92115-1:n:05/02/2007:DSM/aw LRS2007-2100
| SYNOPSIS: | Under existing law, an insurance company that provides insurance coverage for a motor vehicle is not expressly prohibited from directing an insured to a particular body shop for damage repair. |
| This bill would expressly prohibit an insurer from requiring as a condition of payment of a claim that repairs be performed by a specific repair shop and would provide penalties for violations. | |
| Amendment 621 of the Constitution of Alabama of 1901, now appearing as Section 111.05 of the Official Recompilation of the Constitution of Alabama of 1901, as amended, prohibits a general law whose purpose or effect would be to require a new or increased expenditure of local funds from becoming effective with regard to a local governmental entity without enactment by a 2/3 vote unless: it comes within one of a number of specified exceptions; it is approved by the affected entity; or the Legislature appropriates funds, or provides a local source of revenue, to the entity for the purpose. | |
| The purpose or effect of this bill would be to require a new or increased expenditure of local funds within the meaning of the amendment. However, the bill does not require approval of a local governmental entity or enactment by a 2/3 vote to become effective because it comes within one of the specified exceptions contained in the amendment. |
To prohibit an insurance provider from requiring that damage to a motor vehicle of an insured be performed at a specific repair shop; to allow for a civil action and criminal penalties for violations; and in connection therewith would have as its purpose or effect the requirement of a new or increased expenditure of local funds within the meaning of Amendment 621 of the Constitution of Alabama of 1901, now appearing as Section 111.05 of the Official Recompilation of the Constitution of Alabama of 1901, as amended.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. (a) Notwithstanding any other provision of law, whenever motor vehicle damage or loss is suffered by an insured, no insurance provider shall require that the repair be made to the insured vehicle by a particular contractor or motor vehicle repair shop as a condition of payment of the claim.
(b) In processing a claim for damage or loss to a motor vehicle other than a claim solely involving window glass, unless expressly requested by the insured, an insurer shall not recommend or suggest that repair be made by a particular contractor or motor vehicle repair shop.
(c) Any insurer who violates this act shall be guilty of a Class A misdemeanor and will be subject to a private right of action the same as for any violation of the Deceptive Trade Practices Act.
Section 2. Although this bill would have as its purpose or effect the requirement of a new or increased expenditure of local funds, the bill is excluded from further requirements and application under Amendment 621, now appearing as Section 111.05 of the Official Recompilation of the Constitution of Alabama of 1901, as amended, because the bill defines a new crime or amends the definition of an existing crime.
Section 3. This act shall become effective on the first day of the third month following its passage and approval by the Governor, or its otherwise becoming law.