AN ACT RELATING TO INSURANCE -- UNFAIR CLAIMS SETTLEMENT PRACTICES ACT (Characterizes the failure of a homeowner's insurance policy to use matching principle in its interpretation of replacement cost coverage in its homeowner's insurance policy, as an unfair claim settlement practices.)

S2770

2026 -- S 2770
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STATE OF RHODE ISLAND
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2026
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A N A C T
RELATING TO INSURANCE -- UNFAIR CLAIMS SETTLEMENT PRACTICES ACT

Introduced By:
Senators Pearson, Quezada, Gallo, Tikoian, Lauria, Kallman, Euer, and
Zurier

Date Introduced:
March 04, 2026

Referred To:
Senate Commerce
It is enacted by the General Assembly as follows:
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SECTION 1. Section 27-9.1-4 of the General Laws in Chapter 27-9.1 entitled "Unfair
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Claims Settlement Practices Act" is hereby amended to read as follows:
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27-9.1-4. “Unfair claims practices” defined.
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(a) Any of the following acts by an insurer, if committed in violation of § 27-9.1-3,
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constitutes an unfair claims practice:
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(1) Misrepresenting to claimants and insured relevant facts or policy provisions relating to
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coverage at issue;
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(2) Failing to acknowledge and act with reasonable promptness upon pertinent
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communications with respect to claims arising under its policies;
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(3) Failing to adopt and implement reasonable standards for the prompt investigation and
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settlement of claims arising under its policies;
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(4) Not attempting in good faith to effectuate prompt, fair, and equitable settlement of
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claims submitted in which liability has become reasonably clear;
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(5) Compelling insured, beneficiaries, or claimants to institute suits to recover amounts due
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under its policies by offering substantially less than the amounts ultimately recovered in suits
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brought by them;
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(6) Refusing to pay claims without conducting a reasonable investigation;
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(7) Failing to affirm or deny coverage of claims within a reasonable time after having
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completed its investigation related to the claim or claims;

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(8) Attempting to settle or settling claims for less than the amount that a reasonable person
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would believe the insured or beneficiary was entitled by reference to written or printed advertising
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material accompanying or made part of an application;
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(9) Attempting to settle or settling claims on the basis of an application that was materially
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altered without notice to, or knowledge or consent of, the insured;
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(10) Making claims payments to an insured or beneficiary without indicating the coverage
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under which each payment is being made;
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(11) Unreasonably delaying the investigation or payment of claims by requiring both a
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formal proof of loss form and subsequent verification that would result in duplication of
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information and verification appearing in the formal proof of loss form;
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(12) Failing in the case of claims denials or offers of compromise settlement to promptly
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provide a reasonable and accurate explanation of the basis of those actions;
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(13) Failing to provide forms necessary to present claims within ten (10) calendar days of
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a request with reasonable explanations regarding their use;
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(14) Failing to adopt and implement reasonable standards to assure that the repairs of a
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repairer owned by or required to be used by the insurer are performed in a workmanlike manner;
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(15) Misleading a claimant as to the applicable statute of limitations;
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(16) Failing to respond to a claim within thirty (30) days, unless the insured shall agree to
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a longer period;
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(17) Engaging in any act or practice of intimidation, coercion, threat, or misrepresentation
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of consumers rights, for or against any insured person, claimant, or entity to use a particular rental
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car company for motor vehicle replacement services or products; provided, however, nothing shall
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prohibit any insurance company, agent, or adjuster from providing to such insured person, claimant,
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or entity the names of a rental car company with which arrangements have been made with respect
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to motor vehicle replacement services; provided, that the rental car company is licensed pursuant
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to § 31-5-33;
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(18) Refusing to honor a “direction to pay” executed by:
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(i) An insured, claimant, indicating that the insured or claimant wishes to have the
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insurance company directly pay the insured’s or claimant’s motor vehicle replacement vehicle
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rental benefit to the rental car company of the consumer’s choice; provided, that the rental car
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company is licensed pursuant to § 31-5-33. Nothing in this section shall be construed to prevent
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the insurance company’s ability to question or challenge the amount charged, in accordance with
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its policy provisions, and the requirements of the department of business regulation; provided that,
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the insurance company promptly notifies the rental car company in writing of the reason. The

