New York State
Insurance Department


ISSUED: 5/10/2000

FOR IMMEDIATE RELEASE

IN RESPONSE TO COURT DECISION DEPARTMENT ALLOWS
INSURER TO RECOMMEND REPAIR SHOPS TO CONSUMERS

            Superintendent Neil D. Levin today issued a Circular Letter advising that, pursuant to a recent court decision, all insurers that write motor vehicle physical damage coverage in New York State may now recommend or suggest particular repair shops to their policyholders. Insurers are reminded, however, that they may not require policyholders to use specified repair shops. The Circular Letter was issued in response to a recent decision issued by Judge Casey of the United States District Court on May 4th in which he found that such restrictions violated First Amendment commercial speech protections.

            Circular Letter No. 16 advises all insurers that write automobile insurance in New York State that they may now recommend or suggest that repairs to a damaged vehicle be made in a particular place or shop regardless of whether the policyholder requests a recommendation. Two companion cases, Allstate Insurance Co. v. Serio and GEICO v. Serio challenged the constitutionality of a section of the Insurance Law that prohibited insurers from recommending or suggesting particular repair shops unless requested to do so by the policyholder.

            The law prohibiting referrals was originally enacted in 1974. It was amended in 1983 to allow insurance companies to recommend auto glass repair shops, although the change was not extended to general repairs.


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