Q:

What are "aftermarket crash parts" in relationship to auto repair?

A:

Aftermarket crash parts means replacement of parts damaged in a collision that are nonmechanical sheet metal or plastic parts and which generally make up the exterior of a motor vehicle.

Q:

What do the terms "non-original" or "non-OEM" parts refer to?

A:

"Non-OEM" refers to parts manufactured by a manufacturer other than the original manufacturer of the vehicle. Non-OEM parts are generic as opposed to name-brand parts.

Q:

What are OEM crash parts?

A:

OEM crash parts are parts that are made for or by the original manufacturer of a motor vehicle.

Q:

What are recycled crash parts?

A:

Recycled crash parts are parts that have been removed from a salvaged vehicle.

Q:

Shouldn't California consumers have the right to have their vehicles repaired to pre-accident condition?

A:

Yes. Under an auto insurance policy providing collision coverage, the insurer agrees to pay for repairs that will restore the vehicle to its pre-accident condition, up to the fair market value of the vehicle.

Q:

What does existing California law require auto repair shops and insurance companies to do concerning the use of generic crash parts?

A:

The law requires that the use of generic replacement crash parts must be identified on the repair invoice. The law also prohibits insurers from requiring the use of generic crash parts unless the parts are at least equal to the original equipment manufacturer parts in terms of kind, quality, safety, fit and performance.

Q:

Do other states allow the use of generic aftermarket crash parts to be used in automobile repair?

A:

Yes, non-OEM generic crash parts have withstood regulatory scrutiny in all states. In many cases, state regulation encourages, or even requires their use ( Massachusetts and Hawaii ).

Q:

Why should generic replacement crash parts be allowed in automobile repair?

A:

For the same reason that consumers have the right to purchase generic or name-brand pharmaceuticals and groceries. Generic replacement parts are used to keep costs down. It is estimated that the use of generic replacement parts saves policyholders approximately $800 million each year. These savings are passed along to policyholders in the form of lower insurance premiums.

Example : A national insurance trade association recently looked at the cost of building a 1999 Toyota Camry with original manufacturer parts from scratch. Although the Camry has a suggested retail price of $23,263, the cost of building one from scratch using OEM parts is a whopping $101,355.55. The cost of the interior trim alone is $6,566.61, the engine assembly cost nearly $5,000 and the instrument panel cost $4,383.78. The association estimated that the car would cost more than $200,000 if competition from generic aftermarket parts didn't exist. 1

Q:

Do non-OEM parts violate the manufacturer's warranty? In addition, is it true that the warranties on non-OEM parts do not transfer to subsequent car owners while OEM warranties do?

A:

Under federal law, the Magnuson-Moss Act states that the mere use of parts from other than the original manufacturer cannot invalidate the original manufacturer's warranty on the car. While it is true that the original manufacturer does not warrant a non-OEM replacement part, three different sources guarantee the quality of a non-OEM part: the manufacturer, the supplier, and the insurance company that pays for the part.

Q:

If generic replacement crash parts are so good, why has one major insurer lost a class action lawsuit in Illinois over this issue?

A:

The jury at the Illinois trial was not permitted to hear evidence about the benefits of auto part competition for the consumer. The plaintiffs claimed that all generic replacement crash parts do not fit, they aren't safe and they hurt the car's resale value. Ironically, at the trial, the plaintiffs presented no evidence that anyone had been harmed in any way. They did not produce even one policyholder who was economically harmed or whose car was physically damaged through the use of generic replacement parts. The company is appealing directly to the Illinois State Supreme Court.

Recent cases in other states including Connecticut and Montana have resulted in contrary decisions upholding the use of aftermarket generic parts. The Illinois case, because it is a multi-state class action and has extra-territorial effect, threatens the right of each state to regulate the business of insurance within its boundaries.

Q:

What does the loss in Illinois mean to consumers if the verdict is upheld by the state's Supreme Court?

A:

It means the total monopoly enjoyed by the car makers over replacement parts will be restored. Car repair costs will go up, and because there is no competition, insurance rates will eventually go up because there will be nothing to restrain the pricing of the original parts.