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written notification shall be made at or before the time that the insurance company submits payment
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to the rental car company;
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(ii) An insured or claimant, indicating that the insured or claimant wishes to have the
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insurance company directly pay the insured’s or claimant’s motor vehicle repair benefit, as a single
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party payment exclusively to the auto body shop of the consumer’s choice; provided that, the auto
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body shop is licensed pursuant to § 5-38-4;
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(19) Refusing to honor a “direction to pay” executed by an insured, claimant, indicating
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that the insured or claimant wishes to have the insurance company directly pay the insured’s
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property damage benefit to the restoration company of the consumer’s choice; provided, however,
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that the amount of the claim to be paid directly to the restoration company shall be no greater than
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five thousand dollars ($5,000), and that the restoration company is licensed pursuant to § 5-65-3.
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Nothing in this section shall be construed to:
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(i) Prevent the insurance company’s ability to question or challenge whether the services
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billed for are covered by the policy, related to an occurrence covered by the policy, or the amount
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charged, in accordance with its policy provisions, and the requirements of the department of
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business regulation; or
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(ii) Adversely affect the right of any mortgagee or other person with an interest in the policy
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unless such mortgagee or other person has also executed the “direction to pay”;
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(20) Modifying any published manual, i.e., Motor’s Auto Repair Manual, Mitchells, or any
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automated appraisal system, relating to auto body repair without prior agreement between the
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parties;
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(21) Failing to use a manual or system in its entirety in the appraisal of a motor vehicle;
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(22) Refusing to compensate an auto body shop for its documented charges as identified,
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and based on, the most current version of automotive industry-recognized software programs or
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systems for paint, body, and refinishing materials, utilized in auto body repair, including, but not
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limited to, programs such as Mitchell’s RMC, PMC Logic, Paint, Micromix, or other paint
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manufacturer’s programs. An insurer shall not discount documented charges by failing to use a
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system in its entirety, including an automotive industry standard markup;
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(23) Refusing to acknowledge and compensate an auto body repairer for documented
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procedures identified as required or recommended by the original equipment manufacturer,
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manufacturer’s program, or collision repair industry recognized programs such as Alldata,
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Repairlogic, CCC Repair Methods, I-Car or paint manufacturer, upon the initial request from the
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auto body shop, such as, but not limited to, post collision procedures and components that should
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not be reused or reinstalled, when included in the repairer’s appraisal, or when requested by the

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repairer (i.e., components that cannot be reused/reinstalled: requiring clips, retainers, hardware, and
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materials);
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(24) Failing to comply with the requirements of § 31-47-12.1;
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(25) Failure to have an appraisal performed by a licensed appraiser where the motor vehicle
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has sustained damage estimated to exceed two thousand five hundred dollars ($2,500). The licensed
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appraiser referred to herein must be unaffiliated with the repair facility repairing the subject motor
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vehicle; must perform a physical inspection of the damaged motor vehicle; and may not perform
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an appraisal based upon pictures of the damaged motor vehicle;
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(26) Failure of an insurer’s assigned appraiser, or representative, to promptly schedule an
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appointment for an appraisal of a damaged vehicle with the auto body repair shop, at an agreed
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upon date and time, between normal business hours;
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(27) Failure to perform an appraisal within three (3) business days after a request is
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received from an auto body repair shop, provided the damaged motor vehicle is on the premises of
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the repair shop when the request is made, and failure to perform a supplemental appraisal inspection
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of a vehicle within four (4) business days after a request is received from an auto body repair shop.
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If the insurer’s appraiser fails to inspect the damaged motor vehicle within the allotted number of
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business days for an appraisal or a supplemental appraisal, the insurer shall forfeit its right to inspect
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the damaged vehicle prior to repairs, and negotiations shall be limited to labor and the price of parts
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and shall not, unless objective evidence to the contrary is provided by the insurer, involve disputes
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as to the existence of damage or the chosen manner of repair. The time limitations set forth in this
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subsection may be extended by mutual agreement between the auto body repair shop and the
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insurer;
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(28) Refusing to extend the rental vehicle coverage requirements of an insured or claimant
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proportionally to claim delays caused by the insurer;
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(29) Designating a motor vehicle a total loss if the cost to rebuild or reconstruct the motor
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vehicle to its pre-accident condition is less than seventy-five percent (75%) to eighty percent (80%)
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of the “fair market value” of the motor vehicle immediately preceding the time it was damaged.
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The consumer may designate the motor vehicle a total loss when the seventy-five percent (75%)
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threshold is met but less than eighty percent (80%) of the fair market value of the motor vehicle:
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(i) For the purposes of this subdivision, “fair market value” means the retail value of a
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motor vehicle as set forth in a current edition of a nationally recognized compilation of retail values
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commonly used by the automotive industry to establish values of motor vehicles;
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(ii) Nothing herein shall be construed to require a vehicle be deemed a total loss if the total
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cost to rebuild or reconstruct the motor vehicle to its pre-accident condition is greater than eighty

