BEDFORD, Texas (Sept. 12, 2003)—Allstate Insurance Co. and its Sterling Collision Centers Inc. subsidiary have filed a lawsuit challenging a Texas law that prevents insurance companies from owning auto repair shops in the state.
The Automotive Service Association said the companies filed the suit against the Texas Attorney General in the District Court of Dallas County, Texas. Gov. Rick Perry signed Texas House Bill 1131 in June, and it became effective Sept. 1.
In their filing, the companies allege the law is unfair to insurer-owned repair shops and hurts competition.
“The real purpose of H.B. 1131 is obvious: to turn the American business model—where competition brings out the best—on its head by protecting and insulating local Texas autobody shops from having to compete with Allstate's…own collision repair operations,” the filing said.
Rather, the companies argue, insurer-owned shops can give customers higher quality and more cost-effective services because of their broader reach and larger volume. The companies are asking that the law be declared unconstitutional.
Allstate acquired Sterling Collision in May 2001. Sterling operates a network of 39 collision repair stores in seven states, including Texas.