Lawmakers in Utah are reviewing House Bill 119, a proposal that would update automobile insurance requirements, establish standards for repair parts used in insurance work, and expand the state insurance department's rulemaking authority.
Under HB 119, auto insurance policies would be required to cover the difference between a vehicle's market value before and after an accident. The bill grants the insurance commissioner authority to create rules defining how this value difference is calculated.
Additionally, the legislation prohibits insurers from reducing coverage when a "permissive" driver, named insured, or other defined person is at fault, provided the claim is filed by the policyholder or a named insured, according to a report from Best Wire.
Regulations on repair parts
The bill also addresses vehicle repair standards. It allows repair shops to use non-original equipment manufacturer (non-OEM) crash parts if they are equal in quality and function to OEM parts. Insurers cannot mandate the use of non-OEM parts unless the policyholder receives written notice in advance, clearly stating that the parts are not from the vehicle’s original manufacturer.
HB119 further establishes a private right of action, enabling vehicle owners to pursue damages if a repair shop violates these provisions. Under the bill, courts could award actual damages caused by the violation, although the shop would not face additional penalties from state regulators for the same offense, the report said.
Potential impact to policyholders
If enacted, HB119 could increase claims costs for insurers, particularly for high-value vehicles, by requiring coverage for post-accident market value differences. Allowing non-OEM parts while requiring disclosure may reduce repair costs for some claims, but insurers could face administrative burdens ensuring compliance with notice requirements. The private right of action introduces potential litigation risk, as policyholders could challenge repair shops, indirectly affecting insurers that work with those shops.
Insurers may also need to update policy language, adjust pricing models, and strengthen claims oversight to account for these new requirements. For the broader Utah market, the bill could influence competition, as carriers that efficiently manage compliance and repair networks may gain a competitive advantage.
Overall, HB119 reflects a growing legislative trend to increase consumer protections while balancing repair cost management, and its adoption could set a precedent for other states considering similar auto insurance reforms.
Utah's auto insurance market
Utah’s private passenger auto insurance market is concentrated among a handful of carriers. In 2024, the five largest writers based on direct premiums written were Progressive Insurance Group (18.87%), State Farm Group (16.01%), Allstate Insurance Group (11.24%), Berkshire Hathaway Insurance Group (7.46%), and Bear River Mutual Insurance Co. (6.58%).
Similar legislation is under consideration in Ohio, where lawmakers are exploring requirements for insurers to disclose the use of OEM versus non-OEM parts, offer policies covering OEM replacements, and provide consumers a choice in parts used for repairs.
