motor vehicle insurance;
lienholder status
HB 2073 requires an insured or claimant to provide information regarding the existence of a lien or encumbrance on a vehicle when making an insurance claim. A claim alone shall not be proof of loss until satisfactory evidence of the lien is provided to the insurer. The legislation provides a conditional exemption for insurers with regards to payment for damages or loss on a vehicle.
Current Status
The Committee on Financial Institutions and Insurance failed to give HB 2073 a do pass recommendation.
History
Arizona statutes are silent regarding third party payors (e.g. insurance companies) when there is damage to a motor vehicle caused by the negligence of another person. The provisions of the vehicle owner’s policy, and the claims handling practices of the insurer dictate the manner in which payment is made, and to whom payment is made. When the vehicle is a total loss, the payment is made jointly to the lienholder and vehicle owner, protecting the interests of the lienholder. However, when the vehicle sustains damage that does not amount to a total loss, in third-party situations, the insurance company sometimes makes payment directly to the vehicle owner. If the motor vehicle owner does not make the necessary repairs and then defaults on the loan, the lienholder may incur the ultimate loss. HB 2073 requires an insured or claimant to provide information regarding the existence of a lien or encumbrance on a vehicle when making an insurance claim. A claim alone shall not be proof of loss until satisfactory evidence of the lien is provided to the insurer. The legislation provides a conditional exemption for insurers with regards to payment for damages or loss on a vehicle.
Provisions
· Requires an insured or claimant to provide information concerning the existence of any lien or encumbrance on a vehicle when making a claim for damage or loss on a vehicle. Making a claim alone is not sufficient without evidence of a lien or encumbrance.
· Clarifies that the legislation is applicable for claims equaling or greater than $1,000.
· Establishes that an insurance company must rely on and act in good faith based on the information submitted by a claimant. The insurer will not be liable for the damages or loss on a vehicle if the claimant does not provide accurate information.
· Stipulates that the insured or claimant will be liable for the damages or loss on a vehicle if they fail to provide accurate information.
· Specifies that the statute is not applicable for insurers making payment for repair or damages under two conditions:
· An insurer issues a release of claims and makes payment to both the insurer or claimant and all lienholders or vehicle lessors;
· An insurer makes proceeds payable to the repair facility after verification that the repair was complete.
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45th
Legislature
Second
Regular Session 2 February 14, 2002
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