HOUSE BILL 588

47th legislature - STATE OF NEW MEXICO - first session, 2005

INTRODUCED BY

Joe M Stell

AN ACT

RELATING TO INSURANCE; PROHIBITING UNFAIR SETTLEMENT PRACTICES; PROHIBITING PERSONS FROM REQUIRING THE USE OF DESIGNATED PARTS, REPAIR FACILITIES OR MANUFACTURERS AS A PREREQUISITE TO SETTLING A CLAIM.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     Section 1. A new section of Chapter 59A, Article 16 NMSA 1978 is enacted to read:

     "[NEW MATERIAL] UNFAIR SETTLEMENT PRACTICES--REPLACEMENT AND REPAIR.--

          A. An insurer or its agents or contractors shall not:

                (1) require an insured or claimant to use designated replacement or repair facilities or services, or the products of designated manufacturers, as a prerequisite to settling or paying any claim arising under a motor vehicle insurance policy;

                (2) engage in any act of coercion or intimidation causing or intended to cause an insured or claimant to use designated replacement or repair facilities or services, or the products of designated manufacturers, in connection with settling or paying any claim arising

under a motor vehicle insurance policy;

                (3) fail to disclose to the insured or claimant, prior to being referred to a third party representative in connection with a glass claim arising under a motor vehicle insurance policy, that the third party representative is not the insurer and is acting on behalf of the insurer;

                (4) fail to disclose to the insured or claimant, at such time as the insurer or its third party representative recommends the use of a designated motor vehicle replacement or repair facility or service, or products of a designated manufacturer, in connection with settling or

paying any claim arising under an insurance policy, that the insured or claimant is under no obligation to use the replacement or repair facility or service or products of the

manufacturer recommended by the insurer or by a representative of the insurer; or

                (5) fail to disclose to the insured or claimant, at such time as it or its third party representative recommends the use of a designated motor vehicle replacement or repair facility in connection with settling or paying any claim arising under an insurance policy, that the insurer or its third party representative has a financial interest in such replacement or repair facility, if the insurer or its third party representative has such an interest.

          B. This section shall not be construed to require an insurer to pay an amount for motor vehicle repair services or repair products necessary to properly and fairly repair the vehicle to its pre-loss condition that is greater than the prevailing competitive charges for equivalent services or products charged by similar contractors or repair shops within a reasonable geographic or trade area of the address of the repair facility. Offering an explanation of the extent of an insurer's obligation under this section to its policyholder or third party claimant shall not constitute a violation of this section.

          C. The superintendent shall investigate, with the written authorization of the insured or the claimant, any written complaints received pursuant to this section, regardless of whether the written complaints are submitted by an individual or a repair facility. For the purposes of this section, any insurance company using a third party representative shall be held accountable for any violation of this section by its third party representative."

- 4 -