Arizona Governor Signs Anti-Steering, Inspections Bill into Law
April 20, 2011

Arizona Gov. Jan Brewer signed a bill related to recommendations of auto glass service providers by both third-party administrators and any auto glass “inspectors” they utilize in auto glass claims into law on Monday, just before Arizona lawmakers adjourned their 2011 legislative session.

The final text of the law, as passed by the state’s House of Representatives on April 12, and concurred with by the Senate on April 13, permits third-party administrators to recommend or provide information about auto glass repair facilities to customers, but requires them “to inform the person of the person’s right prescribed in Section 20-469 to choose any glass repair facility for the repair of the loss relating to motor vehicle glass at the same time as making the recommendation or providing information.”

In addition, the law, which takes effect in July (90 days from the adjournment of the session), also includes the following language related to auto glass “inspectors:"

“An independent adjustor or a third-party administrator’s auto physical damage appraiser or claims inspector for automotive glass repair or replacement work in connection with an inspection limited to automotive glass repair or replacement shall not recommend any particular glass repair facility."

The law specifies that it “shall not apply to any employee or insurance producer of an insurer,” and includes a provision that anyone “who knowingly violates this section is guilty of a petty offense for a first violation.” A fine of $1,500 will be levied on second-time offenders that violate the statute within 18 months of a prior violation, and $3,000 for any subsequent violation (after the first and second) within 18 months.

The legislation defines whether a defendant acted knowingly as follows: “It may be presumed that the person had knowledge if the person was engaged in a regular and consistent pattern of the prohibited activity.”

While the legislation originally included a provision that would have made it “unlawful for an insurer or an insurer’s third-party administrator or agent to cause a delay in the inspection of a policyholder’s auto glass condition in the handling of a policyholder’s claim regardless of the repair facility the policyholder chooses,” this section was removed by the House’s Banking and Insurance Committee prior to final passage.

Likewise, the legislation, sponsored by Sen. John McComish, also originally included a provision that would have prohibited insurers and third-party administrators from having a financial interest in auto glass replacement companies—but was amended to remove this language in its early stages of debate in the House Banking and Insurance Committee.

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