Last week, the Washington House Committee on Consumer Protection and Business heard testimony from the Washington Office of the Insurance Commissioner (OIC), collision repairers, appraisers, consumers, and the Washington State Association for Justice — all in support of a right to appraisal bill. 

The bill would require insurance policies to include a provision that gives policyholders the right to an appraisal to resolve disputes about the actual cash value and amount of loss on a damaged vehicle. 

HB1645 was introduced Jan. 28 and referred to the Consumer Protection and Business Committee. A similar bill, SB6252, was filed in the Senate last year but never made it out of the Committee on Business, Financial Services, Gaming and Trade. 

Justin Lewis, president of the Washington Independent Collision Repair Association (WICRA), said 42 of his members attended the hearing. He said the turnout showed legislators how important the issue is to constituents. 

“Right now insurance companies are underpaying our customers repair plans and they’re forcing families who thought they had full coverage to have an additional expense to make their vehicles safe again,” Lewis said during the hearing. “Adjusters who, a lot of times have never seen the car in person are low-balling payments and leaving hardworking consumers to cover the difference. Meanwhile, for us, the cost of labor, materials, equipment has skyrocketed. Repair shops have a duty to pay our skilled technicians a living wage but also to ensure a safe vehicle for our customers back on the road.” 

Repair shops are forced to pass the cost of insurance short-payments on to their consumers or risk going out of business, Lewis said. 

“The insurance companies are claiming that this might raise rates but if you look at the numbers, repair costs only increased 1.3% last year and insurance increased 11%,” Lewis said. 

Lewis said that if an insurance company is acting in good faith, they shouldn’t be afraid of the bill passing and affecting them. 

David Forte, senior policy advisor for the OIC’s Property & Casualty, Policy & Legislative Affairs Division, said the OIC finds HB1645 to be a good consumer protection bill. 

“It will allow folks that have fallen through the cracks in the auto claim environment to have a dispute resolution pathway that does not involve hiring an attorney or contacting the regulator,” Forte told the committee. 

Jeff Butler, a public and independent adjuster who owns Collision Consulting of Washington, said he sees insurers undervalue repairs or replacement costs every day. He added this has increased since the pandemic because of virtual tools used by insurance companies. 

“People just need their car fixed or replaced, not a lawsuit,” Butler said. 

A consumer testifying during the hearing said his car was totaled in 2022. 

“I experienced firsthand how insurance companies exploit every possible loophole and trick in order not to pay up or lowball,” the consumer said. “I hired a public adjuster and my insurance company told me that this could affect me negatively.”

The consumer said he had to hire a lawyer after battling with an insurance company for more than a year. He said his insurance company withheld important documents. It took a court order to obtain the records. He said the case was settled within days after he received the documents. 

The insurance company initially offered $63,000 for the vehicle. After appraisal, the insurance company paid about $22,000 more for a total of more than $85,000. 

Patrick LePlay, an attorney who works with the Washington State Association for Justice, said the association supports the legislation because they believe it will help consumers. 

“There are two big reasons that we’re supporting this legislation,” LePlay said. “One is an appraisal process is supposed to be an inexpensive economic and speedy remedy. It just hasn’t turned out to be that way for an awful lot of consumers.”

Some legal cases with insurance companies can last more than three years before an appraisal resolves the case, he said. He said these cases are rare but five to eight months is not that unusual. 

LePlay also said uniform language for appraisal clauses is the second positive aspect of the legislation. 

Kevin House, owner of Center Collision in Tacoma, told the committee his customers come to his shop believing that their insurance company will cover the costs of repairs. 

“What I’m seeing is that they will experience a realization that, and this is very common, their insurance company isn’t all cracked up to what they thought it was going to be,” House said. 

House said his shop’s objective is to put the vehicle back to the condition it was in as best as possible using OEM recommendations for those repairs. 

“This is a serious problem because a lot of people aren’t prepared for those expenses,” House said. 

Kentin Brine, president of the Northwest Insurance Council, said the bill creates an incentive for higher costs on the repair side at no risk for the auto repair facility. He said all the risk lands on the insurer and that this could increase the costs of repairs over time.

A representative with the American Property Casualty Insurance Association (APCIA) noted an issue with the bill giving authority to the insurance commissioner to determine if an auto policy meets the bill’s standards. 

He also believed the state already has a regulatory framework for total loss vehicles and that references to actual cash value are not needed in the bill. He said the bill should be limited to repair estimates. 

“We think that cost for additional appraisal estimates should be held equally by both parties to the dispute,” the representative said. “We would note that Washington’s collision repair marketplace is robust and competitive, and that competition protects consumers. And when a policyholder’s repair is completed at a facility with whom their insurer has a relationship, the insurer guarantees the repairs.” 

The representative added that under Washington law insurance companies cannot steer or require a policyholder to use a repair facility that it has a contractual relationship with.

The Washington House Committee on Consumer Protection and Business is expected to vote on the bill during a meeting Wednesday.

IMAGES

Feature Photo: Jeff Butler, a public and independent adjuster who owns Collision Consulting of Washington and Justin Lewis, president of the Washington Independent Collision Repair Association (WICRA), testify during the Washington House Committee on Consumer Protection and Business. 

Inside photo: A group of Washington Independent Collision Repair Association (WICRA) members attended a hearing on the state’s right-to-appraisal bill Feb. 12/WICRA