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Rhode Island bill requires insurers honor direction to pay, compensate for OEM recommendations

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A Rhode Island Senate bill introduced last week would require insurance companies honor “direction to pay” agreements under the Unfair Claims Settlement Practices Act. 

SB3105 was introduced by Sen. Hanna Gallo (D-27) May 29. It is set to go before the Senate Judiciary Committee Today. 

Insurance companies would be required to pay benefits as a single-party payment exclusively to a repair shop of the consumer’s choice if requested by the insured, the bill says. 

The bill also tweaks language in the act to require insurers to acknowledge and compensate auto body repairers for documented procedures identified as required or recommended by the OEM or paint manufacturer. The act currently uses the word “necessary” in place of required or recommended. 

Added language also requires insurance companies’ acknowledgment and compensation for required or recommended repairs upon the initial request from the repair shop for post-collision procedures and components that should not be reused or reinstalled. 

Language also would be added to the act to protect claims on Rhode Island vehicle repairs in Rhode Island regardless of the state from which the policy paying the claim originates. 

Unfair Claims Settlement Practices Acts are a common method of governing claims practices throughout the US, and governed on a state-by-state basis.

The U.S. District Court in West Virginia is currently overseeing an unfair claims settlement practices and breach of contract lawsuit against State Farm and Snapsheet with the plaintiff alleging the companies failed to evaluate the claim in good faith. 

Plaintiff Terry Vanover says his RV was damaged when it struck a pothole in the road in 2022. She claims State Farm never field an adjuster to the claim and never inspected the vehicle. 

Instead, Vanover was told to submit photographs of the damage but damage to a tongue assembly was not immediately visible with a photograph, the claim states. 

Snapsheet, a contractor of State Farm, looked at the photo sent and determined the total cost of repairs was $185 to align the panel with nails, according to the claim. 

The claim states Vanover immediately contacted State Farm to explain the damage. It says State Farm stood by Snapsheet’s estimate. 

State Farm gave Vanover the option of paying out of pocket for a supplemental estimate, the claim says. However, the vehicle couldn’t be towed and State Farm said any damage in towing would not be covered under the policy. The insurer also said a qualified RV repair person could generate an estimate at Vanover’s home but wouldn’t provide information on a repairer who could perform the estimate. 

Vanover identified an RV repair specialist on their own, who gave a repair estimate of $30,000, according to the claim. 

State Farm later offered a “total loss” for the RV, according to the claim. 

In March, State Farm filed a motion to strike the complaint or require Vanover to provide a more definite statement of her claims against the company.


Photo courtesy of pabradyphoto/iStock

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