SB3536 104TH GENERAL ASSEMBLY

LRB104 17057 BAB 30472 b

104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
SB3536

Introduced 2/5/2026, by Sen. Chapin Rose

SYNOPSIS AS INTRODUCED:

215 ILCS 5/154.6	from Ch. 73, par. 766.6
215 ILCS 5/155.29a new

Amends the Illinois Insurance Code. Defines terms. Provides that "insurer" means a company, firm, partnership, association, order, society, or system that is obligated to pay at least part of the cost of repairing the exterior of an insured's motor vehicle under an insurance policy issued by the company, firm, partnership, association, order, society, or system. Provides that an insurer may not direct a body shop to repair an insured's motor vehicle until the insurer or its agent has given the insured written notice that meets certain requirements. Sets forth requirements for the content of the written notice. Provides that an insurer or its agent shall give an insured an opportunity to indicate in writing the type of body parts that the insured approves for use in the repair of the insured's motor vehicle. Provides that an insurer who violates certain requirements commits an improper claims practice. Provides that the requirements of the amendatory provisions apply only for 5 years after the model year of the applicable motor vehicle. Provides that the requirements of the amendatory provisions may be fulfilled on behalf of an insurer by the body shop that is directed by the insurer to repair the applicable motor vehicle. Makes a conforming change.

A BILL FOR

AN ACT concerning regulation.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Insurance Code is amended by changing Section 154.6 and by adding Section 155.29a as follows:

(215 ILCS 5/154.6) (from Ch. 73, par. 766.6)

Sec. 154.6. Acts constituting improper claims practice. Any of the following acts by a company, if committed without just cause and in violation of Section 154.5, constitutes an improper claims practice:

(a) Knowingly misrepresenting to claimants and insureds relevant facts or policy provisions relating to coverages at issue;

(b) Failing to acknowledge with reasonable promptness pertinent communications with respect to claims arising under its policies;

(c) Failing to adopt and implement reasonable standards for the prompt investigations and settlement of claims arising under its policies;

(d) Not attempting in good faith to effectuate prompt, fair and equitable settlement of claims submitted in which liability has become reasonably clear;

(e) Compelling policyholders to institute suits to recover amounts due under its policies by offering substantially less than the amounts ultimately recovered in suits brought by them;

(f) Engaging in activity which results in a disproportionate number of meritorious complaints against the insurer received by the Insurance Department;

(g) Engaging in activity which results in a disproportionate number of lawsuits to be filed against the insurer or its insureds by claimants;

(h) Refusing to pay claims without conducting a reasonable investigation based on all available information;

(i) Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed;

(j) Attempting to settle a claim for less than the amount to which a reasonable person would believe the claimant was entitled, by reference to written or printed advertising material accompanying or made part of an application or establishing unreasonable caps or limits on paint or materials when estimating vehicle repairs;

(k) Attempting to settle claims on the basis of an application which was altered without notice to, or knowledge or consent of, the insured;

(l) Making a claims payment to a policyholder or beneficiary omitting the coverage under which each payment is being made;

(m) Delaying the investigation or payment of claims by requiring an insured, a claimant, or the physicians of either to submit a preliminary claim report and then requiring subsequent submission of formal proof of loss forms, resulting in the duplication of verification;

(n) Failing in the case of the denial of a claim or the offer of a compromise settlement to promptly provide a reasonable and accurate explanation of the basis in the insurance policy or applicable law for such denial or compromise settlement;

(o) Failing to provide forms necessary to present claims within 15 working days of a request with such explanations as are necessary to use them effectively;

(p) Failing to adopt and implement reasonable standards to verify that a repairer designated by the insurance company to provide an estimate, perform repairs, or engage in any other service in connection with an insured loss on a vehicle is duly licensed under Section 5-301 of the Illinois Vehicle Code;

(q) Failing to provide as a persistent tendency a notification on any written estimate prepared by an insurance company in connection with an insured loss that Illinois law requires that vehicle repairers must be licensed in accordance with Section 5-301 of the Illinois Vehicle Code;

(q-5) Violating subsection (e) of Section 155.29a;

(r) Failing to pay the replacement vehicle use or occupation tax, title, and transfer fees required by Section 154.9 of this Code;

(s) Engaging in any other acts which are in substance equivalent to any of the foregoing.

(Source: P.A. 102-69, eff. 7-1-22.)

(215 ILCS 5/155.29a new)

Sec. 155.29a. Motor vehicle insurance; body parts used in the repair of a motor vehicle.

(a) As used in this Section:

"Body part" means a replacement for any of the nonmechanical sheet metal or plastic parts that generally constitute the exterior of a motor vehicle. "Body part" includes the inner and outer panels of the body of a motor vehicle.

"Body shop" means a business that repairs damage to the exterior of motor vehicles.

"Insured" means a person who is entitled to the coverage provided by an insurance policy.

"Insurer" means a company, firm, partnership, association, order, society, or system that is obligated to pay at least part of the cost of repairing the exterior of an insured's motor vehicle under an insurance policy issued by the company, firm, partnership, association, order, society, or system. "Insurer" includes associations operating as Lloyds, reciprocal or inter-insurers, and individual underwriters.

"Motor vehicle" means a vehicle that is self-propelled. "Motor vehicle" does not include a farm tractor, an implement of agriculture designed to be operated primarily in a farm field or on farm premises, an electric bicycle, an electric foot scooter, or an electric personal assistive mobility device.

"New body part" means a body part that has not previously been attached to a motor vehicle.

"Used body part" means a body part that has previously been attached to a motor vehicle.

(b) An insurer may not direct a body shop to repair an insured's motor vehicle until the insurer or its agent has given the insured written notice that meets the requirements set forth in subsection (c).

(c) An insurer or its agent shall give an insured written notice that complies with the following:

(1) the written notice informs the insured that the insured has a right to approve the type of body parts used in the repair of the motor vehicle; and

(2) the written notice gives the insured an opportunity, in approving the type of body parts used in the repair of the motor vehicle, to select from the following categories:

(A) new body parts manufactured by or for the manufacturer of the motor vehicle;

(B) new body parts that were not manufactured by or for the manufacturer of the motor vehicle; and

(C) used body parts.

(d) An insurer or its agent shall give an insured an opportunity to indicate in writing the type of body parts that the insured approves for use in the repair of the insured's motor vehicle.

(e) An insurer who does any of the following actions commits an improper claims practice under Section 154.6:

(1) the insurer or its agent does not give an insured written notice and directs a body shop to repair the insured's motor vehicle;

(2) the insurer or its agent does not meet the requirements set forth in subsection (c) or (d) and directs a body shop to repair the insured's motor vehicle;

(3) the insurer or its agent gives an insured an opportunity to indicate in writing the type of body parts that the insured approves for use in the repair of the insured's motor vehicle and directs a body shop to repair the motor vehicle using a type of body part that is different from the type of body part that the insured approved; or

(4) the insurer or its agent gives an insured an opportunity to indicate in writing the type of body parts that the insured approves for use in the repair of the insured's motor vehicle and refuses to pay for the type of body parts that the insured approved or refuses to direct a body shop to use the type of body parts that the insured approved in the repair of the motor vehicle.

(f) The requirements of this Section apply only for 5 years after the model year of the applicable motor vehicle.

(g) The requirements of this Section may be fulfilled on behalf of an insurer by the body shop that is directed by the insurer to repair the applicable motor vehicle.