HB1193
To Require An Insurer To Include A Lienholder On Payments Made Under An Insurance Policy.
AI-Generated Summary
This bill, House Bill 1193, aims to amend Arkansas law regarding insurance payments for motor vehicle damages. It mandates that when a claim is filed for damages to a motor vehicle with a perfected lienholder, the insurer must issue payment jointly to both the insured or third-party claimant and the lienholder. This requirement applies to claims made with an insurer or in a court of law. However, there are specific exceptions to this rule. The bill does not apply to lienholders without a physical location in Arkansas. Furthermore, it exempts situations where the damage claim is below $2,500 or when payment is made directly to a repair facility for the cost of repairs. The stated purpose is to ensure lienholders are included on payments made under insurance policies for damaged vehicles.
Potential Impact Analysis
Who Might Benefit?
The primary beneficiaries of this bill would be financial institutions and other entities that hold perfected liens on motor vehicles. By requiring insurers to include lienholders on payment checks, the bill aims to ensure that outstanding loan balances are addressed promptly when a vehicle is damaged. This can help protect the lender's interest in the collateral and reduce the risk of them not being repaid if the vehicle's value is diminished or if the vehicle is declared a total loss.
Who Might Suffer?
Insurance companies operating in Arkansas would be most directly impacted by this bill, as they would be required to alter their payment processing procedures. They would need to implement systems to identify and verify lienholders and issue checks jointly. This could lead to increased administrative costs and potentially slower claim processing times, especially if identifying and verifying lienholder information becomes a complex or time-consuming process. Additionally, repair facilities might be indirectly impacted if insurers are slower to process payments due to the new joint payment requirement, potentially affecting their cash flow.