Rhode Island Updates Auto Insurance Appraisal Process with New Law
Rhode Island has enacted a new law, signed by Governor Daniel McKee, that updates the vehicle appraisal process within the state's insurance framework. The legislation, effective immediately upon passage, extends the timeframe for insurance company appraisers to inspect vehicles from three to four days after the appraisal clause is triggered. If the insurer fails to conduct the inspection within this period, it forfeits the right to inspect before repairs, shifting negotiations to focus strictly on labor and parts costs unless contrary evidence is provided.
The law introduces provisions allowing insurers and auto body repair shops to mutually agree to extend appraisal time limits, enhancing flexibility in the claims handling process. It clarifies the method for resolving appraisal disputes by setting thresholds: if appraisers’ estimates differ by 15% or less, the settlement amount will be the midpoint. For differences exceeding 15%, appraisers must nominate three disinterested Rhode Island-licensed appraisers to select an umpire or involve an arbitration association to appoint one.
An umpire selected under this process is required to make a binding decision within five days. This aims to streamline resolution of disputes and reduce prolonged negotiations. Additionally, the legislation specifies who bears appraisal-related costs. If the claimant initiates appraisal and the final award surpasses the insurer’s original offer by more than 25%, insurers must reimburse the appraisal costs. Otherwise, appraisal costs are shared between parties.
The statute also makes binding the appraisal award, except for supplements related to hidden damages, parts price increases, or other unpaid reasonable charges. This legal update addresses gaps in previous Rhode Island statutes concerning appraisal timelines, dispute resolution, and cost allocation.
This development in Rhode Island follows similar recent legislation in Washington and Texas, which have passed right-to-appraisal laws after extensive lobbying. Washington’s bill notably removed clauses requiring insurers to reimburse policyholders for appraisal costs under certain conditions, indicating ongoing legislative negotiation over cost responsibilities. New Jersey is also considering a comparable bill, though it remains in committee.
These legislative changes reflect a broader national trend toward formalizing appraisal procedures in auto insurance claims to enhance clarity, efficiency, and fairness in dispute resolutions. Industry stakeholders, including insurers and repair shops, should monitor these evolving standards as they may influence claims processes and cost management strategies in their jurisdictions.