A consumer group is criticizing a California bill that would allow
an insurer to provide an auto insurance claimiant with information
regarding services and benefits available during the claims process.
According to Assembly Bill 1200,
"Motor vehicle insurance: direct repair programs" which is headed to
its third reading in the senate, existing law prohibits insurers from
requiring that an automobile be repaired at a specific automotive
repair dealer. However, an insurer may suggest or recommend a specific
automotive repair dealer under certain specified circumstances.
AB 1200 "would authorize an insurer to provide a claimant with specific truthful and nondeceptive information regarding the services and benefits available to the claimant during the claims process pursuant to the policy, as specified."
Consumer Watchdog said the proposal would undo a current California
law prohibiting insurance companies from pushing, or "steering,"
customers to auto body shops under contract with the insurer. AB 1200
"effectively guts the prohibition on steering and now allows insurers
to ‘hard sell’ a policyholder on the insurer-controlled repair shop,
even after the policyholder chooses an independent repair shop," the
A copy of a letter the group sent to Assemblywoman Mary Hayashi, D-Hayward, who proposed the bill, is available at: http://www.consumerwatchdog.org/resources/071709AB1200.pdf.
According to consumer advocates, steering can lead to shoddy
workmanship and endanger drivers’ safety. So-called "direct repair
contracts" between insurance companies and body shops encourage auto
repair shops to cut corners in order to save the insurer money and earn
a spot on their "preferred provider" list. AB 1200 would allow insurers
to, at any time during the claims process, badger customers with
reasons to use the insurer-preferred shop, Consumer Watchdog said.