§ 27-9.1-4. "Unfair claims practicesâ€� defined.
(a) Any of the following acts by an insurer, if committed in violation of § 27-9.1-3, constitutes an unfair claims practice:
(1) Misrepresenting to claimants and insured relevant facts or policy provisions relating
to coverage at issue;
(2) Failing to acknowledge and act with reasonable promptness upon pertinent communications
with respect to claims arising under its policies;
(3) Failing to adopt and implement reasonable standards for the prompt investigation and
settlement of claims arising under its policies;
(4) Not attempting in good faith to effectuate prompt, fair, and equitable settlement
of claims submitted in which liability has become reasonably clear;
(5) Compelling insured, beneficiaries, or claimants to institute suits to recover amounts
due under its policies by offering substantially less than the amounts ultimately
recovered in suits brought by them;
(6) Refusing to pay claims without conducting a reasonable investigation;
(7) Failing to affirm or deny coverage of claims within a reasonable time after having
completed its investigation related to the claim or claims;
(8) Attempting to settle or settling claims for less than the amount that a reasonable
person would believe the insured or beneficiary was entitled by reference to written
or printed advertising material accompanying or made part of an application;
(9) Attempting to settle or settling claims on the basis of an application that was materially
altered without notice to, or knowledge or consent of, the insured;
(10) Making claims payments to an insured or beneficiary without indicating the coverage
under which each payment is being made;
(11) Unreasonably delaying the investigation or payment of claims by requiring both a formal
proof of loss form and subsequent verification that would result in duplication of
information and verification appearing in the formal proof of loss form;
(12) Failing in the case of claims denials or offers of compromise settlement to promptly
provide a reasonable and accurate explanation of the basis of those actions;
(13) Failing to provide forms necessary to present claims within ten (10) calendar days
of a request with reasonable explanations regarding their use;
(14) Failing to adopt and implement reasonable standards to assure that the repairs of
a repairer owned by or required to be used by the insurer are performed in a workmanlike
manner;
(15) Misleading a claimant as to the applicable statute of limitations;
(16) Failing to respond to a claim within thirty (30) days, unless the insured shall agree
to a longer period;
(17) Engaging in any act or practice of intimidation, coercion, threat, or misrepresentation
of consumers rights, for or against any insured person, claimant, or entity to use
a particular rental car company for motor vehicle replacement services or products;
provided, however, nothing shall prohibit any insurance company, agent, or adjuster
from providing to such insured person, claimant, or entity the names of a rental car
company with which arrangements have been made with respect to motor vehicle replacement
services; provided, that the rental car company is licensed pursuant to § 31-5-33;
(18) Refusing to honor a "direction to pay� executed by:
(i) An insured, claimant, indicating that the insured or claimant wishes to have the insurance
company directly pay the insured's or claimant's motor vehicle replacement vehicle
rental benefit to the rental car company of the consumer's choice; provided, that
the rental car company is licensed pursuant to § 31-5-33. Nothing in this section shall be construed to prevent the insurance company's ability
to question or challenge the amount charged, in accordance with its policy provisions,
and the requirements of the department of business regulation; provided that, the
insurance company promptly notifies the rental car company in writing of the reason.
