Local news stories affecting the auto body industry in California, Nevada, Oregon, Washington, Idaho, Montana, Hawaii, Alaska and Wyoming
The California Insurance Commissioner's office has released the following NOTICE, saying, in part, that
California Code of Regulations, Title 10, Chapter 5, Subchapter 7.5, Article 1, Fair Claims Settlement Practices Regulations, Section 2695.8(g) reads:
g) No insurer shall require the use of non-original equipment manufacture replacement crash parts in the repair of an automobile unless:
(1) the parts are at least equal to the original equipment manufacturer parts in terms of kind, quality, safety, fit, and performance;
(2) insurers specifying the use of non-original equipment manufacturer replacement crash parts shall pay the cost of any modifications to the parts which may become necessary to effect the repair; and,
(3) insurers specifying the use of non-original equipment manufacture replacement crash parts warrant that such parts are of like kind, quality, safety, fit, and performance as original equipment manufacturer replacement crash parts; and,
(4) all original and non-original manufacture replacement crash parts, manufactured after the effective date of this subchapter, when supplied by repair shops shall carry sufficient permanent, non-removable identification so as to identify the manufacturer. Such identification shall be accessible to the greatest extent possible after installation; and,
(5) the use of non-original equipment manufacturer replacement crash parts is disclosed in accordance with section 9875 of the California Business and Professions Code.
Requirement for Permanent, Non-Removable Identification.
Insurers are reminded that CCR Section 2695.8(g)(4) requires that “all original and non-original manufacture replacement crash parts, manufactured after the effective date of this subchapter, when supplied by repair shops shall carry sufficient permanent, non-removable identification so as to identify the manufacturer.” An admitted insurer shall not require that a repair shop install non-original manufacture replacement crash parts, or limit payment to the cost of a non-original manufacture replacement crash part, unless those parts comply with section 2695.8(g)(4) and carry sufficient permanent, non-removable identification so as to identify the manufacturer. An admitted insurer shall not limit payment to the cost of a non-original manufacture replacement crash part for any part that does not carry sufficient permanent, non-removable identification so as to identify the manufacturer.
Use of Non-Original Equipment Manufacture Replacement Crash Parts.
Insurers are also reminded that CCR Section 2695.8(g)(1) provides that no insurer shall require the use of non-original equipment manufacture replacement crash parts in the repair of an automobile unless “the parts are at least equal to the original equipment manufacturer parts in terms of kind, quality, safety, fit, and performance” (emphasis added). CCR Section 2695.8(g)(3) requires that “insurers specifying the use of non-original equipment manufacture replacement crash parts warrant that such parts are of like kind, quality, safety, fit, and performance as original equipment manufacturer replacement crash parts.” The required use, or payment of the cost, of a non-original equipment manufacturer replacement crash part that is not equal in terms of like kind, quality, safety, fit, and performance as compared to the original equipment manufacturer replacement part may subject the insurer to further action by this Department.
It has come to the Department’s attention that certain aftermarket bumper reinforcement bars may be significantly different in terms of like kind, quality, safety, fit, and performance as compared to the original equipment manufacturer replacement part. All insurers doing business in California are reminded of the above noted standards for the use of non-original equipment manufacturer (aftermarket) replacement crash parts.
Any questions should be directed to Teresa Campbell, Senior Staff Counsel, at (415) 538-4126 or email@example.com.
The California Department of Insurance (CDI) has sent a notice (see also related stories) to all California insurers reminding them of their requirement to warrant all non-original equipment manufacture replacement crash parts to be at least equal to original equipment in terms of kind, quality, safety, fit, and performance. This reinforces their liability in the process. The CDI also warned insurers as to the use of non-compliant parts in settlement offers.
CRA President Lee Amaradio Stated "This official notice was the culmination of numerous meetings with CDI, numerous letters written that required a response from the Commissioner and a press conference that was held by Assembly Member Dave Jones in which Toby Chess was a participant. We have received numerous calls from the Industry asking, why our position is so drastically different than CAA, and why are they claiming that the notice is a result of their efforts. First and foremost they are entitled to their position. Their position was limited to tracking and identification of parts. The only entity that voiced similar views is the Aftermarket parts industry. Our Position is based on the law and before you make a decision you should take time to review the regulations and statutes that relate to this issue."
Amaradio added, "When Non-compliant parts are used to establish settlement the claim is paid short. CRA's position is to protect the consumer and have CDI enforce the laws and regulations that require insurers to warrant non-original equipment replacement crash parts are at least equal. Determinations of parts being equal is manifested in the claims process, prior to repair.
