New Direct Repair Program Comes Under Fire in California
California drivers are criticizing a bill which would allow insurance providers to suggest third party services “direct repair programs” to the policyholder during the claims process.
Assembly Bill 1200 “Motor vehicles insurance: direct repair programs” currently prohibits insurance providers from requiring that their clients’ automobiles are repaired at specific mechanics. The only exception is under specified circumstances, wherein a client’s car requires special care.
The new bill, which is now in its third reading, would allow an auto insurance provider to provide its clients with “truthful and nondeceptive” information about suggested services that are available during the claims process. It would not, however, require clients to use the services suggested. Officials say that it simply gives the consumer the option of making an informed decision, while benefiting the insurance providers who feel it is their right to suggest benefits to their clients.
Critics of the new bill say that this would contradict California’s current position on the matter, which prohibits insurers from “steering” drivers to auto body shops. They would be allowed to “hard sell” their clients on a mechanic who is an affiliate, even if their client wishes to work with one that is independent.
Steering clients to affiliate repair shops can be a dangerous option. Many consumers feel that “direct repair contracts” between mechanics and insurance providers pushes the autoworker to cut down on costs in order to help their insurance provider save money.