H.B. 322

1

MOTOR VEHICLE REPAIRS - CONSUMER
2 RIGHTS
3 2005 GENERAL SESSION
4 STATE OF UTAH
5 Sponsor: Todd E. Kiser
6
7 LONG TITLE
8 General Description:
9 This bill modifies the Insurance Code and the Motor Vehicle Business Regulation Act
10 by amending provisions relating to consumer rights in motor vehicle repairs.
11 Highlighted Provisions:
12 This bill:
13 . provides definitions;
14 . provides that an insurer may not:
15 . limit coverage for a damaged motor vehicle by limiting the beneficiary of a
16 policy from selecting a repair person or body shop to repair a damaged motor
17 vehicle covered under the policy;
18 . require more than two estimates to repair a damaged motor vehicle as a
19 condition of payment for a claim; or
20 . demand or take discounts for parts or labor that are not reflected in a repair
21 estimate that is agreed on by the insurer and the body shop;
22 . provides that an insurer may:
23 . write or secure an additional damaged motor vehicle repair estimate at the
24 insurer's own expense;
25 . recommend a body shop and provide education on the guarantees and other
26 economic advantages of that recommendation;
27 . provide a list of certain body shops in the geographic area; or

28 . require that payment for repair of a damaged motor vehicle is limited to
29 competitive market parts or labor rates;
30 . provides procedures for establishing a competitive market labor rate;
31 . provides that if an insurer violates the provisions, it is an unfair claims settlement
32 practice;
33 . provides that a vehicle owner has the right to select a repair person or body shop of
34 the owner's choice and provides that a body shop, towing service, or dealer may not
35 require a vehicle owner to repair a vehicle at a specific body shop as a condition of
36 rendering service or payment for a claim;
37 . requires a body shop to post certain notices in a conspicuous place;
38 . requires a body shop and an insurer to provide certain notices on repair estimates;
39 and
40 . provides that if a body shop violates the provisions, it is a class B misdemeanor and
41 a civil violation and may result in civil damages of up to $1,000 per occurrence.
42 Monies Appropriated in this Bill:
43 None
44 Other Special Clauses:
45 This bill takes effect on July 1, 2005.
46 Utah Code Sections Affected:
47 AMENDS:
48 31A-26-303, as last amended by Chapter 91, Laws of Utah 1987
49 41-3-702, as last amended by Chapter 334, Laws of Utah 2003
50 ENACTS:
51 31A-22-321, Utah Code Annotated 1953
52 31A-22-322, Utah Code Annotated 1953
53 31A-22-323, Utah Code Annotated 1953
54 31A-22-324, Utah Code Annotated 1953
55 41-3-901, Utah Code Annotated 1953
56 41-3-902, Utah Code Annotated 1953
57 41-3-903, Utah Code Annotated 1953
58 41-3-904, Utah Code Annotated 1953

59
60 Be it enacted by the Legislature of the state of Utah:
61 Section 1. Section 31A-22-321 is enacted to read:
62 31A-22-321. Title.
63 Sections 31A-22-321 through 31A-22-324 are known as the "Consumer Vehicle Repair
64 Insurance Claims Act."
65 Section 2. Section 31A-22-322 is enacted to read:
66 31A-22-322. Definitions.
67 As used in Sections 31A-22-322 through 31A-22-324 :
68 (1) "Betterment" means a replacement part used to repair a vehicle that improves the
69 vehicle by increasing the useful life of the part replaced before the motor vehicle was damaged.
70 (2) "Body shop" has the same meaning as defined in Section 41-3-102 .
71 (3) "Insurer" means an insurance company and any person authorized to represent the
72 insurer with respect to a claim.
73 Section 3. Section 31A-22-323 is enacted to read:
74 31A-22-323. Repair of motor vehicles.
75 (1) An insurer may not:
76 (a) directly or indirectly limit its coverage under a policy covering damage to a motor
77 vehicle by limiting the beneficiary of the policy from selecting a body shop to repair damage to
78 a motor vehicle covered under the policy;
79 (b) require an owner of a vehicle to obtain more than two estimates to repair a damaged
80 motor vehicle as a condition of payment for a claim; or
81 (c) demand or take a discount for parts or labor used to repair a motor vehicle that is
82 not reflected in a repair estimate agreed on by the insurer and the body shop.
83 (2) An insurer may:
84 (a) write or secure additional estimates to repair a damaged motor vehicle at the
85 insurer's own expense;
86 (b) recommend a body shop and provide education on the guarantees and other
87 economic advantages of using a recommended body shop;
88 (c) provide a list of:
89 (i) body shops in the geographic area; or

