Insurers: After-market parts are key to savings

Auto body shops and car manufacturing companies are working hard this year to pass a bill that would line their pockets at the expense of auto insurance consumers.

SB 1059 (Midgen) would prohibit the use of after-market parts (those manufactured by a company other than a car’s original manufacturer) to repair newer cars. 

After-market parts provide significant financial savings to consumers, as they are less costly than original equipment manufacturer (OEM) parts.  Think generic versus brand-name drugs.

The use of after-market parts means less money out of people’s pockets when they are in an accident.  On average, after-market repair parts are 20 to 50 percent less expensive than OEM parts, and they are ordinarily guaranteed by both the insurer and the part manufacturer.  After-market parts are also subject to significant quality and safety standard reviews. 

What are the damaging results of SB 1059? 

Creates a Monopoly: Senate Bill 1059 would create a monopoly for auto manufacturers by allowing them to be the only source of repair parts for cars three years old or newer.  Economic history teaches us that lack of competition due to monopolies leads to higher costs — in this case higher repair charges that will result in higher auto insurance premiums for all drivers.

Limits Choice & Raises Consumer Costs: Senate Bill 1059 would also limit choices for claimants when having their car repaired.  Accident victims would lose the ability to select high quality, lower cost alternative parts to help keep their repair bill down. 

Hits Low-Income Drivers Hardest: The passage of this legislation would mean that lower income drivers are going to be hit disproportionately hard, as increased costs for everyone are going to be spread across all accident claimants.

The question to ask is, “What is the real consumer protection interest for this legislation?” 
The answer is there is none. 

Consumers are already protected, because federal law [Magnuson-Moss Warranty Act, Federal Trade Commission Improvement Act, section 2302(a)] absolutely “prohibits companies from invalidating warranties for the use of generic/Aftermarket parts.” Any worries that use of after-market parts would invalidate warranties are clearly addressed in federal law. 

This bill is designed to help car manufacturers sell more of their replacement parts and body shops to make more money when they install the manufacturers’ more expensive parts.  Senate Bill 1059 is about money and the competitive threat that after-market parts pose to car manufacturers.

Those who assert that there is a big difference in the quality of aftermarket parts compared with original manufacturer parts should be pressed to explain why millions of automobiles with original equipment have been recalled in recent years due to failed, faulty, or dangerous original parts!  Clearly there are many instances where original parts don’t meet the test of quality and safety.

The reality is that certified aftermarket parts are as good as and sometimes better than replacement parts provided by the manufacturer.  They are subject to strict quality and safety reviews, and they are manufactured to meet high production standards. 
All of these facts blunt the arguments of the bill’s proponents and expose the bill as nothing more than a special interest effort void of any real benefit for consumers.

Consumers deserve better.  They deserve more choices and lower costs. 

That is why Senate Bill 1059 deserves a no vote.

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