Earlier this week, Gov. Arnold Schwarzenegger signed A.B. 1200, insurer-backed legislation that loosens restrictions on the information insurers can provide to claimants during the claims process.
The bill adds the following to section 758.5 of the California Insurance Code, known as the anti-steering statute:
An insurer may provide the claimant with specific truthful and nondeceptive information regarding the services and benefits available to the claimant during the claims process. This may include, but is not limited to, information about the repair warranties offered, the type of replacement parts to be used, the anticipated time to repair the damaged vehicle, and the quality of the workmanship available to the claimant.
Assemblywoman Mary Hayashi, the bill’s author, said A.B. 1200 provides consumers with more information about repair options so they can make “informed decisions.”
The California Autobody Association (CAA) and Collision Repair Association of California (CRA) both adamantly opposed the legislation because they felt it weakened the state’s anti-steering laws.
CRA President Lee Amaradio Jr. said that although the group hoped for a different outcome, he believes it’s time for repairers to hold insurers to the standards created by the bill.
“A.B. 1200 provides that insurers may provide specific truthful and nondeceptive information regarding the services and benefits available to the claimant during the claims process…Dialogue related to these issues in light of the current language could cause the insurers to subject themselves to possible discipline or litigation,” he said. “The standard steering dialogue now employed by insurers could be construed by any reasonable person to be deceptive, and if so would constitute a violation of section 758.5 of the Insurance Code.”
Amaradio added that insurers could trip up under the legislation’s language by:
• Making references to parts without disclosing part type (OEM, aftermarket, recycled), quality and fit;
• Referring claimants to DRP programs without fully disclosing terms of the DRP agreement; or
• Making statements about quality of workmanship since the insurer isn’t performing the repair.
“It would appear that all statements made to consumers during the claims process are subject to this non-deceptive standard,” he said, adding that the CRA will work to ensure that consumers are afforded “an informed choice with full disclosure” under the new law.
CAA Executive Director David McClune applauded the efforts of the group’s members, who sent hundreds of letters to Schwarzenegger asking that he veto A.B. 1200.
“The CAA is very disappointed that A.B. 1200 was signed by the governor,” he said.
The law will take effect in January.
More information about A.B. 1200:
• Text of A.B. 1200
• California Associations Unhappy with Amended Anti-Steering Bill
• A.B. 1200 Debate Intensifies as Legislators Question Integrity of Insurers, Repairers
