Iowa Representatives Propose New Bill Concerning Auto Repair Facility Choice

The Iowa House of Representatives has introduced a bill that aims to add a section regarding automobile repair facility choice to the state’s law. However, the bill notes that “automobile repair business or location” does not apply to facilities that exclusively provide auto glass replacement and repair services or glass products.

Under the proposed new section, an insurer or its adjuster will not be allowed to require the claimant to use an auto repair facility of its choosing for an estimate or a repair. It also aims to ban insurers from intimidating, coercing or providing the claimant with an incentive to use a particular repair shop.

The new section also addresses the relationship between auto repair shops and direct repair programs (DRP), stating, “If an insurer has a direct repair program, the insurer, upon request, shall provide to a claimant, without prejudice or bias, a list of all automobile repair businesses or locations that are reasonably close or convenient to the claimant and willing to provide services and that meet the insurer’s criteria for participation in its direct repair program …”

However, under the proposition, an insurer will not be allowed to limit the number of shops in its DRP unless the shop does not meet certain criteria that is outlined within the bill.

“An insurer transacting business in this state, including its producers and adjusters, that issues or renews an automobile liability policy shall not abrogate the right of a claimant to use any automobile repair business or location at the claimant’s sole discretion, and the insurer shall pay for the reasonable and necessary cost of the automobile repair services for covered damages, less any deductible under the terms of the policy,” the bill reads. “This section does not require an insurer to pay more for automobile repair services than the market price.”

According to the bill, “market price” must either be agreed upon between the insurer and the policy holder or service provider; the price must be reasonable for the local area in which the repair or replacement is being performed; and it cannot be less than the cost of the repair or replacement work to the service provider.

HSB 529 was introduced on January 16 to the House Commerce Committee.

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