'Steering' Cars Should Be Illegal, Connecticut Attorney General Says

(MoneyWatch)  Connecticut Attorney General Richard Blumenthal is a frequent crusader against insurance abuses. In his latest well-publicized battle with auto carriers, he certainly has a point, perhaps a bigger point than even he knows.

Blumenthal is asking his federal counterpart, U.S. Attorney General Eric Holder, to investigate reports that property casualty insurers improperly "steer" motorists with banged up cars to certain body shops where these insurers have cozy deals with the owners. That makes it more likely the parts they use may be cheap, and repairs quick and shoddy.

"Both state and federal law enforcers should send a message: your car, your choice," says Blumenthal, adding that the pressure exerted on policyholders violates a consent decree signed by several insurers almost 50 years ago.

Insurers, who've seen states out west pass laws to prohibit steering, were quick to react to this threat to the bottom line. They fear that local repair shops can, and might, run up bills by turning a dented bumper into a broken frame. Blumenthal's steering charges were "ginned up by a special interest group using the attorney general to line their own pockets," says an insurance flack.

But consider this: while steering may be illegal when it comes to cars, it is quite legal in other parts of the insurance business.

Take health insurance, for example. Insurers routinely tell sick and injured policyholders which doctors they can use, when and under what circumstances they can see specialists, whether they can take certain tests, and what hospitals can perform these procedures. Isn't that "steering?"

Of course, health insurance is far more expensive than car insurance, and with the battle over health care reaching its climax, no one is even talking about this kind of steering.

So, ironically, if Blumenthal has his way, your car could end up in better shape than you are.