CRA members report that every day insurers wants aftermarket parts placed on new cars. Radiators and AC condensers are common examples of parts that should be OEM. One CRA member in Southern California was involved in a situation where the auto manufacturer would not honor the warranty on a cracked head gasket after the insurer required that the damaged 2006 vehicle be fitted with an aftermarket radiator that later failed.
The CRA asked Senator Migden to carry this legislation to demonstrate the extremes to which insurers will go to control repair work subject to a contract between the vehicle owners and the repairer, not the insurer.
The bill seeks to amend a long list of actions that are “unfair claims practices” and, thus, illegal. The bill simply adds this provision: (i) Requiring an automotive repair dealer to install an aftermarket part in a vehicle that is under factory warranty.
CRA lobbyist Richard Steffen emphasized that the key provision in the bill is “require.” An insurer may ask that an aftermarket part be used, and that part may be installed if the repairer and the consumer consent. But in those cases where the repairer believes that “factory is best,” the insurer would not be able to override this decision if SB 1059 were law.
CRA Executive Director Allen Wood stated, “After buying a home, a consumer’s second most common major purchase is a new car. A major incentive for buying a new car is the manufacturer’s warranty that covers the cost of repairs during the length of the warranty.
Californians bought 1,125,678 new vehicles in 2006. SB 1059 adds a layer of protection to the new vehicle warranty.” Violations of this act would carry a penalty to the insurer of $5,000 to $10,000 per occurrence.