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State of Rhode Island and Providence Plantations
DEPARTMENT OF BUSINESS REGULATION
Division
of Insurance
233 Richmond Street
Providence, RI 02903
INSURANCE
REGULATION 77
PRE-INSPECTION
OF PRIVATE PASSENGER MOTOR VEHICLES
Table of Contents
Section 1 Authority
Section 2 Purpose
Section 3 Definitions
Section 4 Mandatory Inspection Requirements
Section 5 Exemptions to Inspection Requirement
Section 6 Waiver of Inspection
Section 7 Deferral of Inspection
Section 8 Standards and Procedures for Inspections
Section 9 Standards for Suspension of Physical Damage Coverages
Section 10 Records
Section 11 Severability
Section 12 Effective Date
Form A Insurance Company Letterhead or Inspection Service
Letterhead
Form B Notice of Mandatory Pre-Insurance Inspection
Requirement
Form C Notice of Suspension of Physical Damage Coverage
Form D Acknowledgment of Requirement for Pre-Insurance
Inspection
Section 1 Authority
This Regulation is promulgated pursuant to
R.I. Gen. Laws §§ 27-10.1-10
and 42-14-17.
Section 2 Purpose
The purpose of this Regulation is to establish standards and procedures
for inspection of private passenger vehicles weighing less than ten thousand
(10,000) pounds
prior to the issuance by insurers of Physical Damage Coverage.
Section 3 Definitions
For the purpose of this Regulation:
A. "Director" means
the Director of Business Regulation or his or her designee.
B. "Insurer" means all persons, firms, corporations,
or associations authorized to offer automobile insurance in this
state.
C. "Applicant" means the named insured, as defined
in the policy, or an applicant for a motor vehicle insurance
policy.
D. "Authorized Representative" means any person or
legal entity, other than the applicant, authorized by an insurer
to conduct pre-insurance
inspections
pursuant to this Regulation, and may include an employee of the
insurer, or inspection service.
E. "Producer" means a person required to be licensed
under the laws of this state to sell, solicit or negotiate insurance.
F. "Inspection Service" means any person or legal entity,
other than the applicant, which is approved by the insurer to
perform inspections
required
by this Regulation. In determining whether to approve an inspection
service, an insurer must take into consideration the service's
professionalism,
efficiency, and cost effectiveness.
G. "Physical Damage Coverage" means the optional coverages
in a policy for collision or comprehensive (other than collision)
coverages.
H. "Private Passenger Motor Vehicle" means any owned
or leased four -wheeled motor vehicle, except vehicles which
have a gross weight
equal to or
in excess of ten thousand (10,000) pounds.
I. Policy means any insurance policy, contract, or certificate
under which a claim is made.
J. "Temporary Substitute Motor Vehicle" means any private
passenger motor vehicle not owned by the applicant, which is
used by the applicant,
with the permission of the owner, as a temporary substitute due
to breakdown, repair,
servicing, loss or destruction of the applicant's own motor vehicle.
K. "Existing Customer" means an applicant who has been
insured for two (2) years or longer, without interruption, under
a private passenger
motor
vehicle policy which includes Physical Damage Coverage, by the
insurer to which the application is submitted.
Section 4 Mandatory Inspection Requirements
(1) No motor vehicle liability policy or endorsement insuring a private passenger
motor vehicle for Physical Damage Coverage shall be issued in this state
unless the insurer has inspected the motor vehicle in accordance with this
Regulation.
(2) Physical Damage Coverage shall not be issued on an additional
or replacement motor vehicle under an existing policy, unless otherwise
exempted, until
the insurer has inspected the motor vehicle in accordance with the
Regulation.
Section
5 Exemptions to Inspection Requirement
(1) The requirement of an inspection shall not apply
to the following:
(A)
a new, unused motor vehicle, including demonstration vehicles,
from an automobile dealership where the insurer is provided
with
either:
(I)
a copy of the bill of sale which contains a full description
of the motor vehicle, including all options
and accessories;
or
(ii) a copy of the window sticker or the dealer invoice showing
the itemized options and equipment in addition to the total
retail price of the vehicle.
The
Physical Damage Coverage on such new, unused motor vehicle,
including demos, shall not be suspended during
the term of the
policy due to the applicant's
failure to provide the required documents. Payment of a claim,
however, may be conditioned
upon the receipt by the insurer of such documents, and no physical
damage loss
occurring after the effective date of the coverage shall be payable
until the documents are provided to the insurer. If the above
documents are not
submitted
by the applicant at least sixty (60) days prior to the applicant's
annual renewal date, the insurer, before renewing the Physical
Damage Coverage,
must require
an inspection as set forth in this Regulation.
(B) a motor vehicle which is already insured for such Physical
Damage Coverages with the insurer by the applicant.
(C) a temporary substitute motor vehicle.
