Indiana body shop laws: what insurers and shops must do

What it means in Indiana

Indiana's statutes don't say whether an insurer may require or recommend a shop. The insurer can't misrepresent what the policy says; whether a given steering statement does that is a question for the Department of Insurance or a lawyer. Before an insurer directs a body shop to fix an insured's car, it must give the insured written notice of their right to approve the type of body parts. That notice rule covers cars up to five years past their model year.

Indiana's statutes do not say whether an insurer may require or recommend a particular shop; whether a given steering statement misrepresents the policy under IC 27-4-1-4.5(1) is a question for the Department of Insurance or counsel. The parts-notice rule protects insureds, not third-party claimants, for the model year and five years after. The Department's Bulletin 71 (1991) interprets that rule; read it on the Department's website. Unfair claim practice complaints go to the Indiana Department of Insurance.

The law's own words

From a list that begins: “The following are unfair claim settlement practices:”

“(1) Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue.”

IC 27-4-1-4.5

From a list that begins: “The following are unfair claim settlement practices:”

“(6) Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear.”

IC 27-4-1-4.5

“An insurer that is obligated to pay at least part of the cost of repairing the exterior of a motor vehicle under an insurance policy issued by the insurer may not direct a body shop to repair the motor vehicle until the insurer has presented the insured with a written notice that meets the requirements set forth in subsections (b) and (c).”

IC 27-4-1.5-8

What it means in Indiana

No rule in our Indiana collection requires the insurer to pay storage or give notice before it stops. If you store or repair a car at the owner's request, you have a lien for reasonable storage charges. Under the repair and storage lien statute, storage costs can't exceed $1,500, and storage on an abandoned vehicle is generally capped at $2,000. A towing service that doesn't notify the owner or lender as required can't collect storage that builds up after it gets their address.

The $1,500 limit is in the repair and storage lien statute. No rule in our Indiana collection requires an insurer to pay storage or give notice before it stops.

The law's own words

Shop

“A person that performs labor, furnishes materials or storage, or does repair work on a vehicle at the request of the owner of the vehicle has a mechanic's lien on the vehicle for the reasonable value of the charges for the labor, materials, storage, or repairs.”

IC 9-22-6-2, Indiana Code 2026 edition

Shop

“The costs of storing a motor vehicle may not exceed one thousand five hundred dollars ($1,500).”

IC 32-33-10-5, Indiana Code 2026 edition

Shop

“Except as provided in subsection (c), the costs for storage of an abandoned vehicle may not exceed two thousand dollars ($2,000).”

IC 9-22-1-4, Indiana Code 2026 edition

Tow and storage lot

“Notwithstanding section 4 of this chapter, a public agency or towing service that fails to notify the owner of or lienholder on the vehicle as set forth in this subsection may not collect additional storage costs incurred after the date of receipt of the name and address obtained.”

IC 9-22-1-19, Indiana Code 2026 edition

What it means in Indiana

You have a mechanic's lien for the reasonable value of your work and storage, though the statute doesn't use the words "keep the car." If the bill isn't paid and the car isn't claimed within 30 days after it came in, you can advertise it in the local paper and send certified letters to the owner and every lender on the title naming the auction date. The sale must wait 15 days after both the ad and the letters. The sale route also requires the steps in IC 9-22-1-19, a towing statute; how that applies to a repair shop is a question for a lawyer.

IC 9-22-6-2 does not use the words "retain possession." Its sale route cross-references IC 9-22-1-19, a section written for towing services and public agencies; how that applies to a repair shop is a question for counsel. No owner bond release appears for repair shops.

The law's own words

Keep the car

“A person that performs labor, furnishes materials or storage, or does repair work on a vehicle at the request of the owner of the vehicle has a mechanic's lien on the vehicle for the reasonable value of the charges for the labor, materials, storage, or repairs.”

IC 9-22-6-2, Indiana Code 2026 edition

Sell or title it

From a list that begins: “A person that has a mechanic's lien on a vehicle under subsection (a) or (b) may advertise the vehicle for sale if the person followed the procedures described in IC 9-22-1-19 and if:”

“(1) the charges made under subsection (a) or (b) are not paid; and (2) the vehicle is not claimed; within thirty (30) days after the date on which the vehicle is left in or comes into the possession of the person for repairs, storage, towing, or the furnishing of materials.”

