You asked for a summary and status of bills proposed in the Maryland and Oregon legislatures this year regarding automobile repair shops and insurance companies.

SUMMARY

Legislators in Maryland and Oregon introduced bills this session that require an auto repair shop to disclose information to customers regarding its relationship to an insurance company. A copy of each bill is enclosed.

Two bills in Maryland took up the issue, HB 1189 and HB 1190. HB 1189 requires auto repair shops to give customers a copy of any contract or agreement it has with an insurer. HB 1190 requires the shop to disclose if an insurance company has a financial interest in it. In Oregon, SB 210 requires a repair shop to post a conspicuous sign if it has a preferred provider agreement with an insurer.

Maryland's Economic Matters Committee gave HB 1189 an unfavorable report. HB 1190 was withdrawn from consideration. Oregon's Senate recommitted SB 210 to the Business and Economic Development Committee.

MARYLAND

HB 1189, An Act Concerning Insurance – Motor Vehicle Repairs – Prohibited Acts and Penalties

Maryland law currently prohibits an adjuster, appraiser, insurance producer, or insurer's employee from (1) recommending a specific auto repair service or location to an insured without also informing the insured that he does not have to abide by the recommendation; (2) requiring an appraisal or repair be made in a specific repair shop; (3) requiring, intimidating, coercing, or threatening an insured to use a specific contractor or repair shop for a repair service or product. A person who violates the law is subject to a $1,000 penalty for each violation and denial, suspension, or revocation of his license.

HB 1189 amends current law. It prohibits an insurer from authorizing an adjuster, appraiser, insurance producer, or employee to recommend a specific auto repair service or source that has a contract or agreement with the insurer unless a copy of the contract or agreement is filed with the insurance commissioner and a copy is given to the claimant or insured. The bill also prohibits making false or misleading statements to induce an insured and offering a discount, warranty, or other inducement for the insured to use a specific contractor or repair shop. It increases the penalty to $5,000 and permits a person injured by a violation to file a complaint with the commissioner.

On February 11, 2005, the House referred HB 1189 to the Economic Matters Committee, which reported it unfavorably on March 21.

HB 1190, An Act Concerning Consumer Protection – Auto Body Repair Facilities – Regulation

Maryland's Automotive Repair Facilities Act requires an auto repair shop to provide a written estimate for repairs, prepare an invoice of completed repairs, and unless waived by a customer, return all replaced parts to the customer. Violation of the act is an unfair or deceptive trade practice.

HB 1190 amends the Automotive Repair Facilities Act. It gives the Consumer Protection Division in the Office of the Attorney General authority over the business practices of an auto body repair facility and requires the division to adopt regulations regarding damage estimate procedures and appraisal guidelines. It may also adopt other regulations it determines necessary.

The bill requires an employee of an auto body repair facility in which an insurer has a financial interest to provide a customer with a written notice stating that the customer is not required to obtain an appraisal or have auto repairs made at the facility. The notice has to be separate from the estimate, signed by the customer, and kept with the repair records for his motor vehicle. To have a “financial interest” means to own, have as a subsidiary business, or have any direct or indirect economic interest in the repair facility.

The bill also requires an auto body repair facility in which an insurer has a financial interest to prominently display in public view a notice stating (1) that an insurer has a financial interest in the facility, (2) the name of the insurer, (3) that the customer is not required to obtain an appraisal at the facility, and (4) that the customer is not required to have their vehicle repaired at the facility.

On February 11, 2005, the House referred HB 1190 to the Economic Matters Committee. The bill was withdrawn on March 14, 2005.

OREGON

SB 210, An Act Relating to Signs Displayed by Motor Vehicle Repair Shops

Oregon law currently requires a motor vehicle body and frame repair shop operator to post a sign in a conspicuous place that says “Pursuant to Oregon insurance law, an insurance company may not require that repairs be made to a motor vehicle by a particular person or repair shop.” The sign must be in boldfaced type with letters at least two-inches high. Failure to do so is an unlawful trade practice.

SB 210 (amended by committee) requires a motor vehicle body and frame repair shop operator that has a preferred provider agreement with an insurance company to post an additional sign, in boldfaced type with letters at least two-inches high, that says “This repair shop has a financial agreement with one or more insurance companies to direct business to this facility. Details of these agreements are available upon request.” The shop operator must keep a copy of the agreement on the repair shop premises and provide a copy or an explanation of it to any person upon request. The bill makes failure to display a sign as required an unlawful trade practice.

The bill defines “preferred provider agreement” as an agreement to give a motor vehicle insurer a discounted price on parts and services or a limitation on the scope of work performed in exchange for the insurer's suggestion of the repair shop as a place where a person with a damaged vehicle may obtain repairs.

On January 10, 2005, the Senate referred SB 210 to the Business and Economic Development Committee, which favorably reported a substitute bill on April 13. The Senate “rereferred” (recommitted) the bill to the committee on April 18.

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