R.I. Enacts Auto Body Repair Bill; Industry Group Expresses Disappointment

July 22, 2013

Rhode Island Gov. Lincoln Chafee recently signed into law a bill (HB 5263/SB 465) that would prevent insurers from declaring a vehicle a total loss if the vehicle can be restored to its pre-accident condition at a cost less than 75 percent of its “fair market value.”

The new restriction would not be applicable if the vehicle owner agrees and authorizes that the vehicle be declared a total loss. The bill was signed into law on July 17.

The fair market value refers to the retail value of a vehicle as set forth in a current edition of a nationally recognized compilation of retail values commonly used by the automotive industry to establish values of motor vehicles, according to the bill.

The Property Casualty Insurers Association of America said the group is “profoundly disappointed” with the new law.

“We are profoundly disappointed that HB 5263/SB 465, which is part of the agenda of a few body shops, will become law at the expense of hard working Rhode Island consumers,” said Frank O’Brien, PCI’s vice president of state government relations.

“Rhode Islanders already pay among the highest amounts for auto body repairs in the nation and this legislation supported by the Auto Body Association of Rhode Island (ABARI) could drive costs even higher,” O’Brien said.

He argued that by forcing vehicles that are badly damaged to be repaired rather than totaled, the new law is designed to increase body shop revenues. “But in the end it is the Rhode Island consumer who will pick up the tab,” O’Brien said.

“We believe consumers, insurers and body shops should have the same goals – high quality repairs at reasonable costs. Although this new law falls short of the mark, the insurance industry remains committed to protecting the interests of consumers and putting safety first,” O’Brien said.

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