Aftermarket Crash Parts - Insurance Premiums
Tempe, AZ 03/12/2001 - A number of State Legislatures around the country are considering legislation that would provide various forms of Consumer Protection as would relate to the auto insurance industry mandating the use of Aftermarket Crash Parts in the repair of Consumers' vehicles.
the US General Accounting Office
Because the insurance industry is regulated on a state level, Aftermarket Crash Parts statutes vary on a state-by-state basis. Following is a breakdown of state consumer protection statutes as quoted from the US General Accounting Office report dated January 2001 and entitled "Motor Vehicle Safety - NHTSA's Ability to Detect and Recall Defective Replacement Crash Parts Is Limited."
NO PROTECTION: The following states have no statute protecting consumers as it relates to an insurance company's ability to mandate Aftermarket Crash Parts . . . AK, DE, ME, MT, NV, NM, ND, PA, SC, VT.
NOTIFICATION ONLY: The following states require only that Consumers be "Notified" that Aftermarket Crash Parts will be used in the repair of their vehicles. Consumers have No Statutory Right to object, only the right to be "Notified" of the insurance company's intent to use . . . AL, AZ, CA, CO, CN, FL, GA, ID, IL, KS, LA, MD, MA, MI, MS, MO, NE, NH, NJ, NC, OK, SD, TN, UT, VA, WA, WV, WI.
UPDATE | New Jersey . . .
It has come to our attention that the report by the United States General Accounting Office, relied upon for this original article, was incomplete as relates to conditions in New Jersey. While New Jersey policyholders do not have the right of "Consumer Approval", their interests are partially protected by the New Jersey Administrative Code [NJAC 11:2-17.10(a)10,11,12] which requires specific standards After Market Parts must meet before insurers are permitted to utilize them. First Party Policyholders, wishing to object to their own insurer utilizing After Market Parts, can appeal to the New Jersey Department of Insurance. Third Party Claimants, dealing with the other party's insurer, have a right of recourse through Small Claims or Special Civil Court.
CONSUMER APPROVAL: The following states require Consumer Consent prior to Aftermarket Crash Parts being used in the repair of their vehicles . . . AR, HI, IN, OH, OR, RI, TX, WY.
BANNED: Insurance companies Can Not require the use of Aftermarket Crash Parts in MINNESOTA !
INSURANCE PREMIUMS: In virtually every state that had enacted some form of Consumer Protection Legislation, the insurance and Aftermarket Crash Parts interests had lobbied against such Bills. The primary point they tried to drive home was that such legislation would cause an increase in auto insurance premiums. However, history has shown just the opposite to be true. In almost every state, where some form of Consumer Protection Legislation has been enacted, there have been auto insurance premium rate REDUCTIONS over the past 3 - 5 years.
Probably the most dramatic example to debunk the warnings of premium rate increases would be the experience of Consumers in Minnesota. Auto insurance premium rates have actually gone DOWN since Minnesota virtually Banned the use of Aftermarket Crash Parts. AND . . . on June 12 2000, State Farm Insurance (the state's leading auto insurer) supplemented their pattern of Premium Rate Reductions by declaring a "Premium Refund Dividend" of $13.4 Million to be returned to their Minnesota Policyholders.
Premium Rate Patterns in Other States simply Do Not support warnings of Premium Rate Increases.
The United States General Accounting Office report referenced herein can be accessed on the InterNet at www.gao.gov. The report Title is referenced above. The report number is GAO-01-225. The primary focus of this report is directed toward the safety of Aftermarket Crash Parts and NHTSA's ability to "Track" and "Recall" such parts when found to be defective. While the report determined that evidence on the issue of "Safety" was anecdotal and insufficient to draw a conclusion, the report did identify several internal problems within NHTSA which virtually nullify NHTSA's ability to Track and Recall any defective Aftermarket Crash Parts.
The US/GAO study was not intended to specifically address the "Like, Kind and Quality" issue as it relates to Aftermarket Crash Parts. However, the report did make one definitive statement as it relates to the auto insurance policy language "LKQ" issue. On page # 10 of the report, the US/GAO states . . . "we saw aftermarket crash parts that were clearly different from their OEM counterparts".
CONCLUSION: Consumers should have the Right-to-Decide whether Aftermarket Crash Parts are used to repair their own vehicles. Warnings of Premium Rate Increases, found to be groundless in other states, should Not stand in the way of a Consumer's Right to Choose.