Drivers beware: Insurers often cloak their collision-repair practices

If Shakespeare had been a consumer advocate, he might have written: "For want of a factory radiator, an engine warranty was lost." But the bard didn't have wheels, so it's up to legislators like Senator Carole Migden (D-San Francisco/North Bay) and consumer groups to warn car owners about insurance companies that hide certain collision repair practices from their policyholders.

Here is what most consumers don't know. To save money insurers compel collision repairers to sign secret agreements that spell out what make of parts are to be used to fix damaged vehicles. There are two part types: those designed for the vehicle by the manufacturer, or Original Equipment of the Manufacturer (OEM), and those copied by a fabricator and sold as "aftermarket."

Insurers prefer aftermarket parts which in some cases don't hold up as well and differ in appearance from OEM parts. Why? Aftermarket costs a little less than OEM. But why do repairers agree to use these less desirable parts? Well, if you want the insurer to refer claimants to your repair shop, or if you don't want them steered away, concessions are required. Some insurer agreements mandate the use of aftermarket over OEM, even if the car is covered by a manufacturer's warranty. And here is where problems occur. If an aftermarket radiator fails and contributes to engine damage, federal law allows the manufacturer to void the engine warranty. Sure, the supplier or installer of the radiator may be liable for replacing the radiator, but don't turn to the manufacturer for help on the engine. And your insurer? Forget about it.

The math is bad for consumers. Insurers save a few bucks on the radiator while consumers shell out $5,000 or more for engine work. How about a $90 savings on an air conditioning condenser? Go with an aftermarket AC condenser that fails and you might get stuck with a $2,500 bill while the insurer saves about $90.

A solution may be at hand. Senator Migden's SB 1059 would make it unlawful for an insurer to require that aftermarket parts replace key components of a vehicle under warranty during the vehicle's first three years as a new car. Insurers hate the bill as do aftermarket manufacturers. Consumers and law enforcement back the measure along with collision repairers.

Please note: the proposal doesn't prohibit installation of aftermarket parts on a car under warranty; it simply prevents insurers from forcing repairers to use aftermarket if they and the vehicle owner believe factory is best. And if the insurance policy requires aftermarket parts, the bill's provisions don't apply. Some insurers cut premiums for policyholders who opt for aftermarket. But some insurers-and this is what SB 1059 is trying to stop-charge high premiums but lean on repairers to use aftermarket parts under the "try and see" method. In brief, if the consumer doesn't complain, go with aftermarket and if the part doesn't fit, the repairer is required to make modifications to make it fit.

Senator Migden has shown leadership by taking this issue head on, winning the first battle in the Senate Banking, Finance, and Insurance Industry where the bill was whipped into shape by Senator Mike Machado committee chair. At the hearing Senator Machado stated that insurers who require aftermarket installations that might void a warranty , in essence, are taking away a consumer's property rights.

Some critics have suggested that insurers should assume liability for warranty issues if they require the installation of an aftermarket part. This approach has some merit, although the insurer's liability would be hard to maintain if the vehicle is sold, or the owner switches carriers. Many warranties last beyond the first owner, so a subsequent purchaser could be victimized if a prior owner allowed installation of an aftermarket part. Car dealers are deeply concerned about leased vehicles being returned with aftermarket replacement parts.

Owners of vehicles under warranty shouldn't wait for SB 1059 to become law. Review your insurance policy to see if it allows use of aftermarket parts. Talk to your agent and visit a licensed collision repairer before you have an accident which we hope never happens to you. Auto body shops are everywhere, but they vary in terms of equipment and skilled technicians. Visit to learn more about what to do after an accident. A little planning will save headaches later on.

Want to see more stories like this? Sign up for The Roundup, the free daily newsletter about California politics from the editors of Capitol Weekly. Stay up to date on the news you need to know.

Sign up below, then look for a confirmation email in your inbox.


Support for Capitol Weekly is Provided by: