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CYA with A/M Parts

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How can I cover my @*! when installing A/M parts?

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When the Illinois Supreme Court overturned Avery vs. State Farm, repairers immediately began asking the CYA question.

And not since “Which came first, the chicken or the egg?” has one little question fueled such debate.

If only the answer were as straightforward as the question. To help, I enlisted James Castleman, a Massachusetts attorney who’s represented autobody trade associations and shops for more than 25 years.

First on our list: what a shop should do when it has a safety concern with an A/M part.

“The issue is particularly difficult because, in most states, the shop is required to warranty all parts it uses, so the shop is required to warranty even parts it recommends not using,” Castleman says. “There also may be consumer protection issues for intentionally using a part the shop knows is unsafe.”

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He recommends three alternatives for shops to consider when dealing with safety-related A/M parts:

1. Get someone to authorize OE or don’t do the job.

Disadvantage: You may lose a lot of work.

Advantage: You’re protecting yourself from potential liability. “I have a client who uses this alternative successfully, but it specializes in repair of a higher-end foreign car. … I’ve been told by appraisers that they’re more likely to write for an OEM part at this shop because they know the shop will actually use the part and not substitute a cheaper one.”

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Problems with this option: “If you’re a preferred shop, your contract probably requires you to … use the parts specified by the insurer,” says Castleman.

2. Keep the job, negotiate and eat the difference if need be.

Disadvantage: It costs you money. However, if you take this one step further than Castleman did, it won’t cost you a thing: “A repairer can cost shift as he sees fit to effect a repair for the bottom line, assuming he gets one sufficient to pay the cost of a repair that he and his customer can live with,” says collision industry veteran Charlie Barone. “As long as the invoice mirrors the outcome, there’s no foul, no harm and certainly no fraud. If the insurer writes the customer a check for $4,500 for A/M parts in the repair and you can fix the car for $4,500 using OE parts, then do it. Be pragmatic. Maybe the adjuster says he can’t write for an OE hood. But a nice adjuster will put some money somewhere else.”

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Advantage: The vehicle owner is happy, and you’ve protected your shop from liability issues.

3. Present the vehicle owner with a Hold Harmless.

Says Castleman: “Try to convince customers to use OE parts and to pay the difference in cost. But if they insist, use the part specified by the insurer and pray it doesn’t fail. You [can] develop a form for your customers to sign that ostensibly releases you from liability for using parts that you warn them about but they choose to have you use anyway but, in most states, this probably isn’t going to protect you.”

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Disadvantage: You could still be held liable. “This varies greatly from state to state,” says Castleman. “In Massachusetts under our consumer protection and warranty laws, it’s not possible to avoid liability in a transaction for the sale of unsafe goods sold primarily for personal or household use. Today many states frown on attempts by businesses to take advantage of consumers by attempting to limit liability in a transaction where the business holds the upper hand.”

Advantage: Despite the fact that a Hold Harmless might not hold water, “many businesses still attempt it,” says Castleman, “and many consumers do not know that the liability waiver is ineffective, so it has the desired effect.” Says North Carolina shop owner Bob Winfrey: “I use the document, and no one has signed it so far. It’s an excellent deterrent. … I don’t start firing until I have the job signed and in the shop. … Everybody has three days grace [to sign] and then storage or stall rental fees start.”

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Winfrey says that since he’s been presenting a Hold Harmless to the vehicle owner and insurer, someone has always authorized OE parts – and the insurer has paid the price difference every time (so far anyway).

But what if the A/M part isn’t a safety concern, just a quality issue? Castleman says to try to sell the OE part, but if the customer wants A/M, use it. “If the customer makes an informed choice (after you inform him of the difference in quality), then you shouldn’t have to worry about liability issues. And, assuming the part isn’t going to fail, you may also have protection from warranty issues. If you’re dealing with only quality, have a form, signed by the customer, that tells him you’ve recommended a better quality part but that he’s opted for the A/M part.”

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Also keep in mind that Avery being overturned doesn’t mean insurers have no liability regarding A/M parts. If they specify parts they know are unsafe or even not “like kind and quality,” then “there may very well be contractual and/or consumer protection liability on the part of the insurer,” says Castleman.

That, however, doesn’t change a thing for you. You are still the repair expert, and you are the only thing standing between a consumer and an unsafe repair. No matter how many forms you have someone sign, responsibility for installing a part that fails will ultimately fall squarely on your shoulders.

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And it should.

Georgina K. Carson, editor

Comments? E-mail them to BSB editor Georgina K. Carson at
[email protected]

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