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Nebraska again considers OEM repair procedure requirement, definition of structural total

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Legal | Repair Operations
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A bill carried over from the 2023 legislative session in Nebraska seeks to add structurally totaled vehicles to the state’s list of vehicles that require a branded title for the safety of consumers and to reduce financial risk, according to the bill’s sponsor.

An amendment to LB 1105 would require “automobile body consumer care facilities” to follow OEM manufacturer manuals and guidance “for performing consumer care except for the use of OEM parts.”

A hearing on the bill was held Tuesday by the Transportation and Telecommunications Committee.

“I feel that we are really close on having a bill that will achieve that,” said Sen. Barry DeKay (R-District 40), the sponsor of the bill. “People repairing vehicles should need to know that they have the backing to repair their vehicles and do the job.

“Likewise, people buying these vehicles can have peace of mind that they are not only buying a car that is cosmetically repaired, but also is structurally repaired to be driven safely. I would like to thank both sides of this issue for the discussion today. I think these discussions will ultimately get us where we want to be having safe vehicles on the highway.”

The new bill, just like the 2023 bill, defines a structurally totaled vehicle as one that has a kink or crease in a frame rail, a unibody, or a structural component, including an engine cradle or a rear differential. Vehicles totaled due to hail damage or cosmetic damage or with repair costs that are below 75% of the actual cash value aren’t included.

The titles of totaled vehicles, or verbal or written acceptance from the owner, would then be given to the insurance company, which would surrender it to the county treasurer, and apply for a destroyed-vehicle branded certificate of title unless the owner wants to keep the totaled vehicle.

“If the owner elects to retain the structurally totaled vehicle, the insurance company shall notify the department of such fact in a format prescribed by the department,” the bill states. “The department shall immediately enter the destroyed-vehicle brand onto the computerized record of the vehicle. Beginning on the implementation date designated by the director pursuant to subsection (5) of section 60-1508, the insurance company shall report electronically to the department using the electronic reporting system.

“The insurance company shall also notify the owner of the owner’s responsibility to comply with this section. The owner shall, within thirty days after the settlement of the loss, forward the properly endorsed acceptable certificate of title to the county treasurer in the county designated in section 60-144. Upon receipt of the certificate of title, the county treasurer shall issue a destroyed-vehicle branded certificate of title for the vehicle.”

Also like last year’s bill, the use of OEM-specified parts is excluded, which was previously a major point of contention between proponents and the opposition.

Nebraska resident Susan Wachner testified about her family’s experience with a salvaged and improperly repaired vehicle. She purchased a used Toyota Rav4 in Omaha and was informed it had a salvage title but that the state had inspected it and confirmed it was safe to operate.

“My daughter drove to high school with my son in the passenger seat on a beautiful spring day,” she said. “They were at a dead stop, in typical morning traffic, waiting for the light to turn green. My son confirmed my daughter was not on a cell phone… [she] took her foot off
the pedal anticipating the light had turned green when it had not. She bumped into the Minivan in front of her.

“When I arrived at the scene of the accident, I anticipated a minor fender bender. To my shock, the car frankly folded up like a small accordion… I’m no expert, but if the car did this at a standstill, I shudder at the result of a 40, 50, 65 mph impact.”

Wachner added that a collision repair shop performed a post-collision inspection and found that the vehicle had only been cosmetically repaired and not structurally.

The Collision Industry Conference Industry Relations Committee shared in January how common improper repairs are when revealing the results of its review of a sample of 26 cases.

Significant frame damage, totaled vehicles, and a lack of OEM-recommended procedures such as alignments and calibrations were found. Ninety percent of the vehicles were totaled after having an independent post-repair inspection. Nearly 50% of the vehicles had significant frame damage. 

At the hearing on Tuesday, Sarah Stillahn, from Bumper to Bumper Body and Paint in Scottsbluff, testified that “hack shops” and “rebuilders” should be held accountable for selling unsafe vehicles.

