A state of Washington Senate committee heard public response regarding a right-to-appraisal bill Tuesday, where multiple consumers said the bill was needed and insurance advocates threatened the bill would increase costs for residents of the state.

SB 6252 was filed Jan. 17 by Sen. Derek Stanford (D-1), Sen. Bob Hasegawa (D-11), Sen. Patty Kuderer (D-48), Sen. T’wina Nobles (D-28), Sen. Javier Valdez (D-46). It is a companion bill to HB2011, which was prefiled Dec. 21 by Rep. Strom Peterson (D-District 21).

The bills would require a right-to-appraisal clause in all insurance policies in the state of Washington. They would allow an insurance company or policyholder to ask for an appraisal if the two parties can’t agree on the cash value or loss on a damaged vehicle.

If the appraisal process determines the loss is greater than the estimate given by the insurance company, the insurance company must cover all costs incurred by the appraisal process, the bills state.

Language in the bills also requires the use of OEM parts if alternative parts would fail to restore the vehicle to its previous condition.

Ten people spoke during Tuesday’s public input session held by the Senate Business, Financial Services, Gaming and Trade Committee. Of those who spoke, seven were in favor of the bill and three were against it.

David Forte, Washington state office of the Insurance Commissioner senior policy advisor for the property and casualty, spoke in favor of the bill.

“The appraisal process is designed to remedy valuation disputes,” Forte said. “It’s been a key component of property insurance policies for 150 years, as an alternative to costly litigation when a claim is in dispute. It allows independent experts with no financial ties to either party to determine the value of loss for auto insurance policies in Washington state.”

Not all policies have the appraisal clause or have it in full, Forte said.

“We believe this type of bill would assist consumers when their auto insurance claim is in dispute,” Forte said. “Furthermore, there are incentives in the bill for the insurance company to actively investigate the loss so they can gather accurate information as soon as possible. This is a benefit to the consumer and to the insurance market, as the insurance company will pay all that’s owed under the policy sooner.”

Kris Tefft, with American Property Casualty Insurance Association, disagreed that the bill would be positive for insurance companies.

“I think it’s important to point out that an insurer is required by contract and statute to pay what it takes to return a vehicle to pre-loss condition and our members are interested in and committed to doing that in a manner that is quick, safe and done in a high-quality way and done in a cost-effective manner,” Tefft said.

Tefft said sometimes complaints to legislators can make an issue look systemic when it isn’t.

“In our view, the current process of appraisal and auto repair is working and evidence would seem to suggest that literally thousands of cars roll out of auto repair shops every day in the state and customer satisfaction as pulled by J.D. Powers and so on tend to be high.”

In a May 2023 report from the Office of the Insurance Commissioner (OIC) of Washington State, the office also identified that “complaints against property and casualty are at historic level for the Consumer Advocacy Program.”

During a July 2023 OIC workshop, Washington Insurance Commissioner Mike Kreidler said the state’s seen a 63% increase in complaints about claim issues.

Tefft also said he’s concerned about insurers paying for the appraisal process, if their initial estimate is wrong. He said insurance companies often change the initial estimate.

Consumers told legislators they’ve spent months and up to a year battling with insurance companies over claims. Each said insurers wanted to pay less, often thousands less, than estimates to repair the vehicle to its prior condition.

Ron Mondragon, a retired deputy chief of the Seattle Fire Department, said his insurance company originally estimated his vehicle would cost $4,000 to repair. A $12,000 difference from the $16,000 a repair shop estimated.

The argument lasted for more than five months, Mondragon said.

“I will humbly disagree that insurance companies are to the benefit of the consumer,” Mondragon said. “But in my experience, what I’ve seen, is consistent lies and an unwillingness to support returning my vehicle back to its original condition.”

Mark Buchanan, of Seattle, said it took him about a year to resolve a claim dispute when his insurer estimated damage at $5,700 through photos. A repairer estimated the cost at $27,000. The vehicle was eventually totaled and the insurer paid $43,000.

“It’s outrageous that insurers get away with acting like this and the insurance commissioner can’t really do much about it,” Buchanan said. “We need consumer protections like Oregon has. Please pass this bill.”

Oregon, a bordering state, has its own right to appraisal law that requires the clause in insurance policies.

Jeff Butler, Collision Consulting of Washington and owner of Haury’s Collision & Vintage, said Oregon already having the law speaks shows that it can work in a state.

“Oregon hasn’t caught on fire and burned to the ground with insurance claims,” Butler said.

Butler shared data from an analysis on claim payment shortfalls from Collision Consulting of Washington with the legislators. The analysis reviewed 16 repair cost appraisals and 21 total loss vehicle value underpayments recently settled through the independent appraisal process.

It found the average difference between the insurance’s initial estimate and the appraisal award was $11,533. The average difference between the insurance company’s final offer and the appraisal award was $7,217. Appraisal increased the settlement for the 16 repairable claims by $119,048.

The average difference between the insurance offer for total loss and the appraisal award was $5,775. The total amount that appraisal increased the settlement for 21 total loss claims was $121,285.

The bills are partly in response to a letter Butler sent to legislators in December.

During Tuesday’s meeting, others who supported the bill, included Justin Lewis, with Washington Independent Collision Repairers  Association and Washington residents Ralph Carpenter and Adrian Delgado Zambrano.

Kenton Brine, of Northwest Insurance Council, spoke against the bill, along with Catalina Pareja with LKQ Corporation. Pareja’s concerns were focused on bill language requiring OEM parts be used if there was no alternative part that could return the vehicle to its prior condition.

Images

Screenshot from TVW live feed of David Forte, Washington state office of the Insurance Commissioner senior policy advisor for the property and casualty, speaking to Washington Senate Business, Financial Services, Gaming and Trade Committee Jan. 23, 2024.