The Washington Senate Business, Financial Services and Trade Committee passed a right-to-appraisal bill without any amendments Thursday. 

SB5721 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.

During a public hearing Wednesday, Justin Lewis, president of the Washington Independent Collision Repair Association (WICRA) told the Senate Business, Financial Services and Trade Committee that insurance companies are often underpaying claims in the state, forcing residents who thought they had full coverage to pay out of pocket. 

“Adjusters who usually never see the vehicle in person, low ball repair costs,” Lewis said. “There’s no wonder the consumer complaints are up in Washington. Meanwhile, the cost of labor materials and equipment have skyrocketed. Repair shops have a duty to pay skilled technicians a fair wage and ensure vehicles are repaired properly and safely.”

Shops have to pass insurance short-payments to the consumer or risk being put out of business, Lewis said. 

“The insurance lobby claims the bill is going to raise premiums but if insurers are already paying what they owe, why would the rates increase? This shouldn’t be a concern for them,” Lewis said. “The repair industry is battling inflation. However, costs for repairs only increased 1.3% last year when insurance premiums are, on average, up 11%, some up 26% in Washington. Some insurers have single quarter profits of $1.3 billion last year. Meanwhile, our customers are given a burden to cover unpaid claims. That’s not fair to them.” 

Lewis argued against insurance lobbyists who claim the bill will give free rein to repair shops. 

“This bill also allows for insurers to have a vehicle appraisal as well,” Lewis said. “Shops’ reputations are always at stake with their estimates, which means there is accountability for insurers and repairs on both fronts.” 

David Forte, senior policy advisor for the OIC’s Property & Casualty, Policy & Legislative Affairs Division, said the OIC supports the bill. 

“We find this to be a good consumer protection bill that 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 said. 

Patrick LePlay, an attorney who works with the Washington State Association for Justice, also said the association supports the legislation.

“I’ve been practicing more than 49 years — primarily insurance litigation,” LePlay said. “This legislation has been around the last 10 or 12 years and it’s taken and gone through a lot of work in the past interim session to improve the legislation.”

A portion of the bill requires insurance estimates to be within $500 of the final appraised amount, LePlay explained. If the estimate is not within the $500 range, the insurance company is required to pay the appraisal process for the consumer, including any legal fees. 

“My view is, if you can’t come within $500 of the proper appraised amount of the damages on a claim like this then somebody isn’t doing a very good job,” LePlay said. 

 A consumer told the committee they were involved in an incident that totaled their motorcycle. He said the insurance company offered him $3,500 but he argued the vehicle’s value was nearly double. 

“They refused to consider my information,” the consumer said. “They continued to not budge on their evaluation of the vehicle.” 

The consumer said he invoked the appraisal clause on his policy. Five months later, the insurance company agreed to pay $7,500 for the motorcycle, he said. 

“They had everything they needed to settle at the start of the process,” the consumer said. “I had to pay my adjuster out of pocket so I’m still out that money.” 

Kenton Brine, president of the Northwest Insurance Council, said his organization has concerns with the legislation. 

“The current law already requires insurers to make policyholders whole to return a vehicle to pre-loss condition,” Brine said. “If there are errors in the initial estimate, they often make those additional payments when the final estimate is made and the repair is complete. The problem with this legislation — it is something that many insurers already do — which is include a dispute resolution process.” 

Brine said he thinks the bill will incentivize more dispute resolutions in the state and slow down the repair process while increasing costs over time. He said this comes at a time when Washington residents are already seeing significant premium increases due to the rising cost of repairing vehicles and treating injuries. 

In opposition, a representative of the American Property Casualty Insurance Association (APCIA) characterized the bill as mandating a rigid one-size-fits-all appraisal process that will make disputes more common, repairs more expensive, and the process less objective. 

The representative said APCIA would like to see changes to the bill if it were to move forward, including the OIC’s involvement in helping find an umpire if assistance is needed in the process. 

Another concern for APCIA is an insurance company being forced to cover appraisal costs if there is a $500 difference from the original estimate. 

“That’s a matter of deep concern to us,” the representative said.

A similar bill, SB6252, was filed in the Senate last year but never made it out of committee. 

A companion bill, HB1645 was introduced Jan. 28 and then referred to the Consumer Protection and Business Committee. The House bill has yet to be voted on. 

SB5721 will now move to the Senate Rules Committee. 

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Photo screenshot of TVW recording of Washington Senate Business, Financial Services and Trade Committee.