(D) a motor vehicle which is leased for less than six (6) months, provided
the insurer receives the lease or rental agreement containing a description
of the leased motor vehicle, including its condition. Payment of a physical
damage claim may be conditioned upon receipt of the lease or rental agreement.
(E) when requiring an inspection would cause a serious hardship to the
insurer or the applicant, and such hardship is documented in the applicant's
policy
record.
(2) An
insurer shall state in the applicant's policy record the
reason a vehicle is being exempted from the inspection requirement.
(3) An insurer may require an inspection of a motor vehicle otherwise
exempt, provided that the decision to inspect such motor vehicle is reasonable
and
supported by objective facts. The decision to require such an inspection
shall not be based on the age, race, sex, or marital status of the applicant
or the
customary operators of the vehicle, or the principal place of garaging.
A written statement of the reasons for requiring an inspection, pursuant
to this subsection
shall be placed in the applicant's policy record.
Section 6
Waiver of Inspection
An insurer may waive an inspection under any of the following
circumstances:
(A) for policies
which include Physical Damage Coverage on vehicles which are
six (6) or more years old; or
(B) when an individual applicant's coverage is being transferred
by a producer to a new insurer and the producer provides
the new insurer with a copy of
the inspection report completed on behalf of the previous insurer, provided
the
producer represents both insurers, and the insured vehicle was physically
inspected by the previous insurer. However, if the new insurer does not
receive a copy
of the inspection report sixty (60) days prior to the first annual renewal
date, the insurer must, before renewing physical damage insurance, require
an inspection as set forth in this Regulation.
(C) when the applicant is an existing customer who has not had a total
loss due to theft or fire in the preceding two (2) years.
(2) Any decision
to waive or not to waive an inspection pursuant to this Regulation, shall
not be based on the age, race, sex, or marital status
of the applicant or the customary operators of the vehicle, or the principal
place of garaging.
An insurer shall state in the applicant's policy record the reason a
waiver has been granted.
Section 7 Deferral of Inspection
(1) An insurer may defer an inspection for ten (10) business
days following coverage being bound or the effective date
of coverage, whichever is earlier,
for a new policy or for inclusion of additional or replacement vehicles
to an existing policy.
(2) When an inspection is deferred pursuant to subsection (1),
an insurer, through its producer, shall either:
(a) if the
applicant applied for coverage in person, immediately obtain
the prescribed acknowledgment (Form D) signed by the applicant, or
(b) if the applicant has applied for coverage either by mail, by phone,
or electronically, immediately orally confirm Physical Damage Coverage
and remind
the applicant of the inspection requirement on a prescribed notice
letter (Form B. The Form B notice must be mailed or delivered to the
insured
within three
(3) business days following the effective date of coverage being bound
or the effective date of coverage, whichever is earlier.
(3) In addition
to the notice requirements of (2) above, the insurer, through its producer,
shall furnish the applicant, at the time coverage
is effected,
with a list of inspection sites where the inspection can be conducted.
The location of an inspection site or sites, and the consequences of
the applicant's
failure to obtain a timely inspection shall be furnished immediately
to the applicant either in person, by telephone, or in writing. Documentation
of
such notice, including the name of the person giving the notice and
the identity of the site(s) provided must be contained in the
applicant's
policy
record.
(4) Producers must use the prescribed NOTICE OF MANDATORY PRE-INSPECTION
REQUIREMENT letter (Form B) or the prescribed ACKNOWLEDGMENT OF REQUIREMENT
FOR PRE-INSPECTION
letter (Form D), and immediately send a copy to the insurer. A copy
of the confirmation letter addressed to the applicant or the completed
ACKNOWLEDGMENT
letter shall be retained by the producer in the applicant's policy
record.Page 5 of 14 Reg. # 77
(5) Any decision to waive or not to waive an inspection pursuant to this
Regulation, shall not be based on the age, race, sex, or marital status
of the applicant
or the customary operators of the vehicle, or the principal place of garaging.
Section 8 Standards and Procedures for Inspections
(1) Inspections required or permitted pursuant to this Regulation shall
be made by a designated authorized representative of the insurer at a time
and
place reasonably convenient to the applicant.
(2) The inspection shall:
(A) Be recorded
on a form which contains, as a minimum, the information described
on the Motor Vehicle Pre-Inspection
Report (Form A);
(B) Include two (2) color photographs of the motor vehicle, taken
as directed on the inspection report, which shall be attached to
the report;
(C) Include a close-up color photograph (using a special camera attachment
if necessary) showing the Vehicle Identification Number (VIN) located
on the Environmental Protection Agency/Federal Certification Label
(EPA) sticker
affixed
to the driver's side doorjamb. The photograph must be of sufficient
clarity that the information contained on the EPA sticker and VIN
is legible. If
the EPA sticker is damaged, faded, missing, or otherwise not legible,
a photograph of the EPA sticker or of the area of the doorjamb where
the
sticker is normally
located, is still required.