“Consumers are misled that these vehicles are repaired properly and are safe to drive, but more often, that is not the case,” she said. “It will shock you how easy it is to cover up major structural damage and disregard or leave off safety features that are designed to protect occupants and mitigate accidents.

As a shop, we are liable for the repairs we complete. We continue to be liable even after the vehicle is sold. However, if one these vehicles are totaled and goes to the salvage auction and then are sold to an individual or hack shop, sellers get the protection of an ‘as is’ used car sale. They will pretend they had no idea there were clear safety issues with the car or they say they disclosed the previously salvaged title.”

Alliance for Automotive Innovation lobbyist Blair Macdonald pointed out to the committee that newer vehicles come equipped with dozens of advanced driver assistance systems (ADAS) and must be repaired properly.

“In order to fix these vehicles, you need the proper repair procedures,” she said. “Accordingly, automakers develop and publish specific, procedures to guide the post-collision repair of every new car they sell each year detailing the proper way to return a vehicle to a safe roadworthy condition. No other group or company provides anything comparable to the vehicle-specific guidelines to show how to appropriately conduct post-collision repairs under the current system.

“Collision shops are forced to decide between making a proper repair and receiving proper payment for their work from the insurance companies. This is not right. Most consumers, and rightly so, would expect OEM repair practices to be followed, even in the absence of any law that would require such. To steer a collision repairer to follow any repair procedure other than the one produced by the vehicle’s manufacturer is a disservice not only to the owner of that vehicle but their passengers and fellow motorists.”

Those who testified against the bill said it isn’t needed and it will affect consumer protections and choice.

“We do not believe there is a need for this legislation because the current junk and salvage title requirements fulfill the needs of the bill,” said Mark Binder, Copart director of government affairs. “We think the concept is flawed because it creates significant inconsistencies with other states. It’s duplicative of current salvage and junk title requirements.

“It’s confusing, in conflict with current Nebraska statutes, and it’s removing many vehicles out of the consumer fleet that can be safely repaired and registered as a rebuilt vehicle. I would also like to offer that this is about branding of titles and repair procedures is not part of the conversation.”

Kim Decker, Farmers Insurance director of government and industry affairs, said she agreed with Binder and added, “We all know insurance is going up, everything is going up, and it is our concern that this bill will not provide additional safety standards or safety creations for Nebraskans or will simply cause insurance rates to go up. It will make vehicles harder to find in the state.”

Ryan Clark, Nebraska Auto Body Association vice chair, told the committee that “anyone who asserts that the cost of repairs will increase if shops are following the documented repair procedure instructions from the manufacturers, and developed by the engineers who designed
the vehicle is admitting that those procedures are not currently being followed.”

“Otherwise, the cost of repairs (and cost to insure) would not increase. If they are not being followed today, and both sides of the issue agree on that, then the consumers in Nebraska are being endangered. And as someone who sees the outcome of bad repairs every day, that scares me.”

Kerrie Snowden, Farmers Mutual of Nebraska employee and lobbyist, made the same arguments as Decker.

Tim Hruza, an attorney who spoke on behalf of LKQ, said the company most takes issue with the amendment.

“What we are opposed to with this effort is the fact that you take away a great deal of consumer choice in choosing the type of parts and particularly the costs related to those parts and the options that they use when repairing their vehicles,” he said. “When you refer to requiring certain procedures to be used, those procedures then require specific types of parts and tools. It becomes very difficult for consumers to get solutions to their problems, to make choices about how they repair their cars, and to choose the option that is best for them when deciding which parts of procedures and mechanics too for that matter.”

Korby Gilbertson, a lobbyist who spoke on behalf of the American Property Casualty Insurance Association, testified that insurance companies don’t want unsafe vehicles on the road.

“The examples that are given of why we need this bill are examples of people acting in bad faith or doing bad repair work,” he said. “It’s not that people are using aftermarket parts because, as Tim also said, it is already required in Nebraska that all of those parts be of like kind and quality.”


Featured image credit: Kamlesh Suthar/iStock

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