Houston Auto Body Association Urges Members to Support Texas House Bill 3804

Houston Auto Body Association Urges Members to Support Texas House Bill 3804

The Houston Auto Body Association is urging members to support Texas House Bill 3804, which clarifies existing language that prohibits insurers from steering consumers to certain collision repair facilities.

The Houston Auto Body Association is urging members to support Texas House Bill 3804, which clarifies existing language that prohibits insurers from steering consumers to certain collision repair facilities.

Under Chapter 1952 Section 301 of the Texas Insurance Code, “an insurer may not directly or indirectly limit the insurer’s coverage under a policy covering damage to a motor vehicle by: (1) specifying the brand, type, kind, age, vendor, supplier or condition of parts or products that may be used to repair the vehicle; or (2) limiting the beneficiary of the policy from selecting a repair person or facility to repair damage to the vehicle.”

Among the most significant changes that Texas HB 3804 proposes, the bill would expand the aforementioned passage to say that “an insurer, an employee or agent of an insurer, an insurance adjuster or an entity that employs an insurance adjuster may not directly or indirectly limit the insurer’s coverage under a policy covering damage to a motor vehicle by:

  • (1) limiting the beneficiary of the policy from selecting a repair person or facility to repair damage to the vehicle;
  • (2) intimidating, coercing or threatening the beneficiary to induce the beneficiary to use a particular repair person or facility; or
  • (3) offering an incentive or inducement, other than the list described by Section 1952.309 or a warranty issued by a repair person or facility, for the beneficiary to use a particular repair person or facility.”

Here’s the existing language for 1952.302 of the Texas Insurance Code:

“In connection with the repair of damage to a motor vehicle covered under an automobile insurance policy, an insurer, an employee or agent of an insurer, an insurance adjuster or an entity that employs an insurance adjuster may not:

  • (1) solicit or accept a referral fee or gratuity in exchange for referring a beneficiary or third-party claimant to a repair person or facility to repair the damage;
  • (2) state or suggest, either orally or in writing, to a beneficiary that the beneficiary must use a specific repair person or facility or a repair person or facility identified on a preferred list compiled by an insurer for the damage repair or parts replacement to be covered by the policy; or
  • (3) restrict the right of a beneficiary or third-party claimant to choose a repair person or facility by requiring the beneficiary or third-party claimant to travel an unreasonable distance to repair the damage.”

Texas HB 3804 would add:

  • (4) “disregard a repair operation or cost identified by an estimating system that was previously agreed on by the insurer and the repair person or facility to determine the cost of repair; or
  • (5) refuse to pay the reasonable and necessary cost of a repair operation for covered damages less any portion of the cost that is the insured’s responsibility under the policy.
  • (b) For purposes of Subsection (a)(5), the cost of a repair operation is reasonable and necessary if the repair operation and its cost are in accordance with an estimating system that is recognized by the commissioner.”

On March 30, Texas HB 3804 was referred to the Texas House Insurance Committee. The Houston Auto Body Association, which helped bring the bill to the state legislature, urges members to contact their legislators and let them know they support the bill.

“The time is now,” the association said in an email blast. “We’ve gotten it this far. It will take all of us to move this forward.”

 

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