Steered wrong?

When Joe Spiridonoff's car was vandalized in Santa Rosa last year, he took it to G&C AutoBody for repairs.

But Spiridonoff's insurer told him G&C isn't one of its "preferred" repair shops and he'd have to cover any difference in the cost, he said.

"He really wanted me to go somewhere else," said Spiridonoff, who'd done business with G&C in the past and was happy with its work. He felt pressured to use one of his insurer's approved shops, Spiridonoff said.

"I was very uncomfortable with it," he said.

Some insurers are "steering" customers to their approved repair shops, despite a California law that lets policyholders choose a shop they prefer, according to state Sen. Pat Wiggins, D-Santa Rosa.

She's sponsoring legislation in Sacramento that would make it harder for insurers to direct customers to pre-selected repair shops.

Carriers strongly deny they steer customers, although most have "direct repair programs," agreements with selected repair shops to fix policyholders' cars for set rates.

Insurers insist they only advise customers about the preferred repair shops when they haven't already made a choice.

"It's totally up to the customer as to where they send their car to be repaired," said Lonny Haskins, a spokesman for State Farm, California's largest auto insurer. "We don't steer customers."

The insurance industry has come out in force against Wiggins' bill, however, saying it hurts consumers by denying them information about their options.

A coalition of auto repair shops is pushing hard for Wiggins' legislation, saying consumers often get substandard repairs when they are steered to an insurer's preferred shop.

The practice may save insurers money, but it hampers competition and frustrates consumers, said Gene Crozat, who owns G&C Auto Body and heads the Collision Repair Association of California, a Santa Rosa-based group that represents about 200 repair shops statewide.

"Consumers have complained forever that they've been told where to go," said Crozat. "When you can't go to the company you want, there's something inherently wrong."

The dispute promises to spark a political donnybrook in Sacramento, where the insurance industry wields lots of clout.

"There's so much money involved," said Jeff Fuller, a vice president at the Association of California Insurance Companies.

On Friday, Wiggins appeared at a news conference at Crozat's shop to promote her bill, SB 1167. She pointed to a stack of complaints from consumers and said carriers are taking advantage of a loophole in California's anti-steering law.

"Insurers are discouraging consumers from going outside their networks," she said.

At the news conference, two Sonoma County residents said their carriers tried to steer them elsewhere when they took their damaged cars to G&C.

Wiggins' bill would tighten the law, making an insurer ask whether a policyholder has chosen a repair shop before recommending one of its own. If the consumer has already selected a shop, the insurer would be barred from discussing the matter further.

Industry groups said Wiggins' legislation violates insurers' speech rights and keeps important information from their policyholders.

"Consumers should be able to choose any body shop they want following a crash, but they also deserve to know whether or not a particular body shop will stand by their work," said Rex Frazier, who heads the Personal Insurance Federation of California.

The state Department of Insurance, which enforces California's insurance laws, hasn't taken a position on the bill.

The department receives complaints about steering, but it can be hard to determine whether an insurer has broken the law, said Bill Gausewitz, an attorney for Insurance Commissioner Steve Poizner.

"It's a fine line between steering and providing information," Gausewitz said. "We get complaints, investigate them and resolve them as best we can."

Steering is a safety issue, said Rosemary Shahan of Consumers for Auto Reliability and Safety, a public interest lobbying group in Sacramento.

"A car that's been in a collision may not be safe to drive if it's not repaired properly," Shahan said.

Insurers try to save money by directing customers to pre-approved repair shops, she said.

"They don't have your best interests at heart if they're cutting corners to save money," Shahan said.

Insurers deny their referral programs result in substandard repairs. Carriers choose shops "with a proven track record of quality repairs, warranties and a hassle-free claims process," said Janine Gibford, a vice president with the American Insurance Association.

But Crozat's group pointed to a 2007 study by J.D. Power and Associates that found quality suffered in one major insurer's direct repair program.

No hearing date has been set for Wiggins' bill.

You can reach Staff Writer Steve Hart at 521-5205 or steve.hart@pressdemocrat.com.