The written notification shall be made at or before the time that the insurance company
submits payment to the rental car company;
(ii) An insured or claimant, indicating that the insured or claimant wishes to have the
insurance company directly pay the insured's or claimant's motor vehicle repair benefit,
as a single party payment exclusively to the auto body shop of the consumer's choice;
provided that, the auto body shop is licensed pursuant to § 5-38-4;
(19) Refusing to honor a "direction to pay� executed by an insured, claimant, indicating
that the insured or claimant wishes to have the insurance company directly pay the
insured's property damage benefit to the restoration company of the consumer's choice;
provided, however, that the amount of the claim to be paid directly to the restoration
company shall be no greater than five thousand dollars ($5,000), and that the restoration
company is licensed pursuant to § 5-65-3. Nothing in this section shall be construed to:
(i) Prevent the insurance company's ability to question or challenge whether the services
billed for are covered by the policy, related to an occurrence covered by the policy,
or the amount charged, in accordance with its policy provisions, and the requirements
of the department of business regulation; or
(ii) Adversely affect the right of any mortgagee or other person with an interest in the
policy unless such mortgagee or other person has also executed the "direction to pay�;
(20) Modifying any published manual, i.e., Motor's Auto Repair Manual, Mitchells, or any
automated appraisal system, relating to auto body repair without prior agreement between
the parties;
(21) Failing to use a manual or system in its entirety in the appraisal of a motor vehicle;
(22) Refusing to compensate an auto body shop for its documented charges as identified,
and based on, the most current version of automotive industry-recognized software
programs or systems for paint, body, and refinishing materials, utilized in auto body
repair, including, but not limited to, programs such as Mitchell's RMC, PMC Logic,
Paint, Micromix, or other paint manufacturer's programs. An insurer shall not discount
documented charges by failing to use a system in its entirety, including an automotive
industry standard markup;
(23) Refusing to acknowledge and compensate an auto body repairer for documented procedures
identified as required or recommended by the original equipment manufacturer, manufacturer's
program, or collision repair industry recognized programs such as Alldata, Repairlogic,
CCC Repair Methods, I-Car or paint manufacturer, upon the initial request from the
auto body shop, such as, but not limited to, post collision procedures and components
that should not be reused or reinstalled, when included in the repairer's appraisal,
or when requested by the repairer (i.e., components that cannot be reused/reinstalled:
requiring clips, retainers, hardware, and materials);
(24) Failing to comply with the requirements of § 31-47-12.1;
(25) Failure to have an appraisal performed by a licensed appraiser where the motor vehicle
has sustained damage estimated to exceed two thousand five hundred dollars ($2,500).
The licensed appraiser referred to herein must be unaffiliated with the repair facility
repairing the subject motor vehicle; must perform a physical inspection of the damaged
motor vehicle; and may not perform an appraisal based upon pictures of the damaged
motor vehicle;
(26) Failure of an insurer's assigned appraiser, or representative, to promptly schedule
an appointment for an appraisal of a damaged vehicle with the auto body repair shop,
at an agreed upon date and time, between normal business hours;
(27) Failure to perform an appraisal within three (3) business days after a request is
received from an auto body repair shop, provided the damaged motor vehicle is on the
premises of the repair shop when the request is made, and failure to perform a supplemental
appraisal inspection of a vehicle within four (4) business days after a request is
received from an auto body repair shop. If the insurer's appraiser fails to inspect
the damaged motor vehicle within the allotted number of business days for an appraisal
or a supplemental appraisal, the insurer shall forfeit its right to inspect the damaged
vehicle prior to repairs, and negotiations shall be limited to labor and the price
of parts and shall not, unless objective evidence to the contrary is provided by the
insurer, involve disputes as to the existence of damage or the chosen manner of repair.
