confidence, reduce the likelihood of disputes, and promote fair and nondeceptive practices, thereby enhancing the safety and value of automobiles;

(4) The state of Washington further recognizes that cost factors, and proliferating use of nonoriginal equipment manufacturer automotive body and glass parts, in the repair of automobiles threatens the welfare and property interests of the people of the state of Washington who are dependent on the safe and correct repair of automobiles;

(5) The state of Washington has determined that it is in the interests of both insurance companies and insurance consumers to specify the obligations and rights of both. Delineation of rights and obligation along with full disclosure of information will allow for the protection of insurers and claimants in insurance-related automotive repair in the state of Washington; and

(6) This act shall not be construed to alter, amend, or delete existing administrative law as codified in WAC 284-30-300 through 284‑30‑410, including WAC 284-30-390. The insurance commissioner may adopt rules consistent with the intent of sections 1 through 6 of this act. It is the intent of the legislature that sections 1 through 6 of this act be read to incorporate existing statutory, administrative, and case law in protecting consumer rights under automotive insurance policies.

NEW SECTION. Sec. 2. (1) The definitions in this section apply throughout sections 1 through 6 of this act unless the context clearly requires otherwise.

(a) "Agent" means an individual, corporation, association, partnership, or other legal entity authorized to represent an insurer with respect to a claim.

(b) "Claimant" means either a first-party claimant, a third-party claimant, or both, and includes the claimant's designated legal representative and a member of the claimant's immediate family designated by the claimant.

(c) "First-party claimant" means an individual, corporation, association, partnership, or other legal entity asserting a right to payment under an insurance policy or insurance contract arising out of the occurrence of the contingency or loss covered by the policy or contract.

(d) "Insurance policy" or "insurance contract" mean a contract of insurance, indemnity, suretyship, or annuity issued, proposed for issuance, or intended for issuance by an insurer.

(e) "Insurer" means an individual, corporation, association, partnership, reciprocal exchange, interinsurer, Lloyds insurer, fraternal mutual insurer, fraternal mutual life insurer, and any other legal entity engaged in the business of insurance, authorized or licensed to issue or who issues an insurance policy or insurance contract in this state. "Insurer" does not include health care service contractors, as defined in RCW 48.44.010, and health maintenance organizations, as defined in RCW 48.46.020.

(f) "Investigation" means all activities of an insurer directly or indirectly related to the determination of liabilities under coverages afforded by an insurance policy or insurance contract.

(g) "Notification of claim" means a notification, whether in writing or other means acceptable under the terms of an insurance policy or insurance contract, to an insurer or its agent, by a claimant, that reasonably apprises the insurer of the facts pertinent to a claim.

(h) "Third-party claimant" means an individual, corporation, association, partnership, or other legal entity asserting a claim against an individual, corporation, association, partnership, or other legal entity insured under an insurance policy or insurance contract of an insurer.

(2) The definitions in RCW 46.71.011 apply throughout sections 1 through 6 of this act.

NEW SECTION. Sec. 3. An insurer may not require, direct, or otherwise induce a third-party claimant, or cause a third-party claimant to be required, directed, or otherwise induced, to utilize a specific automotive repair facility or one from a list of automotive repair facilities maintained or prepared by the insurer in effecting automotive repairs under the claimant's third-party claim.

NEW SECTION. Sec. 4. (1) For first-party claims, if the insurer directs, suggests, or recommends the use of a specific automobile repair facility, allows for selection of one from a list of automobile repair facilities maintained or prepared by the insurer, or elects to exercise its contract right of repair under policy provisions existing at the time of the claim, the insurer shall notify the insured of the following information, in the following form with a minimum of ten-point type:

YOU ARE NOT REQUIRED TO HAVE YOUR VEHICLE REPAIRED BY A PERSON OR BUSINESS WE SELECT OR RECOMMEND UNLESS WE NOTIFY YOU IN WRITING THAT WE HAVE INVOKED OUR CONTRACT RIGHT TO TAKE AND REPAIR YOUR VEHICLE AT OUR EXPENSE.

(2) After notifying the insured in writing of its election to exercise its contract right to repair, the insurer may:

(a) Require, direct, suggest, or otherwise induce its first-party claimant to utilize a specific automotive repair service or a repair service from a list of repair facilities the insurer prepares or maintains; or

(b) Otherwise control or direct the repair of the first-party claimant's automobile through establishment, control, or limitations on the cost of repair.

