Vehicle inspections are now mandatory within four business days under Rhode Island's new appraisal law.
Rhode Island has established a new Motor Vehicle Appraisal Law under H6054 effective early 2024. The law mandates timely inspections by insurers and introduces new regulations for appraisers to ensure impartiality in damage assessments. Changes include stricter timelines for vehicle inspections and significant implications for insurance companies regarding appraisal costs. This legislation aims to protect consumers and improve the claims process for damaged vehicles amid rising auto repair costs in the state.
Rhode Island has officially enacted an important update to its Motor Vehicle Appraisal Provision with the introduction of H6054, which is now in effect as of early 2024. This legislation introduces stricter regulations that will significantly impact how insurance claims for damaged vehicles are handled in the state.
Under the new law, insurance companies are required to inspect a damaged vehicle within four business days after receiving a written request, as long as the vehicle is located at a repair shop. If insurers fail to comply with this deadline, they forfeit the right to inspect the vehicle before repairs commence. Consequently, negotiations surrounding repairs will be limited only to the prices of labor and parts, unless insurers provide substantial evidence to contest the nature of the damage or the repair methods used.
The law stipulates that all appraisers must be licensed in Rhode Island and cannot have any affiliations with either party involved in the appraisal process within the last 30 days, unless both parties agree to such ties. This aims to guarantee impartiality in the evaluation of the vehicle’s damage.
Significant modifications have also been made to how disputes are resolved under the new appraisal law. If appraisers’ estimates differ by 15% or less, the figure that will be considered final defaults to the midpoint of the two appraisals. If the disparity exceeds 15%, an umpire will be appointed whose decision will need to be made within five business days of their appointment.
Additionally, the law introduces new financial implications for insurers related to the appraisal process. If the final amount awarded exceeds the insurer’s original offer by more than 25%, the insurer will be held responsible for all appraisal costs incurred by the insured party. However, if the adjustment does not exceed 25%, the costs of hiring the umpire will be shared by both parties.
This legislation was proposed by a group of Rhode Island legislators, including Representatives Baginski, Kazarian, Corvese, and Casey. The authors emphasize the importance of timely and fair actions by insurers to avoid financial penalties. These changes come at a time when Rhode Island drivers are already facing the highest average costs for auto collision repairs in the United States, which is approximately $1,987 in 2024.
Furthermore, there is concern that new regulatory measures could lead to increased insurance rates for residents since insurers will likely not be able to absorb the added costs from compliance with these new standards. Rhode Island is currently ranked as the fifth most expensive state for auto insurance, a status exacerbated by a pattern of implementing extensive regulations.
Compounding this issue, one in six drivers in the state is uninsured, ranking Rhode Island 16th in the nation for the rate of uninsured motorists. Legislative discussions are taking place regarding a new Senate Bill (S1015), which aims to further redefine claims handling practices. This bill proposes to increase the appraisal threshold from $2,500 to $5,000 and extend the period for appraisals from three to four business days. It also seeks to ensure insurers accommodate requests from policyholders to direct payments to service vendors and prohibits coercive practices regarding preferred vendors.
If Senate Bill S1015 is passed, it will also mandate insurers to itemize and transparently explain any adjustments made in calculating a vehicle’s total loss. Furthermore, it establishes that insurance companies must cover public adjusters’ fees when directed in writing by the insured. This would enhance consumer transparency and choice in insurance dealings.
The bill is currently awaiting review by the Senate Judiciary Committee, and its fate will have significant implications for both insurance companies and drivers in Rhode Island.
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