DIVISION OF INSURANCE ALLOWS INSURANCE COMPANIES TO CHARGE YOU MORE FOR PROPER REPAIRS!
On December 8, 2000, the Massachusetts Division of Insurance issued Bulletin 2000-15 Revised “all insurers licensed to sell private automobile insurance shall have the option of selling an optional endorsement that provides for the use of new parts manufactured by or under licensure of the original equipment manufacture when replacing crash parts under Coverage 7, 8, and/or 9 of the Massachusetts Personal Automobile Policy, when such new parts are not otherwise required.” I was offered this optional endorsement for my vehicle when it came time for me to re-new my policy.
Now having been in the collision repair business for 25 years, as a tech who had to install aftermarket parts, as a shop manager who had to deal with clients who’s vehicle were being repaired with aftermarket parts, as an insurance appraiser following company direction in specifying aftermarket parts, and currently as one doing post collision repair inspections, I had several questions for my insurer about this new OEM optional endorsement that I was being offered. Here it is for those of you who are offered this endorsement. You may want to ask some of these questions and see what kind of answers YOU get.
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To Whom It May Concern:
I have received my new auto policy for the current year. I noticed that you are offering an optional endorsement for OE parts should my vehicle need repairs under a covered loss. As a consumer of insurance in the state of Massachusetts, and to make an informed decision about whether to choose this optional endorsement, I would like Amica to clarify its current policy, and how the optional endorsement might change that. Specifically I would like to know:
1. How much more does the optional endorsement for OE parts cost?
2. The Division of Insurance has determined that there may be safety issues with some aftermarket parts. Does Amica recommend that I increase my liability and medical coverage to cover this increased liability associated with the use of aftermarket parts?
3. Does the OE parts policy cover NEW OE parts?
4. If I do purchase the lower priced policy, and my car is in an accident, does that mean we will enter into a contract of repairs on the insurance specification of parts and suppliers?
5. If I do purchase the A/M parts policy, will I have to pay any additional money for OE parts if A/M parts are not available?
6. If I do purchase the lower priced policy, and my car is in an accident, and imitation parts are installed that upon my inspection are determined to be defective or not LKQ in accordance with MA law, does that mean I will be owed diminished value (DV) by Amica?
7. Who is legally responsible for determining if imitation parts specified on the insurance estimate ARE in fact LKQ in accordance with MA law?
8. If I do purchase the lower priced policy, and my car is in an accident, and imitation parts are installed that upon my inspection are determined to be defective, what would be all of my legal remedies and recourses from Amica?
9. If I do purchase the lower priced policy, and my car is in an accident, and imitation parts are installed that upon my inspection are determined to be defective, will this policy pay ALL costs associated with the re-repair process including rental payments?
10. Will I be responsible for any additional surcharges if my claim goes over the $2,000.00 limit due to re-repairs that may be required if the parts prove to be defective?
11. If I do purchase the lower priced policy, and my car is in an accident, and imitation parts are installed that upon my inspection are determined to be defective, is it the insurance policy that will guarantees that these imitation parts will be LKQ?
12. If I do purchase the lower priced policy, and my car is in an accident, and imitation parts are installed that upon my inspection are determined to be defective, wouldn’t that mean that the insurance company violated the law by insisting on a part that was not LKQ?
13. Since the Auto Damage Appraisers Licensing Board has determined that imitation parts ARE NOT LKQ, then what specific parts WILL be put on my car with the lower priced policy?
14. Since the policy issued is an actual cash value policy (ACV) is there an automatic payment of diminished value (DV) due in order to achieve the ACV standard?
Thank you for you time and effort in answering my questions. As a long time policyholder with Amica, including other vehicles and my home, I look forward to your written response. At that point, I will make my decision on the optional OE parts endorsement you are offering.
Sincerely,
A Consumer of Auto Insurance in Massachusetts
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Needless to say, my letter fell on deaf ears. I never received any response from the insurer. In a continuing effort to get answers to these seemingly simple questions, I followed up with an Email to my Congressman. Congressman Michael Coppola, Massachusetts House of Representatives send a letter to Commissioner Linda Ruthardt looking for more detail information on the subject of aftermarket parts, and the optional OE parts policy. In her response to Congressman Coppola, Commissioner Ruthardt managed to put full spin on the issues. She writes in her response that the ADALB report “Did not conclude that aftermarket parts are inherently or universally inferior or sub-standard.” That statement is in direct conflict with the ADALB report, which among other things concluded “It is we believe, very safe to assert in writing that the quality and fit of aftermarket cosmetic crash parts are not the equal of an original.” and “With respect to the safety issue involved in the use of cosmetic aftermarket crash parts the Board voted 3-2 that the “aftermarket cosmetic crash parts are not the exact duplicates of the factory original parts and may jeopardize the safety and value of the vehicle.” The ABALB finalized it report on Oct 18,2000, 44 days BEFORE Commissioner Ruthardt issued Bulletin 2000-15, allowing insurance companies the OE policy endorsement. It is clear by her actions just where the loyalties of the DOI are. And it’s NOT with the consumers of the state.
What will be the body shops liability in all of this? I would suggest that if you wanted to know if the shop can be held liable to the consumer for a/m parts that are not Like, Kind and Quality, you would have to look no further than Gorman v Liberty Mutual, a Massachusetts court case from September 19, 2000. This case centered on the use of aftermarket parts, which are already REQUIRD under regulation, 211 CMR 133.04 . This is what the judge had to say: “When Center undertook to repair the vehicle, it was obligated to perform those repairs in a workman like manner and with the proper parts. It has failed to do that. Its conduct rose to the level of violating MGL 93A (consumer protection laws) when, having acknowledged that it failed to do that properly, it failed to correct the work.” Liberties conduct rose to the level of violating MGL 93A when it was notified that the repairs were not proper because of the ill-fitting parts and did not authorize the use of the appropriate parts.” “There is no question as to the right of the Plaintiff to recover in this matter. Although both Center and Liberty Mutual seek to blame each other, the court finds that both are liable as to the Plaintiff.
Insurance companies offer of two separate and distinct policies is something that in my opinion is going to come back and haunt them. It is my opinion that that if an insured elects to purchase the lower priced policy, this is NOT going to let the insurer off the hook for pre-accident condition . By offering OEM parts policies, they are admitting that aftermarket parts are inferior. Are the consumers being told what consequences each policy will have on their second most expensive asset? Not likely. Can insurance personnel be held libel for their failure to disclose? Time will tell. The law and the policy, promise pre-accident condition. There are not two levels of repairs being offered, one for pre-loss condition, and one offering something less. When the aftermarket fender does not fit properly, they are going to have a difficult time explaining to their policyholder “Sorry, we can’t help you. If you wanted your vehicle fixed correctly, you should have purchased the more expensive option”
Will the insurance industry next year offer a policy to correctly paint your vehicle? I can see it now: For an additional premium, we will offer to pay for the correct color match of your repaired vehicle. Then they will try to put blue junkyard fender on the white car, claiming that the policyholder did not elect the optional paint policy.
Where will it end?