The time limitations set forth in this subsection may be extended by mutual agreement
between the auto body repair shop and the insurer;
(28) Refusing to extend the rental vehicle coverage requirements of an insured or claimant
proportionally to claim delays caused by the insurer;
(29) Designating a motor vehicle a total loss if the cost to rebuild or reconstruct the
motor vehicle to its pre-accident condition is less than seventy-five percent (75%)
to eighty percent (80%) of the "fair market value� of the motor vehicle immediately
preceding the time it was damaged. The consumer may designate the motor vehicle a
total loss when the seventy-five percent (75%) threshold is met but less than eighty
percent (80%) of the fair market value of the motor vehicle:
(i) For the purposes of this subdivision, "fair market value� means the retail value of
a motor vehicle as set forth in a current edition of a nationally recognized compilation
of retail values commonly used by the automotive industry to establish values of motor
vehicles;
(ii) Nothing herein shall be construed to require a vehicle be deemed a total loss if the
total cost to rebuild or reconstruct the motor vehicle to its pre-accident condition
is greater than eighty percent (80%) of the fair market value of the motor vehicle
immediately preceding the time it was damaged;
(iii) Nothing herein shall prohibit an insurance company from agreeing to deem a vehicle
a total loss at the vehicle owner's request and with the vehicle owner's express written
authorization if the cost to rebuild or reconstruct the motor vehicle to its pre-accident
condition is less than eighty percent (80%) of the "fair market value� of the motor
vehicle immediately preceding the time it was damaged;
(iv) If condition adjustments are made to the retail value of a motor vehicle designated
a total loss, all such adjustments must be in accordance with the standards set forth
in the current edition of a nationally recognized compilation of retail values, commonly
used by the automotive industry, used by the insurer to determine the retail value
of the vehicle; and all such adjustments, including prior damage deductions, must
be itemized, fair, and reasonable; and
(v) When a vehicle is deemed a total loss, if the insurer is not retaining the salvage,
the insurer must notify the owner of the vehicle in writing of the requirements of
obtaining both a salvage title and a reconstructed title from the department of motor
vehicles pursuant to chapter 1 of title 31, and must obtain, in writing, the owner's consent and acknowledgement that the insurer
is not retaining the salvage and include a statement of the owner's obligation and
potential costs to dispose of or otherwise retain the salvage;
(30) Negotiating, or effecting the settlement of, a claim for loss or damage covered by
an insurance contract with an unlicensed public adjuster acting on behalf of an insured.
Nothing contained in this section shall be construed to preclude an insurer from dealing
with any individual or entity that is not required to be licensed under chapter 10 of this title;
(31) Refusing to pay an auto body repair shop for documented necessary sublet services
paid out to vendors or incurred by the auto body repair shop, for specialty or unique
services performed in the overall repair process, including costs and labor incurred
to research, coordinate, administrate, or facilitate the necessary sublet service,
and an automotive industry standard markup. Examples of sublet services include, but
are not limited to, towing, transportation, suspension, alignments, electronic calibrations,
diagnostic work, mechanical work, and paid charges to release a vehicle;
(32) Failure of any domestic, foreign, or alien insurers to comply with the requirements
of this section; when settling claims on Rhode Island registered vehicles repaired
in Rhode Island, regardless of the state where the insurance policy was issued or
originates;
(33)(i) When a claim is settled, or partially settled, where the named insured is represented
by a public adjuster licensed pursuant to § 27-10-5, failing to obey a direction to pay letter directing the insurer to issue a check
or checks payable to the public adjuster for the public adjuster's fee, but not more
than ten percent (10%) of the total amount of the settlement, and a separate check
payable to the named insured or any loss payee or mortgagee, or both, whichever is
appropriate, for the balance; provided that, the direction to pay letter is signed
or electronically signed and dated or electronically dated by the named insured and
contains the following information:
(A) Name of insured(s);
(B) The claim number (if obtained);
(C) The date or approximate date of the loss;
(D) The public adjuster's name;
(E) The name of the insurer;
(F) The public adjuster's fee; and
(G) The addresses to which each check shall be sent.
(ii) Nothing in this subsection shall be construed to:
(A) Prevent the insurance company's ability to question or challenge whether the services
billed for are covered by the policy, related to an occurrence covered by the policy,
or the amount charged, in accordance with its policy provisions, and the requirements
of the department of business regulation; or
(B) Adversely affect the right of any mortgagee or other person with an interest in the
policy unless such mortgagee or other person has also executed the "direction to pay�.
(b)(1) Nothing contained in subsections (a)(20), (a)(21), and (a)(22) of this section shall
be construed to interfere with an auto body repair facility's contract with an insurance
company.
(2) If an insurance company and auto body repair facility have contracted under a direct
repair program or any similar program thereto, the provisions of subsections (a)(20),
(a)(21), and (a)(22) of this section shall not apply.
(3) If the insured or claimant elects to have the vehicle repaired at a shop of the insured's
or claimant's choice, the insurer shall not limit or discount the reasonable repair
costs based upon the charges that would have been incurred had the vehicle been repaired
by the insurer's chosen shop(s).