Louisiana Law Strengthens Policyholder Choice of Auto Repair Shops

A new law in Louisiana aims to ensure that auto insurance policyholders have the option to choose a particular motor vehicle repair shop.

Under Act 317 (House Bill 411), which has been signed by Gov. John Bel Edwards, insurers are prohibited from recommending specific auto repair shops unless their insureds are clearly informed that they are not required to use the recommended shop.

According to the Coalition Against Insurance Fraud, insurers are allowed inform consumers about reputable repair facilities and warn against body shops suspected of committing fraud.

However, the bill states: “An insurer shall not engage in any act or practice of intimidation, coercion, or threat to use a specified place of business for repair and replacement services.”

The act provides for fines for violations of the law:

$1,000 for a first offense

$2,500 for a second offense within a 12-month period, two thousand five hundred dollars.

$5,000 for third or subsequent offense within a 12-month period

The act also gives the insurance commissioner the power to suspend or revoke insurance licenses of violators.