RELATING TO INSURANCE -- UNFAIR CLAIMS SETTLEMENT PRACTICES ACT
S2301 amends Rhode Island’s Unfair Claims Settlement Practices Act to expand and revise the list of insurer conduct that is treated as an unfair claims practice, with a strong focus on motor vehicle property damage claims and auto body repair. The bill adds and updates numerous requirements governing how insurers handle appraisals, repair estimates, rental coverage, total-loss determinations, direct-pay directions, public adjuster payments, and communications with claimants and repair facilities. It also addresses insurer interactions with licensed rental car companies, licensed auto body shops, restoration companies, and public adjusters, and it applies to claims involving Rhode Island-registered vehicles repaired in Rhode Island regardless of where the policy was issued.
A central change in the bill is the appraisal threshold and timing rule: it raises the dollar amount at which a licensed, unaffiliated appraiser must perform a physical inspection from damage estimated to exceed $2,500 to damage estimated to exceed $5,000, and it extends the deadline for an appraisal request from three business days to four business days. The bill also removes language that had prohibited appraisals based on photographs alone, while preserving requirements for physical inspection by a licensed appraiser in qualifying cases. It further clarifies that if an insurer misses the appraisal deadline, its ability to inspect before repairs is forfeited and negotiations become more limited.
The bill’s impact on state law would be substantial for auto insurers and collision-repair claims handling. It would codify detailed standards for insurer conduct in repair-related claims, including requirements to honor consumer “direction to pay” instructions in certain circumstances, to compensate documented repair procedures and sublet services, to use appraisal manuals and software consistently, and to avoid discounting reasonable repair costs when the insured chooses a repair shop outside the insurer’s preferred network. It also modifies total-loss rules by setting a consumer election point between 75% and 80% of fair market value and requires written notices about salvage and reconstructed-title obligations when a vehicle is totaled.
The general sentiment reflected in the available history is favorable enough for the bill to remain active, but not yet advanced to final passage. The Senate Judiciary Committee voted 9-0 to hold the bill for further study, indicating unanimous committee support for continued review rather than immediate approval or rejection. No transcript excerpts are available, so the record does not show floor debate or detailed sponsor/oppose testimony.
The main points of contention are likely to involve the bill’s effect on insurer discretion, repair-cost controls, and claims administration. Insurers may object to mandatory payment rules, tighter deadlines, limits on challenging repair methods, and requirements to pay for OEM-recommended procedures, sublet services, and consumer-selected repair shops. Auto body repairers, public adjusters, and consumer advocates are likely to support the bill’s protections and payment standards, while insurers may argue that some provisions increase costs, reduce flexibility, or create disputes over valuation and repair scope.
The bill would amend Chapter 27-9.1 of the General Laws, the Unfair Claims Settlement Practices Act, by expanding the statutory definition of unfair claims practices and adding detailed claim-handling rules for motor vehicle damage claims. It would directly affect insurers, claimants, public adjusters, auto body repair shops, rental car companies, restoration contractors, and licensed appraisers, and it would apply to Rhode Island-registered vehicles repaired in Rhode Island even when the insurance policy originated elsewhere. The bill also changes the appraisal threshold from $2,500 to $5,000 and extends the appraisal deadline from three to four business days, while removing the prohibition on photo-based appraisals.
The available voting history suggests the bill is still under active consideration rather than settled opposition or broad final endorsement. The Senate Judiciary Committee voted unanimously, 9-0, to hold the bill for further study, which indicates interest in the proposal but also a desire for more review of its details and effects. Because there are no transcript excerpts, the record does not show direct debate, but the bill’s structure suggests it is intended to be consumer- and repair-shop-friendly, with likely resistance from insurers.
The most notable areas of contention are the bill’s constraints on insurer claims handling and repair valuation practices. Insurers may object to mandatory direct-pay rules, shorter appraisal timelines, limits on using photo-only appraisals, required payment for OEM and industry-recognized repair procedures, and restrictions on discounting repair estimates or challenging consumer-selected repair shops. Repair facilities, public adjusters, and consumer advocates are likely to support these provisions as protections against underpayment and delay. Another likely dispute is the total-loss threshold and the bill’s requirement that insurers notify owners about salvage-title obligations and obtain written acknowledgements.