38.2-517 - Unfair settlement practices; replacement and repair; penalty.
§ 38.2-517. Unfair settlement practices; replacement and repair; penalty.
A. No person shall:
1. Require an insured or claimant to utilize designated replacement or repairfacilities or services, or the products of designated manufacturers, as aprerequisite to settling or paying any claim arising under a policy orpolicies of insurance;
2. Engage in any act of coercion or intimidation causing or intended to causean insured or claimant to utilize designated replacement or repair facilitiesor services, or the products of designated manufacturers, in connection withsettling or paying any claim arising under a policy or policies of insurance;
3. Fail to disclose to the insured or claimant, prior to being referred to athird party representative in connection with a glass claim arising under amotor vehicle insurance policy, that the third party representative is notthe insurer and is acting on behalf of the insurer;
4. Fail to disclose to the insured or claimant, at such time as the insureror its third party representative recommends the use of a designated motorvehicle replacement or repair facility or service, or products of adesignated manufacturer, in connection with settling or paying any claimarising under a policy or policies of insurance, that the insured or claimantis under no obligation to use the replacement or repair facility or serviceor products of the manufacturer recommended by the insurer or by arepresentative of the insurer;
5. Fail to disclose to the insured or claimant, at such time as it or itsthird party representative recommends the use of a designated motor vehiclereplacement or repair facility in connection with settling or paying anyclaim arising under a policy or policies of insurance, that the insurer orits third party representative has a financial interest in such replacementor repair facility, if the insurer or its third party representative has suchan interest; or
6. Engage in the practice of capping. As used in this subdivision,"capping" means the setting of arbitrary and unreasonable limits on what aninsurer will allow as reimbursement for paint and materials.
B. This section shall not be construed to require an insurer to pay an amountfor motor vehicle repair services or repair products necessary to properlyand fairly repair the vehicle to its pre-loss condition that is greater thanthe prevailing competitive charges for equivalent services or productscharged by similar contractors or repair shops within a reasonable geographicor trade area of the address of the repair facility. Offering an explanationof the extent of an insurer's obligation under this section to itspolicyholder or third party claimant shall not constitute a violation of thissection.
C. Any person violating this section shall be subject to the injunctive,penalty, and enforcement provisions of Chapter 2 (§ 38.2-200 et seq.) of thistitle. The Commission shall investigate, with the written authorization ofthe insured or the claimant, any written complaints received pursuant to thissection, regardless of whether such written complaints are submitted by anindividual or a repair facility. For the purpose of this section, anyinsurance company utilizing a third party representative shall be heldaccountable for any violation of this section by such third partyrepresentative.
(1992, cc. 870, 882; 1999, c. 129; 2003, c. 361; 2004, c. 767; 2008, cc. 111,516.)