Texas Department of Insurance Issues Anti-Steering Bulletin to State's Insurers
August 24, 2010

The Texas Department of Insurance (TDI) recently issued an anti-steering bulletin to the state's insurers reminding them of the state's anti-steering law as it applies to automotive repair facilities.

"The purpose of this bulletin is to remind insurers of their responsibilities to claimants regarding payment for damage to a motor vehicle and the selection of a repair person or facility in accordance with Subchapter G, Chapter 1952 of the Texas Insurance Code (TIC) and Title 28, Section 5.501 of the Texas Administrative Code (TAC)," writes the state. "The Department has received information which causes it to be concerned that insurers may be providing claimants with additional notice regarding motor vehicle repairs that may be in conflict with the TIC and TAC."

According to the August 2 bulletin, the Texas insurance code specifies that insurer's cannot limit its coverage by:

• "specifying the brand, type, kind, age, vendor, supplier, or condition of parts or products that may be used to repair the vehicle;" or
• "limiting the beneficiary of the policy from selecting a repair person or facility to repair damage to the vehicle."

The TDI goes on to advise insurers that neither insurers nor related agents may "suggest, either orally or in writing, to a beneficiary that the beneficiary must use a specific repair person or facility or a repair person or facility identified on a preferred list compiled by an insurer for the damage repair or parts replacement to be covered by the policy."

In addition, the TDI reminds insurers in the bulletin that they must notify claimants that they have a right to choose an automotive repair shop.

"The notice also specifies that an insurer is not required to pay more than a reasonable amount for such repairs and parts," adds the TDI.

TDI is requesting that the state's insurers review its notices and "to ensure the notices are not in conflict with the TIC and TAC."

Examples of violations cited by the TDI include "providing notice to a claimant, either verbally or in writing, that implies the claimant may be responsible for paying for certain repair costs if the claimant chooses a repair facility that is not on the insurer's list of preferred repair facilities … "

TDI also points out in its bulletin that it is "concerned that setting reimbursement rates artificially low for specific motor vehicle repairs and parts that are used to make the repairs may lead to substandard repairs, which may also impact the warranty on a vehicle."

"The majority of personal automobile insurance policies require insurers to pay the amount necessary to repair or replace the property with other(s) of like kind and quality," writes TDI. "It is an unfair claim settlement practice for insurers to pay claimants an amount for the repair of the vehicle, including parts, that is not a reasonable amount for repairing or replacing the property with other of like kind and quality or is not sufficient enough to make the repairs necessary for the manufacturer to honor the vehicle warranty."

The TDI says it will investigate allegations of unfair claims settlement practices, "both in the context of individual cases and general business practices, and will take appropriate enforcement action when evidence of unfair claim settlement practices is demonstrated."

At press time, officials from the TDI were unavailable for comment as to the origins of the bulletin.

Need more info and analysis about the issues?
CLICK HERE to subscribe to AGRR magazine.