The California Assembly unanimously passed a bill on July 14 that restricts insurance companies from placing caps on payouts for automobile collision repairs.

The bill, known formally as California Senate Bill 1371 and informally as "the paint capping bill," underwent several amendments after it was passed by the California Senate.

"There were a lot of tweaks made to the original bill," said John Scribner, a spokesperson for California Senator Lou Correa, the author of the bill. "But through all of these tweaks, insurance companies and auto body repairers were able to come into agreement. We call the current bill the 'Kumbaya bill.'"

The latest definition of capping is "...offering or paying an amount that is unrelated to a methodology used in determining paint and materials charges that is accepted by automobile repair shops and insurers." The methodologies, which must be accepted by both automobile repair shops and insurance companies, are determined by multiplying the cost of paint and other materials by the refinishing rate.

Now that the California State Assembly--the lower house of the California legislature--has passed this amended bill, it must be passed again by the California Senate before it can be signed into law by California Governor Arnold Schwarzenegger.

"We anticipate the bill will pass through the Senate again with ease, and we also anticipate that Governor Schwarzenegger will sign the bill into law shortly thereafter," said Scribner.

The American Insurance Association (AIA) lobbied California lawmakers to make certain amendments to the bill and said they were very pleased with the final results.

"We had some concerns about the language of the original bill, but those have been addressed now," said Nicole Mahrt, an AIA spokesperson.

Many other states lack distinct paint capping regulations, while some do not address the paint cap issue at all. Virginia was the most recent state to pass a paint cap law.

For the full text of the bill click here. [PDF]

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Insurers, Auto Body Repairers Sing &quot;Kumbaya&quot; in California

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Insurers, Auto Body Repairers Sing "Kumbaya" in California