Oklahoma Auto Repair Shops Challenge Law Ending Direct Insurance Claims

Oklahoma has enacted a 2025 law prohibiting "assignment of benefit" contracts in the auto body repair sector, a practice where repair shops file insurance claims and collect benefits directly from insurance companies. The legislation was introduced as a response to alleged abuses by some contractors inflating invoices and charging for unnecessary work, which lawmakers argued led to claim inflation and confusion for policyholders. Prior to this law, repair shops could manage repairs and claims directly with insurers, but the new regulation requires vehicle owners to handle claim disputes themselves, shifting financial and legal burdens away from the shops. The law has prompted a lawsuit by several body shop owners, including those from Broken Arrow, who argue that the change compromises repair quality and vehicle safety. Modern vehicles often require specific repair procedures mandated by manufacturers, especially related to high-tech components like sensors and safety devices. Insurance companies, however, sometimes refuse to pay for these services, putting repair shops in a difficult position. Body shop owners contend that the inability to use assignment of benefits contracts forces vehicle owners to either accept incomplete repairs, bear out-of-pocket costs, or pursue legal action themselves--options that may not be feasible for many customers. Repair professionals warn this dynamic may erode necessary safety inspections and repairs, increasing potential risks to drivers. The evolving regulatory landscape highlights challenges in balancing cost controls for insurers with ensuring comprehensive vehicle repairs. The lawsuit filed in Oklahoma County District Court is set for a hearing in January and is expected to focus on constitutional issues and the practical impacts on insurer-repair shop dynamics. This case could influence how other states address similar assignment of benefits concerns and the roles of repair shops in claims processing. The dispute also underscores tensions between insurance cost containment and compliance with automaker standards, which are increasingly complex due to technological advances. Industry stakeholders may need to revisit agreements, transparency, and regulatory frameworks to better align insurer payment policies with repair safety and quality. The Oklahoma development adds to ongoing national conversations about assignment of benefit contracts, claims management, and balancing interests among payers, providers, and consumers in auto insurance.