We feel that, to categorize tracking as the most important issue, is to divert attention from the real issue. Insurers requiring and specifying usage of parts that are non-compliant. It is important to note how the CDI notice tracks with our letters to the Commissioner. If there is a small scale issue it is tracking . Currently systems exist to track parts. It is not done because insurers chose not to comply. The real issue is vehicle and occupant safety ."
An exchange of letters between CRA and Commissioner Poizner’s office has highlighted both agreements and disagreements on the state of aftermarket parts regulation.
The CRA has hand-delivered a letter (see below) to Insurance Commissioner Steve Poizner asking that he simply enforce the law by requiring insurers to either stop putting aftermarket reinforcement bars in damage estimates, or else warrant to the claimant that the aftermarket bar is as good as high-strength steel bars from the vehicle manufacturer.
Allen Wood, CRA Executive Director, signed the letter which points out that aftermarket proponents incorrectly believe automotive repair dealers (ARDs) are responsible for determining if aftermarket parts are equal to OEM.
In a media-oriented demonstration organized by the Collision Repair Association of California (CRA), Autobody News' columnists CRA President Lee Amaradio (left in photo) and Industry Trainer Toby Chess (using saw) were featured on ABC TV news (see video below) replicating Chess' earlier demonstration of mild steel in certain aftermarket parts vs high strength steel in OEM bumper reinforcements.
Jones released the following statement on April 9:
Unbeknownst to most Californians, for many years inferior aftermarket parts have been installed in their cars when they are repaired as part of an insurance claim after a collision. These substandard parts can affect the safety and performance of the vehicle in a future collision and pose a serious risk to anyone on California roads and highways.
California law requires that aftermarket replacement crash parts only be used in the repair of an automobile if “the parts are at least equal to the original equipment manufacturer parts in terms of kind, quality, safety, fit, and performance,” and that insurers warrant that these parts are in fact as good or better than the manufacturer parts.
Today, I am calling on the Insurance Commissioner and the Insurance Industry to:
If the Insurance Industry is not able to take these simple steps to comply with California law and protect our residents, legislation should be introduced that orders insurance companies to do so, and provides strict penalties for failing to do so.
Call on auto insurers to replace defective parts
State Assemblyman Dave Jones
Toby Chess of Los Angeles, national auto parts expert
Lee Amaradio, president of the Collision Repair Association of California
Press conference alerting consumers that thousands of damaged vehicles in California have been repaired with aftermarket bumper supports from China that are significantly weaker than the bumper supports from the vehicle’s manufacturer.
(1) Alert consumers that their cars may have been repaired with inferior parts that affect the safety performance of a vehicle in a collision.
(2) Call on the Department of Insurance and auto insurers to figure out which cars have defective bumpers, alert consumers, and institute a program to replace these defective bumper bars.
(3) Announce that Jones is prepared to introduce legislation on this matter if the Department of Insurance and auto insurers do not quickly alert consumers and replace the defective bumper bars on California roads today.
Where and When:
Thursday, April 8 at 12:00 noon
Gamboa’s Body & Frame, 1101 North D Street , Sacramento
(Off Richards Blvd and Dos Rios)
Display of factory bumper bars and aftermarket bumper bars from China .
Live test showing the strength differences between factory and aftermarket reinforcement bars for a Toyota and a Ford.
Film of crash tests.
Growing concern over the ability of aftermarket bumper reinforcements to protect vehicle occupants has prompted the Collision Repair Association of California (CRA) to seek the intervention of Insurance Commissioner Steve Poizner. In a letter of February 2, 2010, the CRA asked Commissioner Poizner to require insurers to review claims where aftermarket bumper supports were used in collision repairs and to disclose such use to affected policyholders. In the past week major aftermarket associations agreed to suspend distribution of aftermarket bumper reinforcements while one major insurer, GEICO, stated it would no longer use them. These announcements follow on the heels of research by Toby Chess, a nationally recognized expert on vehicle repair, that reveals that aftermarket bumper reinforcements lack the structural integrity to withstand collisions sustained by high-strength steel reinforcements used by vehicle manufacturers.
Below is a draft of the speech given by Kerry Soat to the Arizona House of Representatives Banking and Insurance Committee regarding House Bill 2463. Cindy Ketcherside and Rex Alltree also spoke on House Bill 2464, with regards to eliminating the $0 deductible from the Arizona Law.
Whittier attorney John David Munoz, 42, was arrested this morning at this residence on felony auto insurance fraud charges for allegedly fabricating facts surrounding the destruction of his vehicle.
In California Second Appellate District, a shop owner’s claims of unfair business practices on the part of two major insurance companies in their labor rate surveys, have been denied on appeal, upholding an earlier court decision.