Directs the department of financial services, in consultation with the department of transportation to conduct a study and prepare a report on the fair market value of labor rates for services covered under motor vehicle insurance policies.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A8041
SPONSOR: Kay TITLE OF BILL:
An act directing the department of financial services to conduct a study
on the fair market value of labor rates for services covered under motor
vehicle insurance policies
PURPOSE:
Directs the Department of Financial services to conduct a study of the
fair market value of labor rates for services covered under motor vehi-
cle insurance policies.
SUMMARY OF PROVISIONS:
Section one directs the Department of Financial Services to conduct a
study and prepare a report on the fair market value of labor rates for
services covered under motor vehicle insurance policies.
Section two directs the Department of Financial Services, in consulta-
tion with the Department of Transportation, to issue a report on the
findings of the study along with any appropriate regulatory or legisla-
tive actions to the Governor, the Temporary President of the Senate, and
the Speaker of Assembly.
Section three establishes the effective date.
JUSTIFICATION:
Small automotive repair businesses are being unfairly treated, by the
predatory practices of big-name insurance companies, which deceptively
steer their members toward preferred shops that accept unreasonably low
labor rates. At the same time, they direct insured drivers away from
choosing a repair shop they know and trust. This is not a sustainable
system for small businesses, or for any auto body shop that takes pride
in providing high-quality work.
Notably, these deceptive tactics deployed by the insurance industry
silently prey on their own insured members, often forcing them to pay
out of pocket unless they use a "preferred" shop. These shops are
compelled to accept unreasonably low labor rates simply because the
insurance company dictates the rate, with no regard for whether it is
fair or reasonable.
There are no true negotiations between repair shops and . insurance
companies to determine these rates. Anecdotally, these rates are often
far below what many shops consider fair. In some cases, insurance compa-
nies have even sent threatening letters to small auto body shops, warn-
ing them not to discuss labor rates with other businesses, further
limiting transparency and fair competition.
Without transparency in how insurance companies determine "fair market
value" for labor, there is no way to assess whether the rates they offer
are equitable. Currently, New York State does not provide clear guidance
on how insurers are allowed to establish these labor rates.
This lack of meaningful oversight leads to financial hardship for small
repair shops when insurers can unilaterally decide what they are willing
to pay, regardless of whether that amount is fair. If these deceptive
practices are not addressed through legislation, they will have a devas-
tating impact on mom-and-pop auto body shops across New York.
The relationship between a customer and a trusted automobile repair shop
is built on loyalty and confidence. People should not be forced to take
their car elsewhere simply because-their insurance company requires them
to do so.
This legislation will give New York State the tools it needs to confront
these deceptive practices by providing data and legislative recommenda-
tions on labor rates and what constitutes a fair market value for auto
repairs.
PRIOR LEGISLATIVE HISTORY:
New Bill.
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENT:
Minimal.
EFFECTIVE DATE:
Immediately.
STATE OF NEW YORK
________________________________________________________________________
8041
2025-2026 Regular Sessions
IN ASSEMBLY
April 22, 2025
___________
Introduced by M. of A. KAY -- read once and referred to the Committee on
Insurance
AN ACT directing the department of financial services to conduct a study
on the fair market value of labor rates for services covered under
motor vehicle insurance policies
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The department of financial services, in consultation with
2 the department of transportation shall conduct a study and prepare a
3 report on the fair market value of labor rates for services covered
4 under motor vehicle insurance policies.
5 § 2. Within one year of the effective date of this act, the department
6 of financial services, in consultation with the department of transpor-
7 tation shall issue a report of the findings of the study along with
8 recommendations for any appropriate regulatory or legislative actions to
9 the governor, the temporary president of the senate and the speaker of
10 the assembly.
11 § 3. This act shall take effect immediately.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD11619-01-5
