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Thursday, 03 April 2008 09:04

California Bill Blocks Insurer Requirement for AfterMarket Parts

State Senator Migden: “SB 1059 removes the Catch-22 that some insurers put claimants and repairers in when insurers insist that aftermarket parts be used in repairs even though doing this can void their clients’ vehicle warranties.

The California Collision Repair Industry jumped an important hurdle as the Senate Banking and Finance Committee passed Senate Bill 1059. The bill provides that requiring an automotive repair dealer to install an aftermarket part in a vehicle that is under factory warranty is an unfair method of competition and a deceptive act or practice in the business of insurance.

 

Led by CRA board member Lee Amaradio of “Faith”  Quality Auto Body, Murrieta, proponents of the bill exposed numerous misstatements made by insurance lobbyists at the hearing. At one point, Gene Crozat, CRA president---along with more than 40 CRA members---individually announced their support for the bill to the Senators on the Banking, Finance and Insurance Committee who approved the measure by a 6-3 vote. The CAA and many other individuals and organizations spoke in favor of S.B. 1059.

Allen Wood, CRA Executive Director, stated, “Our members lobbied hard in the morning and their efforts were rewarded in the afternoon as six Senators got our message about how CRA members want to protect consumers.”

After the hearing Senator Carole Migden (D-San Francisco/North Bay) issued this statement: “It’s outrageous that legislation is necessary to protect consumers from their own insurance companies, but that is exactly the problem that this bill addresses,” said Migden.  “SB 1059 removes the Catch-22 that some insurers put claimants and repairers in when insurers insist that aftermarket parts be used in repairs even though doing this can void their clients’ vehicle warranties.”

“Suddenly the insurance industry is scrambling for explanations,” stated CRA lobbyist Richard Steffen. “We will be meeting with the insurers [next week] to discuss reality. As I see it there has to be some legal acknowledgement by insurers that they are selling high-priced vehicle insurance policies without telling their policyholders that their new vehicles may be fitted with aftermarket parts that affect their new warranties. Consumers are smart once they have the facts and I don’t think they’ll be happy to learn that insurers are forcing repairers to install crucial non-factory parts on new cars. ”

Steffen noted that key support for the bill came from Rosemary Shahan, executive director of Consumers for Auto Reliability and Safety, law enforcement, the CAA and the California Motor Car Dealers Association.

At one point in the hearing an insurer lobbyist stated that SB 1059 violated federal warranty law. The audience, packed with CRA members, had trouble containing itself over the misstatement. Amaradio was quick to point out that federal law allowed vehicle manufacturers to void warranties if aftermarket parts contributed to operational failure. Committee members were given statements from manufacturers that are routinely sent to repairers regarding warranty issues.

"Is it worth not using $90 OEM AC condenser to burn up an entire air condition system?” Amaradio asked members. He also pointed out that aftermarket parts diminish the value of the vehicle, a point jumped on by the Committee chair Mike Machado (D-Linden) who said a new vehicle warranty was akin to a property right that insurers were taking from new car owners.

 

 

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