Online Auto Insurance: Kentucky Part of Anti-Steering Push with New Law

July 09, 2012 (PRLEAP.COM) Business News
A new Kentucky law aimed at preventing "steering" practices took effect at the beginning of the month, underscoring several similar efforts across the U.S. that have met different ends, according to Online Auto Insurance.

Steering refers to the post-crash process in which consumers who buy auto insurance seek out a body shop for claims-related repairs. Some insurers offer policyholders a list of preferred repairers without telling the insured that they have a choice of which business to go to, while other insurers tell the insured that they are required to go to a listed business.

Both practices have recently met friction from lawmakers in Kentucky, South Carolina and Rhode Island, where bills were introduced to combat steering.

In Kentucky, HB 207 requires insurers to issue a notice to policyholders during the claims appraisal process. The notice reads: "Under Kentucky law, the consumer and/or lessee has the right to choose the repair facility to make repairs to his or her motor vehicle."

The legislation was finalized in April went into effect in July.

Rhode Island legislators passed legislation containing anti-steering provisions, but Gov. Lincoln Chafee ultimately vetoed the bill last month because of other provisions that would have allowed body shops to sue insurers when they disagreed over compensation amounts.

Insurance trade groups, including the Property Casualty Insurers Association of America (PCI), held a media blitz against HB 7782 as the governor was considering the bill. PCI officials said the veto "sends a strong message that enough is enough" to body shops which would have had the power to bring limitless litigation against insurers.

PCI also spoke out against South Carolina's HB 4042, an anti-steering bill regulating the glass repair industry that was signed into law by Gov. Nikki Haley in June.

According to legislators backing HB 4042, a referral system for claims-related glass repairs promoting steering constituted an "unfair trade practice." Under the legislation, insurers can only refer policyholders to service providers in their networks if the policyholder does not indicate a choice himself or herself.

The legislation restricts insurers from offering a set of best choices to their customers, according to PCI officials.

OAI recommends that policyholders check their state's laws governing post-crash repairs and know that they often have a choice in which repairer to go to, even if their insurer presents them with a list of preferred businesses.

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