Paint cap bill signed by Governor
California state Senate Bill 1371, titled "Insurance: Automobile Repair Capping," was passed by the state Senate Aug. 8 and has been signed by Republican Gov. Arnold Schwarzenegger.
SB 1371, authored by Democratic state Sen. Lou Correa, would prohibit insurers from capping paint and materials charges. The latest definition of capping, which was approved July 14 by the state Assembly, is "offering or paying an amount that is unrelated to a methodology used in determining paint and materials charges that is accepted by automobile repair shops and insurers."
The bill does state, however, that if pricing agreements involving discounts are reached voluntarily between auto repair shops and insurers, capping rules do not apply. Otherwise, the methods for calculating the paint and materials charge, which must be accepted by both repair shops and insurance companies, is determined by multiplying refinish unit times the refinish rate.
Other price-determining factors include manuals and estimating systems that estimate how much refinish will be required to repair a certain part of the automobile and software programs that automatically do the calculations.
"On behalf of the CAA, we would like to thank the governor, Sen. Correa, the insurance industry, and our members on getting this law passed," said Ted Stein, president of the California Autobody Association (CAA). "Anytime our entire industry works together, the results are always good."
SB 1371 will take effect on Jan. 1.
Crash parts bill vetoed by governor
Gov. Arnold Schwarzenegger has vetoed California Assembly Bill 2825 regarding automotive repair crash parts after holding the bill on his desk since Aug. 18.
AB 2825 would have amended the existing Automotive Repair Act, which requires all work completed by an automotive repair dealer to be recorded on an invoice, including both service work and parts used. The invoice must also specify if the crash parts used are original equipment manufacturer or aftermarket parts, which have been proffered on the written estimate given to the customer for approval before repair work begins.
AB 2825 would have required the Automotive Repair Act to better inform automotive repair shop customers as well as protect their rights as consumers. It would have also required automotive repair dealers to provide invoices from distributors, dealers, or manufacturers of crash parts that were installed if they exceeded $50.
On the first page of the written estimate, a notice would have been inserted to specify that installing parts other than those included in the estimate-–and without approval from the customer–-is unlawful.
"This is a huge victory for repairers," Stein said.
The governor's veto message read, "This bill is essentially similar to a bill I vetoed last year (AB 1483). The provisions in this measure are duplicate of existing law and therefore unnecessary. Requiring automotive repair shops to provide additional paperwork is unnecessarily burdensome and would increase expenses that could be passed on to the consumer, with no additional benefit."
The Automotive Service Councils of California (ASCCA) had also opposed the bill. "We can all be proud of the work done by our association working in concert with others," said CAA attorney and lobbyist Jack Molodanof.
Antisteering bill vetoed
The CAA applauded Gov. Arnold Schwarzenegger for vetoing SB 1167, an antisteering bill that was amended and passed by the Assembly and Senate.
SB 1167, by Sen. Pat Wiggins, D-Santa Rosa, was amended to require that the insurance commissioner form a task force to study issues addressed by Insurance Code Section 758.5 on steering.
"CAA did not support the amended version of this bill," said CAA Executive Director David McClune. "This bill would have required the Department of Insurance (DOI) to spend two years studying the issue of steering. The DOI has had plenty of time to study this issue. If this bill had passed, it would have potentially delayed any action by the department on steering for at least two years."
CAA is already on a Task Force working with the DOI on addressing labor rate surveys, steering, and "capping" of rates, McClune said. The department is working on a revised regulation to address labor rate surveys. CAA will be posting these draft regulations on the CAA Web site, www.calautobody.com.
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