(D) Include any additional photographs, taken at the discretion of
the authorized representative, showing any damaged areas. Such photographs
shall also be
attached to the report.
(3) The original
report and photographs shall be immediately sent to
the insurer who shall retain the report and photographs in the applicant's
policy record
for three (3) years from the date of inspection, except as provided
by
paragraph (6)(D). The authorized representative shall also provide
a copy of the report,
without photographs, to the applicant and producer of record.
(4) The insurers shall maintain an up-to-date list of all authorized
representatives and inspection sites performing inspections for the
insurer. The list must
include the names, addresses, and business phone numbersPage 6 of
14 Reg. # 77
of all authorized representatives, and the insurer shall make such
a list accessible to the Director upon request.
(5) There shall be no charge to the applicant in connection with
an inspection.
(6) An insurer shall utilize authorized representatives who shall:
(A)
verify the accuracy, completeness and signature of the inspector
for each inspection report in writing;
(B) maintain a control system on such inspection reports, including
the use of sequentially numbered reports;
(C) retain and supply to other insurers, upon request, a copy of
any inspection report which was completed within three (3) years
of the date of inspection;
(D) provide an optional service, on an additional fee basis, to
insurers whereby the original inspection reports and photographs
are retained
by the authorized
representative who shall maintain such original inspection reports
and photographs in a manner so as to facilitate rapid retrieval
for a period
of at least
three (3) years from the date of inspection. The authorized representative
shall,
upon request of an insurer, mail or deliver the original inspection
report and photographs to the insurer within two (2) business days
of such request.
(A) the inspection report and photographs shall be used by
the insurer to document previous damage, prior condition,
options,
and mileage
of the motor
vehicle on physical damage claims whenever:
(I) the
appraisal indicates prior damage;
(ii) the vehicle is a total loss or unrecovered theft;
or
(iii) the damage exceeds three thousand dollars ($3,000).
(B)
a copy of the inspection report and photographs must be
utilized, and made a part of the insurer's claim file,
in settlement of all
total loss
claims.
The inspection report must be made a part of the claim
file regardless of whether or not the payment is reduced
based on the information
contained therein.
(C) access to an electronic file containing images of
inspection reports and images of color photographs will
suffice in
lieu of physically placing
hard
copies of forms and/or photos in a paper file; providing,
the system allows for the printing of hard copies of forms
and color photographs if required in litigation.
Section 9 Standards for Suspension of Physical Damage Coverages
(1) If the inspection is not conducted prior to the expiration
of the ten (10) business day deferral period, motor vehicle
Physical Damage Coverage on the
motor vehicle shall be suspended at 12:01 a.m. of the day following
the tenth business day, and such suspension shall continue
until the inspection is done.
The insurer must inspect the motor vehicle and reinstate Physical Damage
Coverage (effective at the time of the inspection) if the
applicant thereafter requests
an inspection.
(2) Whenever Physical Damage Coverage is suspended, the insurer shall
within three (3) business days give notice to the applicant, the producer
of record,
and any lienholders a completed prescribed NOTICE OF SUSPENSION OF
PHYSICAL DAMAGE COVERAGE (Form C). The insurer shall complete a certificate
of mailing
of the suspension to the applicant and shall retain the certificate
and a copy of the suspension in the applicant's policy record. Whenever
there is a suspension
of Physical Damage Coverage for more than ten (10) days, the insurer
shall make a pro-rata premium adjustment (return premium or credit)
which shall be
mailed to the applicant no later than forty-five (45) days after the
effective date of the suspension. After the insurer makes the pro-rata
premium adjustment,
reinstatement of Physical Damage Coverage shall only be effective upon
inspection and payment by the applicant to the insurer of the adjusted
premium for the
Physical Damage Coverage in full or in accordance with the insurer's
normal payment plan, at the insurer's option.
(3) If the motor vehicle is not inspected pursuant to this Regulation
due to the fault of the insurer, or if its producer fails to give the
verbal or telephone
notice required by this Regulation, or fails to mail or deliver the
NOTICE OF MANDATORY PRE-INSPECTION REQUIREMENT (Form B) or obtain the
ACKNOWLEDGMENT
OF REQUIREMENTS FOR PRE-INSPECTION INSPECTION (Form D), Physical Damage
Coverage on the motor vehicle shall not lapse. The failure of the insurer
to act promptly
does not relieve it of its obligation to inspect.
Section 10 Records
Insurers shall maintain records as to the costs and savings related to this
Regulation and shall make such records available to the Director upon request.
Section
11 Severability
If any section, term, or provision of this Regulation
should be adjudged invalid for any reason, that judgment should not effect,
impair, or invalidate
any
remaining section, term, or provision, which shall remain in full force and
effect.
Section 12 Effective Date
This Regulation shall become effective twenty (20) days after filing with
the Secretary of State.
EFFECTIVE DATE: March 25, 1994
AMENDED: None
REFILED:
December
19, 2001
AMENDED: September 3, 2002