90 (ii) names of body shops in the geographic area that meet or exceed industry standards
91 of quality, service, or safety; or
92 (d) require that payment for the repair of a motor vehicle be limited to competitive
93 market parts or labor rates.
94 (3) If an insurer requires that payment for repair of a motor vehicle is based on a
95 competitive market labor rate under Subsection (2)(d), the competitive market labor rate may
96 be established by:
97 (a) a generally accepted insurer based methodology; or
98 (b) a market survey or surveys of a majority of the body shops in the geographic area
99 that determine the fair and reasonable market labor rate for similar services.
100 (4) (a) Except as provided in Subsection (4)(b), an insurer, or its agents, employees, or
101 representatives may only conduct a competitive market labor rate survey under Subsection
102 (3)(b) by fax, electronic mail, United States mail, or through an independent third party.
103 (b) An insurer or its agents, employees, or representatives may conduct a market labor
104 rate survey in person only if agreed to by the body shop or its authorized representative.
105 (c) If a competitive market labor rate is challenged, an insurer shall disclose the survey
106 results for the geographic area.
107 (d) If an insurer is required to disclose the survey results under Subsection (4)(c), the
108 results shall not disclose individual labor rates provided by a body shop but shall include a
109 description of the methodology used to establish the geographic competitive market labor rate.
110 (5) A violation of this section is an unfair claims settlement practice under Section
111 31A-26-303 .
112 Section 4. Section 31A-22-324 is enacted to read:
113 31A-22-324. Insurer notice requirements.
114 (1) An insurer shall print on the front page of any motor vehicle repair estimate in 12
115 point, all caps type or larger:
116 "YOU HAVE THE RIGHT TO HAVE YOUR VEHICLE REPAIRED AT THE BODY
117 SHOP OF YOUR CHOICE. A DEALER, BODY SHOP, TOWING SERVICE, OR
118 INSURANCE COMPANY MAY NOT REQUIRE YOU TO HAVE YOUR VEHICLE
119 REPAIRED AT A SPECIFIC BODY SHOP."
120 (2) An insurer shall:

121 (a) clearly identify any parts or labor that are subject to betterment on a repair estimate;
122 and
123 (b) notify a motor vehicle owner verbally or in writing if the insurer does not agree to
124 pay for any part of an estimate that includes parts or labor that are subject to betterment.
125 (3) A violation of this section is an unfair claims settlement practice under Section
126 31A-26-303 .
127 Section 5. Section 31A-26-303 is amended to read:
128 31A-26-303. Unfair claim settlement practices.
129 (1) No insurer or person representing an insurer may engage in any unfair claim
130 settlement practice under Subsections (2), (3), and (4).
131 (2) Each of the following acts is an unfair claim settlement practice:
132 (a) knowingly misrepresenting material facts or the contents of insurance policy
133 provisions at issue in connection with a claim under an insurance contract; however, this
134 provision does not include the failure to disclose information;
135 (b) attempting to use a policy application which was altered by the insurer without
136 notice to, or knowledge, or consent of, the insured as the basis for settling or refusing to settle a
137 claim; or
138 (c) failing to settle a claim promptly under one portion of the insurance policy
139 coverage, where liability and the amount of loss are reasonably clear, in order to influence
140 settlements under other portions of the insurance policy coverage, but this Subsection (2) (c)
141 applies only to claims made by persons in direct privity of contract with the insurer.
142 (3) Each of the following is an unfair claim settlement practice if committed or
143 performed with such frequency as to indicate a general business practice by an insurer or
144 persons representing an insurer:
145 (a) failing to acknowledge and act promptly upon communications about claims under
146 insurance policies;
147 (b) failing to adopt and implement reasonable standards for the prompt investigation
148 and processing of claims under insurance policies;
149 (c) compelling insureds to institute litigation to recover amounts due under an
150 insurance policy by offering substantially less than the amounts ultimately recovered in actions
151 brought by those insureds when the amounts claimed were reasonably near to the amounts

