Current Status Bill Number:5128 Type of Legislation:General Bill GB Introducing Body:House Introduced Date:19980507 Primary Sponsor:J. Smith All Sponsors:J. Smith Drafted Document Number:bbm\9865jm.998 Companion Bill Number:1024 Residing Body:House Current Committee:Labor, Commerce and Industry Committee 26 HLCI Subject:Motor vehicle insurance policy, procedures in having repairs to damaged vehicle with respect to parts, products
Body Date Action Description Com Leg Involved
______ ________ _______________________________________ _______ ____________
House 19980507 Introduced, read first time, 26 HLCI
referred to Committee
View additional legislative information at the LPITS web site.
TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 38-77-400 SO AS TO ESTABLISH A PROCEDURE TO BE FOLLOWED IN HAVING REPAIRS MADE TO A DAMAGED MOTOR VEHICLE UNDER AN AUTOMOBILE INSURANCE POLICY WITH RESPECT TO PARTS, AND PERSONS AND FACILITIES MAKING THE REPAIRS, TO PROHIBIT CERTAIN ACTS, TO AUTHORIZE THE PROMULGATION OF REGULATIONS, AND TO ESTABLISH A CRIMINAL OFFENSE AND A PENALTY.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. The 1976 Code is amended by adding:
"Section 38-77-400. (A) Notwithstanding any other provision of law:
(1) Under an automobile insurance policy delivered, issued for delivery, or renewed in this State an insurer may not, directly or indirectly, limit its coverage under a policy covering damage to a motor vehicle by specifying the brand, type, kind, age, vendor, supplier, or condition of parts or products that may be used to repair the vehicle, or limit the beneficiary of the policy or a third-party claimant from selecting a repair person or facility to repair damage to the motor vehicle covered under the policy. For the purposes of this section, 'parts' means any nonmechanical sheet metal or plastic parts which generally constitute the exterior of a motor vehicle, including inner and outer panels.
(2) In connection with the repair of damage to a motor vehicle, as set forth in (A)(1) of this section, an insurer or its officer, employee, agent, solicitor, or representative or an insurance broker or adjuster may not:
(a) solicit or accept a referral fee or gratuity in exchange for referring a beneficiary of the policy or a third-party claimant to a repair person or facility to repair damage to the motor vehicle;
(b) state or suggest, either orally or in writing, to a beneficiary or third-party claimant that a specific repair person or facility identified on a preferred list compiled by an insurer must be utilized by the beneficiary or third-party claimant in order for the damage, repair, or parts replacement to be covered by the policy;
(c) restrict a beneficiary's or a third-party claimant's right to choose a repair person or facility by requiring the beneficiary or third-party claimant to travel an unreasonable distance to repair the damage to the vehicle.
(3) A contract between an insurer and a repair person or facility, including an agreement under which the repair person or facility agrees to extend discounts for parts or labor to the insurer in exchange for referrals by the insurer, may not result in a reduction of coverage under the policy of insurance.
(4) An insurer may not prohibit a repair person or facility from providing a beneficiary or third-party claimant with information that states the description, manufacturer, or source of the parts used and the amounts charged to the insurer for the parts and related labor.
(5) At the time the vehicle is presented to an insurer or its officer, employee, agent, solicitor, or representative or an insurance broker or adjuster in connection with a claim for damage repair, the insurer or its officer, employee, agent, solicitor, or representative or the insurance broker or adjuster shall provide the beneficiary of the policy or the third-party claimant written notice of the provisions of this section, and the Department of Insurance shall promulgate regulations establishing the method to be used to comply with the notice provisions of this section.
(6) A beneficiary of the policy, third-party claimant, or repair person or facility may submit a written, documented complaint to the Department of Insurance with respect to an alleged violation of this section.
(7) In settling liability claims by a third party against an insured for property damage claimed by the third party, an insurer may not require the third-party claimant to have any or all repairs made by a specific repair person or facility or to use a specific brand, type, condition, kind, or age of parts or products or a specific vendor or supplier of parts or products.
(8) The Department of Insurance may exercise the regulation-promulgating authority with respect to fraudulent activity of a party to an agreement described in (A)(3) of this section.
(9) Billing by an insurer under this section to a specific repair person or facility on a preferred list of repair persons or facilities is prohibited. An insurer may not, in any manner whatever, require that billing be processed by a specific person, place, business, or facility as a condition for payment of a claim under this section; nor may an insurer, in any manner whatever, condition payment of a claim under this section by requiring that repairs be made by a specific repair person or facility.
(10) A disclosure document containing the following information in 10-point, or larger, type must be attached to the repair estimate and initialed by the beneficiary before any repair is made:
'Under Section 38-77-400, Code of Laws of South Carolina, 1976, an insurer shall not directly or indirectly limit its coverage under a policy covering damage to a motor vehicle by specifying the brand, type, kind, age, vendor, supplier, or condition of parts or products that may be used to repair the vehicle, or limit the beneficiary of the policy or a third-party claimant from selecting a repair person or facility to repair damage to the motor vehicle covered under the policy. The customer should be aware that the use of some parts may vary in terms of quality, fit, and performance from the original parts supplied on the vehicle and may affect the vehicle's warranty.'
(B) A person who violates the provisions of this section, including any regulation promulgated under the authority of this section, is guilty of a misdemeanor and, upon conviction, must be fined one thousand dollars for each violation which occurs."
SECTION 2. This act takes effect January 1, 1999 and applies to policies of insurance delivered, issued for delivery, or renewed in this State on and after that date.