Proposed Washington State Legislation Defines Relationship, Public Information of Insurer, Auto Repair Facility Relationship

Legislators in Washington State are currently reviewing a proposed bill that would, if passed in its original state, "prohibit insurers from having a financial interest in automotive repair facilities."

Those following the bill should know, however, that amendments have already removed the language that prohibits insurers from having "any ownership interest" in auto repair shops. Instead, the language proposed requires any shop ownership by a insurer be "fully disclose[d] … to all claimants prior to the initiation of any repairs at such repair facility," and, in later amendments, to have specific language posted in the repair shop "in a location where it is likely to be seen and red by a customer of the repair facility."

The bill was introduced with state House representative Kirby (the bill's prime sponsor) and two members of the Autobody Craftsman Association speaking in support of the measure, citing that "Over time, insurers are getting closer to controlling how each dollar is spent … Insurers should focus on the job of insuring customers." Opposition to the bill's original language came from representatives of Allstate Insurance and an affiliated shop Sterling Autobody Centers, as well as representatives of Progressive and Farmer's Insurance. Their arguments were that "there are no insurer-owned shops today in Washington. The insurance industry opposes … because that option should not be precluded." (CLICK HERE to read the House Bill Report, complete with arguments both for and against the bill.)

With the amended language, the bill currently states that "in addition to the notice required … such an insurer must provide notice to the claimant prior to the initiation of any repairs at an automotive repair facility that the insurer must make a good faith effort to honor a claimant's request for repairs to be made in a specific repair shop, and cannot arbitrarily deny such a request." It also includes language that defines a repair shop as one that "does not … dismantle a vehicle only for the purpose of diagnosing the extent of damage and … refers the vehicle to an independently owned and operated automotive repair facility for repair."

CLICK HERE to access the available information on the bill, including all current amendments.