A bill introduced in Nebraska aims to require the use of OEM or proper like kind and quality aftermarket parts in terms of fit and performance in collision repairs made on vehicles three years old or newer.

LB 111 states that the cost of any necessary modification during repair will be considered as a factor in determining the quality of the non-OEM part. Insurers wouldn’t be able to require consumers to pay the difference for OEM parts to be used.

Under the bill, insurers would have to provide consumers with a written disclosure and receive consent to use non-OEM parts.

Notice would also be given in insurance policies that cover consumer care of a vehicle manufactured more than 36 months before the date of the policy to inform policyholders of the possible use of aftermarket parts that are “at least equal in terms of fit, quality, performance, and warranty to original equipment manufacturer parts.”

During a March 4 hearing on the bill before the Senate’s Banking, Commerce and Insurance Committee, Ryan Clark, Nebraska Auto Body Association vice chairman and Eustis Body Shop vice president, said current statute states insurance companies will reimburse consumers with like kind and quality parts.

Clark noted that the bill isn’t aimed at used OEM parts but they are harder to find for newer vehicles.

“This bill states that vehicles three years old or newer would require the use of OEM parts,” he said. “There are many reasons why this will benefit consumers. First, vehicles are equipped with innovative technology today that weren’t there 10 years ago — think about the new windshield cameras, blind spot monitors, and adaptive cruise control. Now, we have self-driving and even Super Cruise on the Chevys.

“If the vehicle’s in an accident, these sensors can be damaged and need replaced. Ironically, insurance carriers asked the OEMs to build this technology to help reduce the number of accidents and reduce claims. However, this has a direct effect on the increasing repair costs as new sensors were introduced in the cost of these chip sensors, technology programming and calibrating after a collision. The OEMs have done extensive testing to make sure the proper metal thickness substrate or even paint will allow these sensors, often sonar, to read through the different levels of substrate.

Korby Gilbertson, a registered lobbyist on behalf of the American Property Casualty Insurance Association, and Robert Bell, executive director and registered lobbyist for the Nebraska Insurance Federation, argued that LB 111 isn’t necessary because there are already rules on aftermarket parts in Chapter 45 of the state’s insurance code.

“Just in case you think this is a new issue, it is not,” Bell told the committee. “It’s been a long-term issue of the yin and the yang between the auto body industry and the insurance companies. We pay for something like 90% of all collision repairs, so we have a vested interest in making sure that we get the best product at the lowest price. Sometimes that is the OEM part but sometimes that’s the aftermarket part.”

Clark told the committee that insurer contracts with Nebraska customers don’t always meet the part requirements or pass calibrations after they’re painted and installed on vehicles.

“Aftermarket parts may be made in the same exact factories as OEMs but the materials are different, and they have to be because of copyright laws and cost,” Clark said. “Another issue is when a consumer comes in with a brand new vehicle, sometimes less than 5,000 miles, they want it back to pre-accident condition and are upset when the insurance company will not provide OEM parts.”

When aftermarket parts don’t fit properly or fail calibrations, Clark said repairers go back to the insurer to pay for an OEM part, which includes paying for another calibration and additional labor than if OEM had been used initially.

“We’re having to go through all these steps, and this entire time the consumer could have had the vehicle back and now they’re out two, three four weeks. It’s just delaying the repair process,” he said.

Dillon Lapp, co-owner and manager of Twin Rivers Body Shop, added that conversations his shop has to explain why the insurance company won’t pay for OEM parts are difficult and confusing for customers.

“The reactions of these consumers range from sadness and frustration to absolute confusion,” he said. “The questions that are always asked — why will the insurance company not pay for OEM factory parts? Will this affect my selling or trading options? Will this devalue my vehicle?”

Blair MacDonald, on behalf of the Alliance for Automotive Innovation, testified that LB 111 would improve transparency to consumers in insurance-funded automotive repairs and improve safety outcomes.

“Today’s vehicles are considerably more advanced than vehicles of only a few years ago. Aluminum, magnesium, and high strength steel have replaced traditional steel to save weight. Vehicles are equipped with safety technology such as lidar, radar sensors, cameras, and other equipment that improves the safety of the cars, occupants, and shared roadway users.

“These advances undoubtedly have made vehicle repairs more complex, and repairs have had to quickly adapt to be able to restore vehicles to their safe and proper roadway condition in the event of an accident. LB 111 recognizes this new reality and sets a standard for parts used in insurance funded repairs.”

Tod Moore, Auto Care Association grassroots and advocacy manager, told the committee that mandating OEM parts would reduce competition and cause consumers to pay more for vehicle repairs.

“There is no body of research, individual study, or data to support the implication that aftermarket parts are inferior to OE parts,” he said. “In fact, they are often produced by the same company that produces the original equipment part but may come in a different box. The only difference is the OE parts often cost more than the non-OE branded equivalent, meaning increased repair and insurance costs for consumers.”

The debate over whether aftermarket parts are the exact same parts came up during a Q&A session at the November meeting of the Collision Industry Conference (CIC) in Las Vegas.

Wayne Weikel, Alliance for Automotive Innovation (Auto Innovators) vice president of state government affairs, said over the last 10 years he’s talked about aftermarket part issues across the country.

“I’ve been told by aftermarket part manufacturers and distributors that ‘These are the exact same parts. They come off the same assembly line. They just go into different boxes,’” he said. “Stacy, from what I’ve heard you say today, the only parts that really fall into that category are now the Tier 1 parts. Other CAPA-certified parts and other aftermarket parts generally do not fall in the category of ‘they come down the same assembly line. They just go in different boxes.’ Did I hear that correctly?”

Stacy Bartnik, Intertek’s transportation technologies industry relations manager, responded that she didn’t know who had been saying that.

“I would not say that,” she said. “The CAPA-certified is definitely different than Tier 1. It’s made by a different manufacturer, though those manufacturers may make domestic for where they’re OE domestic. But when you’re talking about a CAPA-certified part, it’s not the same line. We are certifying that it’s functionally equivalent to the standard that we have developed with our engineers; that it’s functionally equivalent to that OE service part. I’m not sure who said that it’s the same part, same manufacturer. Certification and verification are two different things.”

During the Nebraska Senate committee meeting, Kevin Fisk, with LKQ Corp., had a similar stance to the Auto Care Association.