(3) In all cases in which an insurer controls or directs the repair of a first-party claimant's automobile, as set forth in subsections (1) and (2) of this section, the insurer:

(a) Shall obtain written verification that the first-party claimant has received written notification of labor costs and specifications of all parts to be used in the repair of the automobile, including, but not limited to, all salvage, nonoriginal equipment manufacturer or aftermarket body and glass parts to be used in the repair of the automobile;

(b) Is strictly liable for all subsequent repairs or loss in value to the automobile occasioned by the use of salvage, nonoriginal equipment manufacturer or aftermarket body or glass parts; and

(c) Is strictly liable for all subsequent, consequential damages resulting from the use of salvage, nonoriginal equipment manufacturer or aftermarket body or glass parts.

NEW SECTION. Sec. 5. For first-party claims in which the insurer, under policy provisions in existence at the time of the claim, does not elect to exercise its right of repair, the insurer:

(1) May not require, direct, or otherwise induce the first-party claimant, or cause the first-party claimant to be required, directed, or otherwise induced, to utilize the services of a specific automotive repair facility or one from a list of automotive repair facilities maintained or prepared by the insurer;

(2) May not require, direct, or otherwise induce the first-party claimant, or cause the first-party claimant to be required, directed, or otherwise induced, to accept nonoriginal equipment manufacturer or aftermarket body or glass parts or parts salvaged from another vehicle in the repair of the claimant's automobile;

(3) Shall:

(a) Make a settlement offer on the automobile property damage claim based on an amount equal to or greater than the lesser of two or more estimates provided by the first-party claimant; or

(b) In cases in which the insurer does not accept the estimates provided by the first-party claimant and seeks remedy under the policy provisions in existence at the time of the claim, provide to the insured a written estimate including, but not limited to the following information:

(i) Parts and labor costs using the terminology of the automotive repair act, chapter 46.71 RCW; and

(ii) A clear statement as to the use of nonoriginal equipment manufacturer or aftermarket body or glass parts or parts salvaged from another vehicle in the proposed repair of the automobile; and

USE OF NONORIGINAL EQUIPMENT MANUFACTURER OR AFTERMARKET BODY OR GLASS PARTS OR PARTS SALVAGED FROM ANOTHER AUTOMOBILE ARE NOT WARRANTED BY THE MANUFACTURER OF YOUR AUTOMOBILE AND MAY VOID YOUR MANUFACTURER'S WARRANTY. USE OF NONORIGINAL EQUIPMENT MANUFACTURER OR AFTERMARKET BODY OR GLASS PARTS OR PARTS SALVAGED FROM ANOTHER AUTOMOBILE MAY VIOLATE THE PROVISIONS OF YOUR INSURANCE POLICY BY FAILING TO RESTORE YOUR AUTOMOBILE TO PREACCIDENT CONDITION IN TERMS OF VALUE, APPEARANCE, AND SAFETY.

NEW SECTION. Sec. 6. The insurer may not engage in anticompetitive activities, including, but not limited to:

(1) The use of unilateral negotiating tactics to force or coerce automotive repair facilities to artificially reduce or restrict their cost for automotive repairs;

(2) Engaging, with automotive repair services, in the use of multiple labor price or parts lists; and

(3) Sharing or directing the use of information on cost of repair with other insurance companies or intermediary services with the intent of reducing or restricting the cost of automotive repairs.

NEW SECTION. Sec. 7. The legislature finds that the practices covered by sections 1 through 6 of this act and RCW 48.30A.015 are matters vitally affecting the public interest for the purpose of applying the consumer protection act, chapter 19.86 RCW. A violation of sections 1 through 6 of this act or RCW 48.30A.015 is not reasonable in relation to the development and preservation of insurance and business practices and is an unfair or deceptive act in trade or commerce and an unfair method of competition for the purpose of applying the consumer protection act, chapter 19.86 RCW. However, in an action under chapter 19.86 RCW concerning a violation of RCW 48.30A.015, a violation may not be found if the defendant proves by a preponderance of the evidence a defense under RCW 48.30A.020.

Sec. 8. RCW 48.30A.015 and 1995 c 285 s 3 are each amended to read as follows:

(1) It is unlawful for a person:

(a) Knowing that the payment is for the referral of a claimant to a service provider, either to accept payment from a service provider or, being a service provider, to pay another; or

(b) To provide or claim or represent to have provided services to a claimant, knowing the claimant was referred in violation of (a) of this subsection.

(2) It is unlawful for a service provider to engage in a regular practice of waiving, rebating, giving, paying, or offering to waive, rebate, give, or pay all or any part of a claimant's casualty or property insurance deductible.

(3) Section 7 of this act applies to this section.

NEW SECTION. Sec. 9. Sections 1 through 7 of this act are each added to chapter 48.30 RCW.