Michigan Senate Takes Up Bill to Keep Insurers From Steering Claims


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Auto insurers could not restrict policyholders from using the repair shop of their choice under legislation to be considered by the Michigan state Senate.

Critics say some insurers currently send or direct claim holders to certain body shops, emphasizing cost over quality. The legislation, sponsored by Democratic Rep. Kenneth Daniels of Detroit, would allow consumers more freedom in selecting where to get their vehicle or glass fixed, Daniels said.

Under the bill, an insurer would be required to tell the client that it has a deal with a repair shop. It also must inform the policyholder that he or she isn’t obligated to use that particular body shop. The bill initially attracted opposition from insurers such as captive writer AAA Michigan. But there’s little opposition now that legislators have stripped the bill of some of its tougher language.

The original bill banned insurers from “intimidating, inducing or requiring” a policyholder to use a certain shop. Now it keeps them from “unreasonably restricting” a consumer from using the shop of his or her choice.

“I certainly think the legislation did not come out of committee with as much teeth as before,” said Rep. Matthew Gillard, D-Alpena, a member of the House committee that considered the bill. Insurers say they enter into deals with certain body and glass repair shops to lower costs and ensure better repairs.

William Cilluffo, vice president for governmental relations with AAA Michigan, said the insurer has no problem with banning companies from requiring someone to get repairs done at a certain shop.

“If that’s all you’re trying to do, we support it,” he said.

AAA won’t suggest a body shop unless a customer asks for a recommendation, Cilluffo said. AAA and other insurers initially opposed the bill because it sought to ban direct repair shop programs, Cilluffo said. These deals allow insurers to recommend certain shops, guaranteeing the warranty of the repair job.

Critics say that repair shops participating in direct repair program really work for the insurance company—not the vehicle owner.

“(Insurers) really are taking away the consumer’s choice,” said Diane Rodenhouse, whose family owns two body shops in the Grand Rapids area. “The insurance companies’ goal is to repair cheaply. But I go to church with these people. I want to repair their cars correctly.”

Copyright 2004 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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