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percent (80%) of the fair market value of the motor vehicle immediately preceding the time it was
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damaged;
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(iii) Nothing herein shall prohibit an insurance company from agreeing to deem a vehicle
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a total loss at the vehicle owner’s request and with the vehicle owner’s express written authorization
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if the cost to rebuild or reconstruct the motor vehicle to its pre-accident condition is less than eighty
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percent (80%) of the “fair market value” of the motor vehicle immediately preceding the time it
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was damaged;
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(iv) If condition adjustments are made to the retail value of a motor vehicle designated a
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total loss, all such adjustments must be in accordance with the standards set forth in the current
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edition of a nationally recognized compilation of retail values, commonly used by the automotive
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industry, used by the insurer to determine the retail value of the vehicle; and all such adjustments,
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including prior damage deductions, must be itemized, fair, and reasonable; and
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(v) When a vehicle is deemed a total loss, if the insurer is not retaining the salvage, the
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insurer must notify the owner of the vehicle in writing of the requirements of obtaining both a
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salvage title and a reconstructed title from the department of motor vehicles pursuant to chapter 1
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of title 31, and must obtain, in writing, the owner’s consent and acknowledgement that the insurer
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is not retaining the salvage and include a statement of the owner’s obligation and potential costs to
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dispose of or otherwise retain the salvage;
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(30) Negotiating, or effecting the settlement of, a claim for loss or damage covered by an
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insurance contract with an unlicensed public adjuster acting on behalf of an insured. Nothing
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contained in this section shall be construed to preclude an insurer from dealing with any individual
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or entity that is not required to be licensed under chapter 10 of this title;
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(31) Refusing to pay an auto body repair shop for documented necessary sublet services
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paid out to vendors or incurred by the auto body repair shop, for specialty or unique services
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performed in the overall repair process, including costs and labor incurred to research, coordinate,
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administrate, or facilitate the necessary sublet service, and an automotive industry standard markup.
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Examples of sublet services include, but are not limited to, towing, transportation, suspension,
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alignments, electronic calibrations, diagnostic work, mechanical work, and paid charges to release
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a vehicle;
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(32) Failure of any domestic, foreign, or alien insurers to comply with the requirements of
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this section; when settling claims on Rhode Island registered vehicles repaired in Rhode Island,
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regardless of the state where the insurance policy was issued or originates;
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(33)(i) When a claim is settled, or partially settled, where the named insured is represented
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by a public adjuster licensed pursuant to § 27-10-5, failing to obey a direction to pay letter directing

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the insurer to issue a check or checks payable to the public adjuster for the public adjuster’s fee,
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but not more than ten percent (10%) of the total amount of the settlement, and a separate check
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payable to the named insured or any loss payee or mortgagee, or both, whichever is appropriate,
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for the balance; provided that, the direction to pay letter is signed or electronically signed and dated
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or electronically dated by the named insured and contains the following information:
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(A) Name of insured(s);
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(B) The claim number (if obtained);
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(C) The date or approximate date of the loss;
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(D) The public adjuster’s name;
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(E) The name of the insurer;
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(F) The public adjuster’s fee; and
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(G) The addresses to which each check shall be sent.
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(ii) Nothing in this subsection shall be construed to:
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(A) Prevent the insurance company’s ability to question or challenge whether the services
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billed for are covered by the policy, related to an occurrence covered by the policy, or the amount
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charged, in accordance with its policy provisions, and the requirements of the department of
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business regulation; or
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(B) Adversely affect the right of any mortgagee or other person with an interest in the
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policy unless such mortgagee or other person has also executed the “direction to pay”.
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(34) Failure of an insurer to apply the matching principle to the interpretation of its
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homeowner's insurance policy's replacement cost coverage provisions which would have resulted
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in the advancement of a reasonably uniform appearance of the insured's property. It would require
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the replacement of items when replaced items do not match in quality, color or size. The matching
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principle shall be utilized for interior and exterior losses. The insured shall not bear any cost over
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the applicable deductible, if any.
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(b)(1) Nothing contained in subsections (a)(20), (a)(21), and (a)(22) of this section shall be
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construed to interfere with an auto body repair facility’s contract with an insurance company.
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(2) If an insurance company and auto body repair facility have contracted under a direct
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repair program or any similar program thereto, the provisions of subsections (a)(20), (a)(21), and
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(a)(22) of this section shall not apply.
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(3) If the insured or claimant elects to have the vehicle repaired at a shop of the insured’s
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or claimant’s choice, the insurer shall not limit or discount the reasonable repair costs based upon
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the charges that would have been incurred had the vehicle been repaired by the insurer’s chosen
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shop(s).

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SECTION 2. This act shall take effect upon passage.
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EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO INSURANCE -- UNFAIR CLAIMS SETTLEMENT PRACTICES ACT
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This act would characterize the failure of a homeowner's insurance policy to use matching
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principle in its interpretation of replacement cost coverage in its homeowner's insurance policy, as
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an unfair claim settlement practice. The result would be matching the damaged part of the property
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to the undamaged part to restore the property to its condition, prior to the loss, resulting in a uniform
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appearance.
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This act would take effect upon passage.
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