Is insurance steering illegal?
If you own a vehicle, you must have insurance coverage – it’s that simple. When you get into an accident, this coverage is there to help absorb your losses. But does that mean you have to use the company the insurance provider tells you to? Isn’t that considered insurance steering? Insurance steering is an illegal practice in many US states, including Maryland. Even though it’s illegal, many insurance companies do this as a standard business practice. According to the law, you may choose the repair shop you want.
What is car insurance steering?Car insurance steering is a common practice that some insurance companies use to pressure policyholders into using a particular repair shop within their network or in their Direct Repair Program (DRP) for vehicle repairs. A DRP is an agreement between an insurance company and a repair facility where services are performed at a discount or predetermined price. In exchange, the insurance company sends more work to the repair shop, making it a win-win for both parties. Note: In Maryland, DRPs are legal, provided they don’t violate anti-steering laws.
Scare tactics insurance companies use in steeringSome common scare tactics that insurance companies may use to steer policyholders toward specific repair shops:
- Suggesting that using a non-preferred repair shop will result in delays, higher costs, or substandard repairs.
- Claiming that if a policyholder chooses their own repair shop, the process will take longer, the repairs will cost more, or the repairs may not be covered under the policy.
- Offering incentives or inducements to use a specific repair shop, such as discounts or warranties, may come at a cost to the policyholder.
- Using aggressive or intimidating language pressuring policyholders into using the preferred repair shop.
- Insinuating that using a non-preferred repair shop will result in a loss of coverage or higher premiums in the future.
- Claiming the warranty will be voided or that the insurer has had issues with the shop before
- Threatening that they’ll not pay for the rental.
Maryland State Steering RegulationsMaryland has specific regulations to protect policyholders’ rights and ensure they can choose their own windshield repair facility. Here are some key regulations related to steering in Maryland:
- Anti-steering laws: Insurers cannot require policyholders to use a specific repair shop or suggest that a specific shop is preferred. Policyholders can choose their repair shop without being punished.
- Disclosure requirements: Insurance companies must provide policyholders with a written disclosure outlining their rights to choose a repair shop. This disclosure must include information about the policyholder’s right to choose a repair shop and the insurer’s obligation to pay for reasonable repairs.
- Prohibition on coercion: An insurance company cannot threaten to cancel or refuse to renew a policy or increase premiums if the policyholder chooses their repair shop.
- Enforcement: The Maryland Insurance Administration is responsible for enforcing these regulations and investigating complaints related to insurance steering. If an insurer is found to violate the regulations, they may face penalties and fines.
- Prohibition on payment for recommendations: Adjusters or appraisers are prohibited from accepting any payment from a repair shop for recommending that shop to a vehicle owner. This helps to ensure that adjusters and appraisers make recommendations based on what is best for the policyholder rather than being influenced by financial incentives.
- Limitations on repair costs: Insurance companies are not required to pay an amount for repairs greater than the usual amount charged by repair shops within a reasonable distance of the vehicle owner. This means that policyholders may need to pay the difference if they choose a repair shop that charges more than the usual amount. It’s worth noting that insurance providers are not prohibited from requiring the owner to drive their damaged vehicle to a facility used exclusively for damage appraisals.