Illinois right-to-appraisal bill moves out of House Insurance Committee

Illinois is the latest state to consider mandating the right to appraisal for first- and third-party claims in auto insurance policies with a bill moving out of the House Insurance Committee.

If passed, HB 4160 would require a provision allowing either the insured or the insurer the right to invoke appraisal if there is a dispute over actual cash value or the amount of a loss, including repairable or total loss amounts, or the value of a settlement offer made to a third-party claimant.

The bill states that either party would submit a written demand for appraisal, and within seven calendar days after receiving the demand, would select a competent and disinterested appraiser; and notify the opposing party in writing of the selection.

If the appraisers can’t agree on the amount of a loss or a settlement offer within five calendar days after the date of their appointment, they would jointly select a competent and disinterested umpire. If the appraisers fail to agree on an umpire within 15 calendar days after they fail to agree on the amount of the loss or the settlement offer, either party could petition a court of competent jurisdiction or request assistance from the Department of Insurance to appoint an umpire.

Each party would pay for its appraiser, and if an umpire is necessary, the cost would be shared equally between the parties unless the final appraisal award is 10% or more favorable to the policyholder or third-party claimant than the insurer’s last written offer before appraisal. In that case, the insurer would pay all appraisal and umpire fees.

If the bill becomes law, any insurer in Illinois that fails to comply with the appraisal provisions, including any refusal to participate in the process in good faith, would be subject to a civil penalty of up to $5,000 per violation, additional administrative penalties imposed by the Department of Insurance, and liability for the insured’s or third-party claimant’s reasonable attorney’s fees and appraisal costs, regardless of the outcome, if it is determined that the insurer delayed, obstructed, or acted in bad faith.

The bill would also require the Department of Insurance to create an Automotive Appraisal Standards Advisory Board to guide rulemaking, enforcement priorities, and best practices within 120 days of the bill becoming law.

On March 18, the House Insurance Committee recommended passage of the bill 10-4.

The Alliance of Automotive Service Providers of Illinois and more than one dozen collision repair and auto body shops are proponents of the bill. The American Property Casualty Insurance Association opposes the bill.

“When your insurance company is telling you you’re covered in situations, and then you’re having to combat your own insurance company, it’s not the way that it once was,” said Beth Seberger, AASPI Board of Directors president.

She added that insurance claims handling practices have worsened compared to 10-15 years ago, and even five years ago.

“It’s not just the repairer side of it,” Seberger said. “We all see as consumers how the shift has gone over the years with the cost of cars and things like that. You expect stuff to go up, but when you find out that insurance companies can literally do what they do to people in Illinois and there’s nothing that says they can’t.”

She noted that AASPI believes the bill’s focus shouldn’t be only on first-party claims but also on third-party. Language negotiations are underway, Seberger said.

“At the end of the day, we all drive cars, we all have insurance,” Seberger told Repairer Driven News. “A person shouldn’t have to wait forever to get their car fixed. If the right to appraisal gets them back on the road faster and less money out of their pocket and exposure to them, isn’t that the whole benefit of it? So that consumers aren’t having to pay, or that we’re not having to sit in courts and hold up court dockets, and having to sue over repair costs?”

HB 4160, and its companion bill in the Senate, SB 2708, were introduced in October during the veto session. The Senate bill currently sits in the Assignments Committee.

Last year, right-to-appraisal bills became law in Texas and Washington.

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