The State of New York Insurance Department recently issued a valuable opinion letter on steering and labor rate negotiations. Legal counsel for Long Island Auto Body Repairmen’s Association (LIABRA) member shop Mid Island Collision received a letter from the department after seeking an opinion on the following questions:
May an insurer recommend or suggest a particular facility for motor vehicle repairs if not expressly requested by the insured?
The insurance department said insurance law “prohibits an insurer from recommending or suggesting a particular facility for repairs in the absence of an express request from the insured.”
Must an insurer, as part of a good faith negotiation, negotiation labor rates?
Good faith negotiations should “be inclusive of all elements of the cost of the repair, including labor rates,” the department said.
If an insured elects to have a vehicle repaired at a facility other than that recommended by the insurer, is the insurer financially responsible for any excess repair cost over the cost that the recommend facility would have charged?
The insurer is not obligated pay for any repair cost that exceeds the amount of the good faith offer made, but at least one court has held that an insured may be paid the balance of the repair costs if it is proven the extra costs were necessary for the repair, the department responded.
According to LIABRA Executive Director Ed Kizenberger, Mid Island has filed and won many small claims suits against insurers for reportedly refusing to pay Mid Island’s posted labor rates. For more information about LIABRA, visit www.liabra.com.