152 recovered;
153 (d) failing, after payment of a claim, to inform insureds or beneficiaries, upon request
154 by them, of the coverage under which payment was made;
155 (e) failing to promptly provide to the insured a reasonable explanation of the basis for
156 denial of a claim or for the offer of a compromise settlement;
157 (f) appealing from substantially all arbitration awards in favor of insureds for the
158 purpose of compelling them to accept settlements or compromises for less than the amount
159 awarded in arbitration;
160 (g) delaying the investigation or payment of claims by requiring an insured, claimant,
161 or the physician of either to submit a preliminary claim report and then requiring the
162 subsequent submission of formal proof of loss forms which contain substantially the same
163 information; [or]
164 (h) not attempting in good faith to effectuate a prompt, fair, and equitable settlement of
165 claims in which liability is reasonably clear[.]; or
166 (i) violating a provision of Section 31A-22-323 or 31A-22-324 .
167 (4) The commissioner may define by rule, acts or general business practices which are
168 unfair claim settlement practices, after a finding that those practices are misleading, deceptive,
169 unfairly discriminatory, overreaching, or an unreasonable restraint on competition.
170 (5) This section does not create any private cause of action.
171 Section 6. Section 41-3-702 is amended to read:
172 41-3-702. Civil penalty for violation.
173 (1) The following are civil violations under this chapter and are in addition to criminal
174 violations under this chapter:
175 (a) Level I:
176 (i) failure to display business license;
177 (ii) failure to surrender license of salesperson because of termination, suspension, or
178 revocation;
179 (iii) failure to maintain a separation from nonrelated motor vehicle businesses at
180 licensed locations;
181 (iv) issuing a temporary permit improperly;
182 (v) failure to maintain records;

183 (vi) selling a new motor vehicle to a nonfranchised dealer or leasing company without
184 licensing the motor vehicle;
185 (vii) special plate violation; and
186 (viii) failure to maintain a sign at principal place of business.
187 (b) Level II:
188 (i) failure to report sale;
189 (ii) dismantling without a permit;
190 (iii) manufacturing without meeting construction or vehicle identification number
191 standards;
192 (iv) withholding customer license plates; or
193 (v) selling a motor vehicle on consecutive days of Saturday and Sunday.
194 (c) Level III:
195 (i) operating without a principal place of business;
196 (ii) selling a new motor vehicle without holding the franchise;
197 (iii) crushing a motor vehicle without proper evidence of ownership;
198 (iv) selling from an unlicensed location;
199 (v) altering a temporary permit;
200 (vi) refusal to furnish copies of records;
201 (vii) assisting an unlicensed dealer or salesperson in sales of motor vehicles; and
202 (viii) advertising violation.
203 (2) (a) The schedule of civil penalties for violations of Subsection (1) is:
204 (i) Level I: $25 for the first offense, $100 for the second offense, and $250 for the third
205 and subsequent offenses;
206 (ii) Level II: $100 for the first offense, $250 for the second offense, and $1,000 for the
207 third and subsequent offenses; and
208 (iii) Level III: $250 for the first offense, $1,000 for the second offense, and $5,000 for
209 the third and subsequent offenses.
210 (b) When determining under this section if an offense is a second or subsequent
211 offense, only prior offenses committed within the 12 months prior to the commission of the
212 current offense may be considered.
213 (3) The following are civil violations in addition to criminal violations under Section

