Colorado’s Regulator Warns Insurers About Auto Shops Waiving Deductibles

Colorado’s Insurance regulator is warning consumers and insurers about trend in auto shops in the state offering to waive deductibles.

“The Division has become aware that certain auto repair shops in Colorado are advertising or engaging in practices that involve waiving insurance deductibles owed by policyholders in connection with covered auto damage claims,” the Division of Insurance for the Colorado Department of Regulatory Agencies states.

The agency issued a bulletin to provide guidance to motor vehicle insurers regarding such practices, warning insurers not to participate in or condone arrangements in which a repair shop waives a policyholder’s deductible.

“The deductible is the policyholder’s contractual responsibility and must be paid by the policyholder,” the bulletin states. “Encouraging or referring policyholders to auto repair shops that waive deductibles or fail to clearly communicate to policyholders that deductibles are policyholders’ responsibilities, may amount to misrepresentation or fraud, and may lead to inflated repair costs, affecting claim costs and premiums for all consumers.”

The bulletin advises:

• Insurers must not participate in or condone arrangements in which a repair shop waives a policyholder’s deductible.
• Insurers are responsible under § 10-3-131, C.R.S., for ensuring their contracted producers and representatives do not engage in or promote practices that result in the waiver of a deductible.
• Insurers should clearly communicate to policyholders that the deductible is their responsibility under the terms of the policy.
• If an insurer becomes aware that an auto repair shop has waived the deductible on a covered claim, the insurer must evaluate whether such conduct constitutes fraud or violates any provisions of Colorado law pursuant to §§ 10-1-128, and 10-4-1003 C.R.S.

Topics Carriers Auto