Idaho looking to update decades-old non-OEM parts disclosure law
By onLegal
Idaho lawmakers are considering a bill that would update a nearly 25-year vehicle repair disclosure law to better inform consumers of the difference in safety between OEM and non-OEM crash parts, according to sponsor Sen. Scott Herndon (R-District 1).
Current law makes it an unfair claim settlement practice for insurers to specify repairers install non-OEM aftermarket crash parts that are non-mechanical sheet metal or plastic exterior parts including inner and outer panels. It’s also an unfair claim settlement practice for repairers to use the specified non-OEM parts without first informing consumers in writing. The bill doesn’t change those portions of the law.
“There are some repair facilities that prefer to use original equipment manufacturer parts and usually their advantages are the fit is sometimes more precise because it’s made specifically for that vehicle,” Herndon said during a Feb. 1 hearing of the Senate Commerce and Human Resources Committee. “They do tend to be more expensive, but over the years, their cost has come down because they’ve had to compete with aftermarket crash parts… the disclosure right now just simply says the difference between an OEM part and a non-OEM part is who warranties the part.”
He added that his purpose in bringing the bill forward is for consumer protection. However, he noted as well that non-OEM parts are usually less expensive, so if there’s a good aftermarket crash part to use in certain repairs, the repair facility or insurance company may want to use it instead.
Amendments made to the law with the proposed bill would add headlamps, fenders, hoods, tail lamps, and bumper components to the list.
The bill would also add the following to the disclosure given to consumers on repair estimates: “Please note that the use of non-original equipment manufacturer (non-OEM) crash parts may affect the safety and performance of your vehicle. It is recommended that you consult with a qualified industry expert or repair shop before making any decisions regarding the use of non-OEM crash parts.”
Herndon said consumers may not know the difference between OEM and non-OEM parts and that the issue isn’t just with warranties, but that non-OEM parts might cause changes in the characteristics of vehicles, like performance and safety.
“I would venture to guess that most consumers leaving the repair facility aren’t thinking about the warranty,” he said. “They’re just happy to get their vehicle back. They hope it performs the same and they hope it’s as safe as when it arrived.”
The bill is timely, Herndon said, because of State Farm’s decision in October to end its suspension of the use of non-OEM crash parts. The practice had been in place since 1999, according to an October 2023 State Farm memo to its Select Service repair centers.
The memo specified that non-OEM bumper components, lighting components, radiator supports/tie bars/inner structural and associated mounting components, and outer sheet metal, plastic/composite, and attachment parts are subject to certification standards.
“The reason for that was because there was a class action lawsuit a couple of decades ago that resulted in hundreds of millions of dollars paid in damages by State Farm because the insurance companies would try to leverage and get aftermarket parts used,” Herndon said, referring to the parts policy change in October. “That was considered, essentially, an unfair business practice, and so State Farm ended up settling that claim and then, for 20 years, only [specified] OEM parts.
“Liberty Mutual has also been involved in lawsuits. There are good reasons and historical reasons why they haven’t wanted to talk about safety and performance… I’m trying to walk a line here — not favoring OEM, not favoring aftermarket crash parts, but giving the consumer a more fully descriptive explanation of why.”
Mike Brassy, with State Farm, later testified that the company assumes there will often be an estimate for vehicle repairs that includes both OEM and non-OEM parts.
“If the insured chooses certified, non-OEM parts then State Farm guarantees the satisfaction of the insured for the remaining life of the vehicle and that’s satisfaction guaranteed for the fit, corrosion resistance qualities, and performance of the parts,” he said.
Opponents of the bill, American Property Casualty Insurance Association (APCIA), LKQ Corp., and the Auto Care Association (ACA) testified during the hearing that encouraging the use of OEM parts would hurt competition in the parts market and drive up costs for consumers.
Elizabeth Kriner, with APCIA, also said the proposed language in the bill “implies the non-OEM parts are inferior to OEM parts.”
“These [parts] decisions are already left to the consumer,” she said. “Consumers and repair shops have long been using these aftermarket products. In many instances, they’re often made in the same manufacturing facilities as the brand product… There is broad use of them and they are very helpful in keeping prices down for consumers, which can be a very important thing; especially in these times today when we are seeing significant inflation challenges in obtaining some of these parts.
“If we’re creating a sense of negativity toward non-OEM parts that could end up ultimately driving up the cost of repairs for consumers as well.”
Catalina Gel Pereda, with LKQ Corp., said the bill is “very discriminatory against our industry and especially aftermarket and recycled auto parts.”
“All of those known OEM crash parts that are related to this specific part of the language are cosmetic in nature,” she said. “We are not mentioning anything that has to do with the structural damage of the vehicle. These parts are cosmetic. They’re crash parts and that goes for OEM parts and non-OEM crash parts… There is nothing that would deem a bumper or a fender or a hood or a crash part related to safety concerns and the reason why is because those parts are not responsible for safeguarding occupants in a crash.”
Herndon argued that the proposed language does include structural parts, however, that isn’t defined in the bill. Structural parts typically include frame rails, apron assemblies, quarter panels, floor structures, bumpers, bumper reinforcement bars, A-pillars, B-pillars, and body panels.
ACA Grassroots and Advocacy Manager Tod Moore said the bill would have “an immediate detrimental effect on this otherwise vibrant aftermarket ecosystem in the state of Idaho” as well as on consumers.
“The overwhelming majority of vehicles are serviced by high-quality aftermarket parts including safety systems,” he said. “In many cases, Tier 1 suppliers who make OEM parts also provide identical products to the independent aftermarket… aftermarket parts are often less expensive than OEM parts. For example, OEM-patented front bumpers are being sold up to 213% higher than their aftermarket counterparts.
“We should always encourage competition in all markets including automotive repair. Unnecessarily warning consumers about aftermarket parts will limit competition and therefore reduce choice while driving up the prices as well.”
In support of the bill, John Miller, owner of Miller Auto Collision, said his friend who is a former senior automotive design engineer reminded him that “every aspect in development at the factory is tested and documented by the manufacturer who subsequently assumes liability.”
“Generally, the only ones who crashed his cars are the manufacturers to both OEM certify and ensure that it meets federal safety standards, he said.
Miller then referenced a widely known 2013 collision that led to a major lawsuit over alleged improper repairs. John Eagle Collison Center was sued by Matthew and Marcia Seebachan after they were trapped in their burning 2010 Honda Fit, which they had purchased used, following a collision with a 2010 Toyota Tundra. The truck hydroplaned into their path causing the Fit to strike the right front quarter of the Tundra in a T-bone collision.
A Dallas County civil jury found John Eagle Collision liable for 75% of the Seebachans’ ordeal, which worked out to $31.5 million of the $42 million damages awarded along with the October 2017 verdict. The Seebachans later settled with the shop for an undisclosed amount.
“Now, these cars are so advanced that each and every part — the ‘cosmetic part’ that people are referring to — that is a part of what triggers the air bags,” Miller said last week. “…The aftermarket parts being applied all over the car can result in undesirable variables that you can see with your eye, which can most certainly be a danger or even fatal to the occupants of the modern car.
“Please consider adopting an updated version of the current statute that will address the lack of transparency that the average auto consumer faces when trying to decide where and in what manner their vehicle should safely be repaired.”
A motion for recommended passage of the bill was made but wasn’t passed by the committee.
A similar House bill in Washington state, and its Senate companion bill, failed in committee.
The legislation would’ve required appraisal clauses in all insurance policies in the state, and the use of OEM parts if alternative parts would fail to restore the vehicle to its previous condition.
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Idaho State House (Credit: picmax/iStock)