California Insurance Bill Irks Consumer Group


Consumer advocates are crying foul over a proposed bill filed at the state legislature regarding car insurance claims and preferred repair shops. Lawyers and experts representing Consumer Watchdog say that Assembly Bill 1200 (AB 1200) would allow insurance companies to “steer” policyholders and claimants towards the providers’ preferred body shops.

California Insurance Bill Irks Consumer GroupThey contend that this is against an existing law that prohibits insurance companies from pushing clients to auto repair shops under contract with the insurers. In the past, the group has also been very vocal when it comes to issues about insurance.

Under the proposed bill, insurance firms can recommend particular body shops to claimants under special circumstances. Advocacy groups are contesting AB 1200’s interpretation of “recommendation”, “suggestion”, and “circumstances.” Critics of the bill also add that it is contrary to the already existing law, prohibiting consumer “steering” or coercion.

Consumer Watchdog representatives further explain that if AB 1200 becomes a law, insurance providers can pressure policyholders into choosing body shops under contract with the companies. They add that the bill effectively gives insurers free rein to coerce their clients into patronizing their preferred repair shops.

Direct repair contracts often lead to “shoddy workmanship” says the group. Advocates explain that many shops under contract with insurance companies cut corners to please providers. This common practice could then endanger the vehicles and lives of many drivers, they say.

AB 1200 also authorizes insurers to provide claimants with “truthful” and “non-deceptive” information. However, it does not give any suggestions how to assess the honesty of an insurance firm when dealing with claims.

Lawmakers say that the new bill, if enacted, would allow policyholders to know the benefits of availing services offered by company-preferred body shops. Despite the seemingly sincere objectives of the proposed bill, many consumer advocates are still suspicious over its real motives.

Consumer Watchdog says that while car owners have the final decision, the new law would give insurance companies the right to persuade policyholders using whatever means or gimmicks. They add that the passage of AB 1200 into a state law can mean the start of the end for insurance claimants’ rights.

The group says that there have been reports of poor repair jobs done by direct-repair shops in the past. Giving insurers more leeway to convince, persuade, and even coerce their customers into honoring these body shops can only lead to more accidents and more costly repairs.