IC 9-22-6-2, Indiana Code 2026 edition

Sell or title it

From a list that begins: “In addition to the advertisement required under subsection (d), the person that holds the mechanic's lien under this section or under IC 9-22-1-21.5(c)”

“must notify the owner of the vehicle and any other person that holds a lien of record, as indicated on the certificate of title of the vehicle or discovered as a result of the search described in IC 9-22-1-19, by certified mail, return receipt requested, at the last known address of the owner or person, as applicable, that the vehicle will be sold at public auction on a specified date”

IC 9-22-6-2, Indiana Code 2026 edition

Sell or title it

From a list that begins: “A person that holds a mechanic's lien under this section shall execute and deliver to the purchaser of a vehicle under this section or under IC 9-22-1-21.5 a sales certificate in the form designated by the bureau, setting forth the following information:”

“Whenever the bureau receives from the purchaser an application for certificate of title accompanied by these items, the bureau shall issue a certificate of title for the vehicle under IC 9-17.”

IC 9-22-6-2, Indiana Code 2026 edition

What it means in Indiana

Indiana gives the insured the choice of parts. Before an insurer paying for exterior body work directs a shop to repair the car, it must give the insured written notice of the right to approve the parts type (new OEM, new non-OEM, or used) and a chance to choose in writing. Refusing to pay for, or direct the shop to use, the type chosen is an unfair claim settlement practice. This applies only for 5 years after the model year.

The chapter covers body parts (exterior sheet metal or plastic, including inner and outer panels) under policies issued or renewed after June 30, 1991, and protects the insured. Under IC 27-4-1.5-13, the insurer's duties count as performed if its agent or the body shop it directs performs them.

The law's own words

Insurer

“An insurer that is obligated to pay at least part of the cost of repairing the exterior of a motor vehicle under an insurance policy issued by the insurer may not direct a body shop to repair the motor vehicle until the insurer has presented the insured with a written notice that meets the requirements set forth in subsections (b) and (c).”

IC 27-4-1.5-8, Indiana Code 2026 edition

Insurer

From a list that begins: “An insurer described in subsection (a) shall present the insured with a written notice that does the following:”

“(1) Informs the insured that the insured has a right to approve the type of body parts to be used in the repair of the motor vehicle.”

IC 27-4-1.5-8, Indiana Code 2026 edition

Insurer

“(2) Gives the insured an opportunity, in approving the type of body parts to be used in the repair of the motor vehicle, to select from among the following: (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. (C) Used body parts.”

IC 27-4-1.5-8, Indiana Code 2026 edition

Insurer

“(c) An insurer described in subsection (a) shall give the insured an opportunity to indicate in writing the type of body part that the insured approves for use in the repair of the motor vehicle. (d) This section applies only in the five (5) years after the model year of the motor vehicle.”

IC 27-4-1.5-8, Indiana Code 2026 edition

Insurer

From a list that begins: “An insurer that:”

“(2) refuses to: (A) pay for; or (B) direct a body shop to use; the type of body parts approved by the insured under section 8(c) of this chapter in the repair of the motor vehicle; commits an unfair claims settlement practice under IC 27-4-1-4.5.”

IC 27-4-1.5-12, Indiana Code 2026 edition

What it means in Indiana

Indiana's captured law has no appraisal statute: nothing in it requires an appraisal clause or says who can demand one. Its unfair claims list is the fallback: lowballing your customer into suing, not trying in good faith to settle once liability is clear, not explaining a compromise offer, and making known a policy of appealing arbitration awards to force smaller settlements. Whether a policy's appraisal clause applies, and how these rules are enforced, is a question for the Department of Insurance or a lawyer.

The captured text of IC 27-4-1-4.5 lists unfair claim settlement practices but does not itself state who enforces them or give a right to sue.

The law's own words

Other dispute rules

From a list that begins: “The following are unfair claim settlement practices:”

“(7) Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds.”

IC 27-4-1-4.5, Indiana Code 2026 edition

Other dispute rules

From a list that begins: “The following are unfair claim settlement practices:”

“(6) Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear.”

IC 27-4-1-4.5, Indiana Code 2026 edition

Other dispute rules

From a list that begins: “The following are unfair claim settlement practices:”

“(14) Failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement.”

IC 27-4-1-4.5, Indiana Code 2026 edition

Other dispute rules

From a list that begins: “The following are unfair claim settlement practices:”

“(11) Making known to insureds or claimants a policy of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration.”

