"Deceptive Referral" Bill Pre-Filed in Kentucky
September 28, 2009

A Kentucky Senator has pre-filed a bill for the 2010 legislative season that would define "deceptive referral" and other several other terms related to automotive repairs in the state's laws. The bill, pre-filed last week by Sen. Gary Tapp, also would do the following:

  • create insurer notification requirements regarding the ability of a claimant to choose his/her repair facility;
  • create requirements for payment of accident claims;
  • prohibit insurers from requesting ore requiring that claim work be performed at a particular shop; and
  • prohibit insurance companies from engaging in deceptive referral practices.

If passed, the law would define a deceptive referral as "any trade practice by which a consumer's choice is changed, swayed or limited from what the consumer would or has chosen to do to another party by misleading statements, omissions, threats, deceptions, promises or inducements."

It would definite the term "request or require" as it relates to the state's insurance law as "any act to influence a claimant's decision."

SB 16 also would add the following language to the law:

An insurer shall inform a claimant immediately upon notice of a claim that he or she has the right to choose the repair facility of their choice to repair a damaged vehicle. An insurer shall not re-direct, refer or otherwise influence a claimant's choice of a repair facility.

With regard to pricing, the bill would prohibit an insurer from "limit[ing] or discount[ing] the amount that the insurer pays for the repair on the basis that the repair would have cost less if it had been made at a particular garage, repair shop, or other vendor, or in a particular location, specified by the insurer."

The bill specifically includes auto glass repair and replacement in its provisions regarding customer choice and proposes a $250 fine or "imprisonment of not more than 90 days" for those who violate the proposed laws.

The Kentucky legislature will begin its 2010 session on January 5.

CLICK HERE for full text of bill as pre-filed.

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