The Office of General Counsel issued the following opinion on June 8, 2004 representing the position of the New York State Insurance Department.
Re: Section 2610 - Certified Autobody Repair Shops
QUESTION
When an automobile manufacturer requires that repairs for physical damage to one of the manufacturer's purchased autos be made at certified repair shops designated by the manufacturer, may the automobile's insurer advise the vehicle owner that they bring the auto to one of the certified repair shops for repair without being asked for a recommendation?
Conclusion
No. Such advice given by an insurer without a recommendation request from the insured owner is prohibited under Section 2610(b) of the Insurance Law. However, the insurer may voluntarily advise the owner that the automobile manufacturer does have a certified repair shop requirement and suggest that the owner may wish to contact the manufacturer for further information.
Facts
The owner of an automobile, whose auto was damaged while parked, brought the car to the body shop of her choice and signed a Designated Representative form, Authorization to Repair and Direction to Pay. After the owner's insurer was advised, the insurer negotiated in good faith with the body shop and secured an Agreed Price ("AP"), after which the insurer issued a check to the shop as per the Direction to Pay. Subsequently, when the shop attempted to order the necessary repair items, the motor vehicle manufacturer refused to sell the parts as the body shop had not been certified by the motor vehicle manufacturer. Further, the motor vehicle manufacturer maintained that the insurer should have advised the owner that the shop was not certified and should not have negotiated with the owner's designated repair shop.
Analysis
As noted in Department Circular Letter No. 14 (2003), Section 2610(b) of the Insurance Law remains in effect and is enforced by the Department consistent with the interpretation of the statute by the New York Court of Appeals in Allstate Insurance Co. v. Serio, 98 N.Y.2d 198 (2002). In that case, the Court of Appeals construed Section 2610(b) as follows:
The literal language of section 2610(b) restricts when an insurance company can make recommendations or suggestions that repairs be performed at a particular shop. The statute does not regulate speech on subjects other than recommendations or suggestions about particular shops, nor does the statute regulate the content or placement of material promoting an insurance company's repair program, nor does the statute regulate discussion or distribution of its text.
98 N.Y.2d at 205.
N.Y. Ins. Law § 2610(b) (McKinney 2000) states that, when processing a motor vehicle repair claim, "the insurer shall not, unless expressly requested by the insured, recommend or suggest repairs be made to such vehicle in a particular place or shop or by a particular concern."
Therefore, contrary to the assertion by the motor vehicle manufacturer that the insurer has an affirmative obligation to steer the vehicle's owner to a repair shop certified by the motor vehicle manufacturer, such advice by the insurer would be expressly violative of the statute. It is the obligation of the motor vehicle manufacturer, not the owner's insurer, to advise its purchasers to utilize certified repair shops in the event the vehicle requires repairs. However, the statute would not preclude an insurer from voluntarily suggesting that an insured may wish to contact their vehicle's manufacturer when the insurer has knowledge that the vehicle manufacturer has a certified repair shop requirement. Such information would be beneficial to the owner and would not constitute "steering" the owner to repair shop favored by the insurer.
For further information one may contact Supervising Attorney Lawrence M. Fuchsberg at the New York City Office.