The California Autobody Association (CAA) is reaching out to shops in the state to asking them to report any insurer violations of the new insurance regulations which took effect this year. On March 31, 2013, Insurance Regulation, Subchapter 7.5, Article 1, Fair Claims Settlement Practices Regulation, Amended Section 2695.8, took effect. The new regulation addresses issues including aftermarket parts and procedures for adjusting shop estimates. The CAA has been working with the department to assist in clarifying the areas of aftermarket parts usage and claims settlement and the new regulations are, in part, a result of CAA discussions with the DOI. In order to assist the DOI, the CAA is now asking shops that are aware of non-compliance by an insurance company related to the new regulations, to submit an Autobody Complaint Form to the DOI. The new regulation addresses a number of issues in the collision repair industry. The regulations: Require the current insurer's warranty of aftermarket parts be expressly stated in the estimate of repair generated by the insurer; Require an insurer to cease use of a part known to be non-compliant, and notify the part distributor within thirty (30) days.

Require an insurer to pay for an amount to repair the damaged vehicle to its pre-loss condition in a good and workmanlike manner, based upon the repair standards required by auto body repair shops licensed to the BAR;

Require an insurer to pay for the costs associated with returning a defective part and the cost to remove and replace the defective part with a compliant non-OEM part or an OEM part;

When insurers prepare an estimate, it cannot deviate from the standards, costs, and/or guidelines provided by the estimating software used by the insurer.

The CAA notes that section f(3) of the new regulations, dealing with the shop estimate and how insurers may make adjustments, is extremely important and shops need to know how this section specifically applies.

The section states that, if a claimant contends that necessary repairs will exceed the written estimate prepared the insurer, the insurer shall reasonably adjust the shop's estimate by either 1) providing the claimant with an edited copy of the shop estimate or, 2) providing a supplemental estimate based on the itemized copy of the shop estimate.

The section states, "The adjusted estimate shall identify the specific adjustment made to each item and the cost associated with each adjustment made to the claimant's shop's estimate."

In January the Association of California Insurance Companies (ACIC) had complained that the new regulations "essentially require insurers to pay whatever auto repair shops demand" and that insurers "no longer have the ability to negotiate the most effective, less costly repair."

Armand Feliciano, ACIC vice president, said in a published interview at the time that, "Auto repairers have resorted to legislation via the regulatory process. We feel that some of these regulations that have been put into place are outside of what the CDI has the authority to do."