Getting to the Bottom of One of the Governor's Auto Insurance Vetoes

A staff report from today’s Pawtucket Times makes it sound like both Governor Donald Carcieri and the Northern Rhode Island Chamber of Commerce support allowing insurance companies to authorize automobile repairs whether or not the owner gives permission…

The Northern Rhode Island Chamber of Commerce applauded Gov. Donald Carcieri's rejection of three bills that attempt to regulate the relationship between the insurance and auto repair industries and plans to urge the General Assembly not to override the vetoes….

Of the three auto repair shop bills, one, Carlin said, would forbid an insurance company from authorizing repairs to a vehicle on behalf of its owner. He said the chamber believes that would "stifle competition and reduce consumer choices.

The description of the bill provided in the trade journal Auto Body Repair News (don’t you love the breadth of information that the Internet allows access to!!!), however, describes a situation that is a bit more complicated. According to ABRN, the purpose of the new law is to prohibit individuals from signing over their power to make repair decisions to an auto insurance company …

Carcieri also vetoed a measure (H 5550) that would have provided that a customer of a body shop may designate a representative to authorize repairs to their vehicle, but that the designee could not be an insurer or the auto body repair shop, or an employee or agent of either.

But according to the text of the bill available on the General Assembly’s website, the ABRN report isn't quite right either…

(a) The owner of a motor vehicle shall not designate another person or entity to authorize repairs to a motor vehicle unless the vehicle's owner shall confirm in writing that the authorization given to a licensed auto body repair facility is his or her choice of facility.

(b) An insurance company may not authorize repairs to a motor vehicle on behalf of the vehicle's owner in violation of subsection (a) above.

In other words, under the proposed legal change, insurance companies would not be allowed to write blanket provisions into their policies saying they have the right to authorize repairs; policy holders would have to individually opt-in and directly notify a repair facility that the insurer was being empowered to make decisions on their behalf, before the insurer could legally assume the power to do so.

It’s not often that I say this, but I’m with the General Assembly on this one (unless there's something hidden elsewhere in the law that changes the meaning of this bill). And if insurance companies think that assuming their policy-holders' right to make repair decisions is something of value to them, they can write policies that offer their customers incentives to take the extra steps required to comply with the new law.