IC 27-4-1-4.5, Indiana Code 2026 edition

What it means in Indiana

Indiana has no law on how the insurer sets the labor rate and no labor rate survey rule. The nearest rules are unfair claim practices when done as a general practice: not trying in good faith to settle fairly once liability is reasonably clear, lowballing an insured into suing, and not explaining a compromise offer. The law gives no right to sue over them. Whether they reach a labor rate dispute is a question for the Department of Insurance or a lawyer.

The section 4.5 practices become unfair methods under section 4 when committed often enough to indicate a general practice. Indiana's body-parts rules, which let the insured approve the type of parts on vehicles within five years of the model year, do not address labor rates.

The law's own words

Related claim rule

“(16) Committing or performing, with such frequency as to indicate a general practice, unfair claim settlement practices (as defined in section 4.5 of this chapter).”

IC 27-4-1-4, Indiana Code 2026 edition

Related claim rule

From a list that begins: “The following are unfair claim settlement practices:”

“(6) Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear.”

IC 27-4-1-4.5, Indiana Code 2026 edition

Related claim rule

From a list that begins: “The following are unfair claim settlement practices:”

“(7) Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds.”

IC 27-4-1-4.5, Indiana Code 2026 edition

Related claim rule

From a list that begins: “The following are unfair claim settlement practices:”

“(14) Failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement.”

IC 27-4-1-4.5, Indiana Code 2026 edition

Related claim rule

“Sec. 18. This article does not create a cause of action other than an action by: (1) the commissioner to enforce his order; or (2) a person, as defined in section 1 of this chapter, to appeal an order of the commissioner.”

IC 27-4-1-18, Indiana Code 2026 edition

What it means in Indiana

Indiana has no rule on capping paint and materials. The unfair claims law bars the insurer, as a general practice, from failing to try in good faith to settle promptly and fairly once liability is reasonably clear, and from failing to promptly explain the basis for a compromise offer. Whether a low materials allowance breaks these rules is a question for the Department of Insurance or a lawyer.

An unfair claim settlement practice counts as an unfair or deceptive act only when committed with such frequency as to indicate a general practice.

The law's own words

Related claim rule

“Committing or performing, with such frequency as to indicate a general practice, unfair claim settlement practices (as defined in section 4.5 of this chapter).”

IC 27-4-1-4, Indiana Code 2026 edition

Related claim rule

From a list that begins: “The following are unfair claim settlement practices:”

“Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear.”

IC 27-4-1-4.5, Indiana Code 2026 edition

Related claim rule

From a list that begins: “The following are unfair claim settlement practices:”

“Failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement.”

IC 27-4-1-4.5, Indiana Code 2026 edition

What it means in Indiana

Indiana sets no number of days to acknowledge, decide or pay a claim: the insurer must only respond reasonably promptly, investigate promptly, accept or deny within a reasonable time after proof of loss, and settle in good faith once liability is reasonably clear. The Commissioner can impose civil penalties up to $25,000 per violation, or $50,000 if knowing. Whether a delay is too long is a question for the Department of Insurance or a lawyer.

These practices are violations when committed often enough to indicate a general practice, and penalties follow a hearing and a cease and desist order. The article creates no private cause of action.

The law's own words

Respond

From a list that begins: “The following are unfair claim settlement practices:”

“(2) Failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies.”

IC 27-4-1-4.5, Indiana Code 2026 edition

Accept or deny

From a list that begins: “The following are unfair claim settlement practices:”

“(3) Failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies.”

IC 27-4-1-4.5, Indiana Code 2026 edition

Accept or deny

From a list that begins: “The following are unfair claim settlement practices:”

“(5) Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed.”

IC 27-4-1-4.5, Indiana Code 2026 edition

Pay

From a list that begins: “The following are unfair claim settlement practices:”

“(6) Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear.”

IC 27-4-1-4.5, Indiana Code 2026 edition

If late

From a list that begins: “the commissioner may at his discretion order one (1) or more of the following:”

“(1) Payment of a civil penalty of not more than twenty-five thousand dollars ($25,000) for each act or violation. If the person knew or reasonably should have known that he was in violation of this chapter, the penalty may be not more than fifty thousand dollars ($50,000) for each act or violation.”

IC 27-4-1-6, Indiana Code 2026 edition