The California Senate Judiciary Committee approved the Collision Repair
Association of California (CRA)-sponsored Senate Bill 1059 by a
3-2 vote and agreed to add the following provision to the bill: “At the
time of sale, the insurer shall specifically notify the insured whether
the insurance contract allows for the use of aftermarket parts, and
that such use may affect the insured’s vehicle manufacturer’s
warranty. The required use of aftermarket parts must also be clearly
and conspicuously disclosed in bold type in the front declaration page
of the policy."
Lee Amaradio, CRA board member and owner of Faith Quality Auto Body in
Murrieta, Calif., testified that consumers are often unaware of how
their insurance policy limits repairs on a new car. He also said that a
factory warranty would be honored across America while an aftermarket
warranty would force the consumer to return to the body shop where the
part was installed. The shop, he then said, would have to hunt down the
aftermarket producer of the part.
"Is this the kind of protection that you want for your new car? ” Amaradio asked.
Senator Carole Migden, author of S.B. 1059, stated that insurers are
“snookering” consumers by hiding coverage provisions for factory and
aftermarket parts. She and Amaradio pointed to a Mercury Insurance
policy disclosure in eight-point type in a terms and conditions
pamphlet where the insurer said the decision on whether or not to use
factory or aftermarket parts would be based on which cost less. The
policyholder who provided the pamphlet to the CRA said he was unhappy
to learn that his new $45,000 car would be fixed with non-factory
parts.
The CRA’s bill was also supported by the consumer group, Consumers For
Auto Reliability and Safety, the California New Motor Car Dealers
Association and the California Autobody Association.
In addition to the new insurance policy disclosure mandate, S.B. 1059
would make it unlawful for an insurer to require the installation of an
aftermarket part affecting the engine, the heating and cooling system,
the air condition system and corrosion protection if the part to be
replaced is under a manufacturer’s original warranty and the
replacement occurs within three years from the date from which the
vehicle was first sold as new. The bill would allow use of aftermarket
parts if the claimant’s insurance policy required the use of
aftermarket parts, or if the repairer and the consumer agreed to use
aftermarket parts. Insurers would be barred from paying aftermarket
prices for the installation of OEM parts under the bill’s mandates.
“With the leadership of Senator Ellen Corbett, the committee chair, S.B.
1059 has become a very serious piece of legislation,” said CRA lobbyist
Richard Steffen. “I find it troubling that insurers would oppose a bill
to increase a consumer’s understanding of collision coverage for a new
car. This issue isn’t going away.”
Allen Wood, CRA Executive Director, noted that during the weekend prior
to the hearing, the CRA ran 30-second television ads supporting S.B.
1059 on selected Northern California cable channels.
"The CRA wants consumers to read their insurance policies," Wood said.
"We don’t want them to be surprised that their new car may be outfitted
with non-factory parts after an accident. Consumers have a right to
make informed choices about the most appropriate insurance product to
protect their transportation investments.”
The bill now goes to the Senate Appropriations Committee, which will
assess its fiscal impact on the state. The next hurdle will be a vote
by the full Senate on the bill sometime in May.