214 41-1a-1008 :
215 (a) knowingly selling a salvage vehicle, as defined in Section 41-1a-1001 , without
216 disclosing that the salvage vehicle has been repaired or rebuilt;
217 (b) knowingly making a false statement on a vehicle damage disclosure statement, as
218 defined in Section 41-1a-1001 ; or
219 (c) fraudulently certifying that a damaged motor vehicle is entitled to an unbranded
220 title, as defined in Section 41-1a-1001 , when it is not.
221 (4) The civil penalty for a violation under Subsection (3) is:
222 (a) not less than $1,000, or treble the actual damages caused by the person, whichever
223 is greater; and
224 (b) reasonable attorneys' fees and costs of the action.
225 (5) The following are civil violations in addition to the criminal violations under
226 Sections 41-3-903 and 41-3-904 :
227 (a) requiring an owner of a damaged vehicle to repair the vehicle at a specific body
228 shop as a condition of rendering service or payment for a claim under Section 41-3-903 ; and
229 (b) a body shop not providing notice as required under Section 41-3-904 .
230 (6) The penalty for a civil violation under Subsection (5) may result in civil damages of
231 up to $1,000 per occurrence.
232 [(5)] (7) A civil action may be maintained by a purchaser, the owner of a vehicle, or by
233 the administrator.
234 Section 7. Section 41-3-901 is enacted to read:
235 Part 9. Consumer Rights for Repair of Damaged Vehicles
236 41-3-901. Title.
237 This part is known as the "Consumer Rights for Repair of Damaged Vehicles."
238 Section 8. Section 41-3-902 is enacted to read:
239 41-3-902. Definitions.
240 As used in this section:
241 (1) "Betterment" means a replacement part used to repair a vehicle that improves the
242 vehicle by increasing the useful life of the part replaced before the motor vehicle was damaged.
243 (2) "Insurer" has the same meaning as defined in Section 31A-22-322 .
244 Section 9. Section 41-3-903 is enacted to read:

245 41-3-903. Consumer may select a body shop.
246 (1) An owner of a damaged vehicle may select the body shop of the owner's choice to
247 repair the damaged vehicle.
248 (2) A body shop, towing service, dealer, or its employee, agent, or representative may
249 not require an owner of a damaged vehicle to repair the vehicle at a specific body shop as a
250 condition of rendering service or payment for a claim.
251 Section 10. Section 41-3-904 is enacted to read:
252 41-3-904. Body shop requirements.
253 (1) A body shop that provides estimates for repair of a damaged vehicle shall post in a
254 conspicuous public place a notice that states:
255 "YOU HAVE THE RIGHT TO HAVE YOUR VEHICLE REPAIRED AT THE BODY
256 SHOP OF YOUR CHOICE."
257 (2) A body shop shall print on the front page of any vehicle repair estimate in 12 point,
258 all caps type or larger:
259 "YOU HAVE THE RIGHT TO HAVE YOUR VEHICLE REPAIRED AT THE BODY
260 SHOP OF YOUR CHOICE. A DEALER, BODY SHOP, TOWING SERVICE, OR
261 INSURANCE COMPANY MAY NOT REQUIRE YOU TO HAVE YOUR VEHICLE
262 REPAIRED AT A SPECIFIC BODY SHOP."
263 (3) A body shop shall post in a conspicuous public place the applicable labor rates for
264 vehicle repairs.
265 (4) A body shop shall:
266 (a) clearly identify any parts or labor that are subject to betterment on a repair estimate;
267 and
268 (b) notify a vehicle owner verbally or in writing if an insurer has not agreed to pay for
269 any part of an estimate that includes parts or labor that are subject to betterment.
270 Section 11. Effective date.
271 This bill takes effect on July 1, 2005.

Legislative Review Note
as of 2-18-05 12:49 PM

Based on a limited legal review, this legislation has not been determined to have a high
probability of being held unconstitutional.

Office of Legislative Research and General Counsel