A Rhode Island law now prohibits insurers from systematically underpaying independent auto body shops based on preferred-shop pricing.
Most independent auto body shop owners in Rhode Island don't realize they now have legal protection against a practice that has cost them thousands of dollars per year: insurers paying them less than their documented reasonable repair charges simply because those charges exceed what the insurer's preferred or network shops would have charged.
That protection comes from a provision buried in S3115, which Rhode Island passed to address total-loss vehicle declarations. While the bill's main focus raises the threshold for declaring a vehicle a total loss from 80% to 85% of its value, the real news for independent shops is Section 1, subsection (b)(3) on Page 6.
The law now requires insurers to pay independent auto body shops their full documented reasonable repair costs—without discount or reduction simply because those costs are higher than what an insurer's preferred shops charge.
This sounds straightforward, but it addresses a systematic problem. Before this provision, insurers routinely told independent shops: "Your documented repair cost is $5,000, but our network shop would charge $4,200, so we're paying you $4,200." The insurer was using its own preferred-shop pricing as a ceiling, regardless of whether the independent shop's charges were reasonable and documented.
That practice forced independent shops into an impossible choice: accept below-cost payments, turn away insurer-referred work, or eat the loss. Many did all three, which is why this provision matters.
This protection applies to independent auto body shops—not insurer-owned or preferred-network shops. If you're an independent operator and you submit documented, reasonable repair charges to an insurer, the insurer cannot now reduce your payment based solely on what their preferred shops would have charged.
The provision does not prevent insurers from negotiating rates or questioning whether charges are reasonable. It simply prohibits using preferred-shop pricing as an automatic discount lever.
The provision became effective upon passage of S3115. There is no delayed implementation or phase-in period. If you've already submitted claims under the old rules, this doesn't retroactively change those payments—but going forward, this is the standard.
Document your repair charges carefully and consistently. The law protects "documented reasonable" charges, so your invoices, labor rates, and parts pricing need to support what you're billing. If an insurer still tries to reduce your payment based on preferred-shop pricing alone, you have grounds to push back and cite Section 1, subsection (b)(3) of S3115.
This is not a guarantee that every charge will be accepted without question—insurers can still dispute whether a charge is reasonable or necessary. But it does mean they cannot use preferred-shop pricing as an automatic discount.
For a detailed, shop-specific guide to S3115 and how it affects your claims process, contact your local Rhode Island auto service association or business advisor.