If passed, the bill aims to prohibit insurers from charging policyholders extra fees associated with OEM parts if the auto manufacturer recommends they be used in the repair.
According to the bill, “ … many motor vehicle insurers do not allow insureds to decide whether repairs are made with aftermarket parts or original equipment manufacturer parts, and they may in fact refuse to reimburse insureds for the additional costs of installing original equipment manufacturer parts, even when necessary to restore a vehicle to its pre-collision condition.”
Under the state’s current law, the insured pays the difference between the OEM part and aftermarket part if he or she chooses the OEM repair, unless an OEM part is necessary to maintain the manufacturer’s warranty.
The bill, HB 1620, was heard by the House Committee on Intrastate Commerce on Jan. 31.
“Some of the concerns that we have are really with the one word that was added to the bill, which states [that] parts that are recommended have to be used for insurance-paid repairs,” said Ray Colas, government affairs representative for LKQ Corp., during the hearing. “No bill has ever been introduced in any other state with similar language. And it’s very apparent that this is a bill that will attempt to increase the market share of the car companies. Today, the car companies own 64 percent of the market share, while the salvage industry, the remanufacturing industry and the aftermarket industry owns the difference.”
Colas believes the passing of the bill would legislate a monopoly by eliminating the lower cost option of aftermarket parts if insurers were required to pay the difference in cost.
“If you state that the insurance companies must pay the difference, than you eliminate the only benefit to our industry,” he said.
Speaking in favor of the bill, Dale Matsumoto, president of Auto Body Hawaii in Kailua-Kona, Hawaii, iterated that most modern vehicles are equipped with Advanced Driver Assistance Systems (ADAS), making repairs much more technical, and the systems’ functionality can be compromised by the use of non-OEM parts.
“Safety is a huge factor, and I don’t care who says what as far as financial things go. The safety of Hawaii’s people should not be jeopardized no matter what, no matter the cost,” Matsumoto said. “There is no proven fact that there is going to be an increase in cost to the rates. There already is written proof that the use of aftermarket parts will increase a second collision. If there are more damages sustained on a second collision, doesn’t that also increase the liability side? It’s kind of a mixed bag here.
“Say you bought a brand-new car, and I hit your car---you’re okay with aftermarket parts, imitation parts on your car? Are you okay with it? I wouldn’t [be].”
Consumers also weighed in in support of the bill. Kevin Rathbun, a resident of the state, said he owns three modern vehicles. A few years ago, his car was involved in an accident and in need of repairs. Aftermarket parts were ordered but did not fit his car properly, he said, causing the repair to be delayed for a week.
“Having an expensive car, I expect to have the parts on there that the manufacturer suggests that we have,” he added. “If there’s a cost incurred, then that should be a disclosure to us and give us that choice. And currently, it’s very muddy, to say it bluntly, on how to get your car repaired.”
The bill passed the committee hearing favorably with eight “yeas.” A Senate bill with identical language, SB 2243, has been introduced to the Committee on Commerce, Consumer Protection and Health, but has yet to be heard.