North Dakota Bucks Trends by Passing Law Allowing Insurers to Direct Policyholders to Certain Auto Body Shops
North Dakota has decided to buck a trend in the way states approach automotive insurance issues. Most states discourage auto insurance companies from directing their policyholders to certain auto body shops. In other words, they cannot prevent their policyholders from bringing their vehicles to certain collision shops for estimates and repairs. In recent decades, states that have made changes to laws, concerning an insurer’s right to select the repair facility, have typically adjusted their laws towards limiting insurers’ ability to influence where a vehicle is repaired. Lawmakers in North Dakota went in another direction.
Under current law, the North Dakota Unfair Insurance Practices Act makes it illegal for an insurance company to enter, “any agreement to commit, or by any concerted action committing, any act of boycott, coercion, or intimidation resulting in or tending to result in unreasonable restraint of, or monopoly in, the business of insurance.” In response complaints from the public, the state’s Commissioner of Insurance in 1983 issued a bulletin that clarifies that this provision means, “the insurance company is obligated to make an adjustment on the basis of the policy contract. The matter of repairs is strictly between the automobile owner and the repair shop. It is entirely proper for adjusters to assist the owner in selecting a repair shop, but it is not within their authority to require that repairs be accomplished by a designated shop.”
Senate Bill (SB) 2374 would overturn that bulletin. Among other insurance-related provisions, the legislation will allow insurers to issue policies that contain, “a managed repair program provision” that provides for “a specified reduction in premium or other specified incentive for participation in a program restricting an insured’s choice of repair vendors or contractors for covered repairs.”
In its original version, SB 2374 included a line that stipulated, “an insured retains the option to select an insured’s own contractor, subject to the standard policy terms, and request an alternative program contractor.” The American Property Casualty Insurance Association (APCIA) submitted testimony against the bill and noted that it owed its opposition, in part, to this language. APCIA argued that this provision seemed contradictory to the other provision permitting directing policyholders to certain repairers and would “render it ineffective…[I]f the ability to opt out of a program— for which the insured has already received a discount—is not removed, it is difficult to see any insurer choosing to offer such a program under these terms.” The APCIA stated it would oppose the bill unless the lawmakers amended this language.
After advancing out of the Senate Industry and Business Committee on a 5-0 vote and passing on the senate floor on a 45-2 vote, the House Industry, Business, and Labor Committee amended SB 2374 by removing language surrounding an insured’s right to select their own contractor. This change, which was approved on a 7-4 vote, brought this section of the bill in alignment with APCIA’s testimony. The full house then approved this updated version on a 76-17 vote. The house and senate negotiated resolutions to differences – related and unrelated to managed repair programs – in the versions of the bill passed by each chamber. This final version passed 46-1 in the senate and 79-14 in the house. On April 30, 2025, North Dakota Governor Kelly Armstrong (R) signed SB 2374 into law. It will go into effect on August 1, 2025.
Bob Redding is the Automotive Service Association’s Washington, D.C., representative. He is a member of several federal and state advisory committees involved in the automotive industry.
