Collision Collusion: How Insurance Companies Junk Your Car
Drivers who were in a collision often follow the recommendation of their insurance company when it comes to fixing the car. By doing so, they hope for a more accommodating insurance company. They also are likely to end up with a car that has lost a lot of value. In collusion with insurance companies, low-cost collision shops use knock-off or used parts.
“It’s a big problem,” Bob Collins, owner of Wreck Check Assessments told the Boston Globe. “It’s pretty widespread.” Collins says vehicles are often worth an average of about 10 percent less, or more vulnerable to failure, when shops install generic parts.
- In December, a West Virginia court ordered Liberty Mutual to stop using parts salvaged from junkyards to fix newer cars.
- California regulators tightened their rules for using knockoff parts last month.
- Massachusetts repair shops are considering lobbying state regulators to require insurers to pay for new parts for vehicles that are still under warranty, or with less than 36,000 miles: Current regulations require companies to use new, original parts on cars with less than 20,000 miles.
In many states regulations require insurance companies to tell customers what type of parts are being used in repairs. Often, the information is buried in stacks of paperwork.
In Massachusetts, a group representing repair shops, the Alliance of Automotive Service Providers, is considering asking regulators to stop insurers from requiring old or generic parts to fix cars that are still under warranty or that have less than 36,000 miles.Hat tip to Herr Holzman.
In my state by law it is the insured's choice what parts are used. Of course, insisting on OEM parts may result in the car being written off. The insurance companies can try to influence you to go cheaper, especially if the accident was your fault, but they can't force you to. Typically they will offer a rental car when one is not otherwise covered, or a "lifetime" warranty is offered on the repair if you do it their way. Ditto with choice of body shop. In my case, a couple years ago an idiot in a pickup pulled into a parking space in front of my parked Saab 9-3 and yanked the whole front end right off my car. I insisted on all new Saab parts - both headlights, bumper cover, various plastic panels, etc. Almost $4K with painting and very small amount of bodywork on the front edge of the fender. Headlights alone were $1500 of it, and they were the halogens, not the HIDs.
My wife's SUV was hit last year in her work parking lot. State Farm wanted me to take it to a "preferred shop", but I have one near me that I've used before and does really nice work (they do a lot of restorations). Anyway, State Farm only paid them to paint over a door next to a repaired quarter-panel, instead of to sand and repaint the door as it should have been done. (I have a shop in my family, and I hear this is common.) The shop actually did do the job correctly (sand the door), even though State Farm did not pay them to do so. So seems that a preferred shop wouldn't have done so. Plus, since the shop was not preferred, State Farm would not pay them directly. They instead wrote me a check that I then wrote to them. Oh, and the adjustor originally left out some misc. trim parts that needed to be replaced.
I am generally skeptical of expanding intellectual property, but the recent trend of automakers seeking design patents is going to help solve this cheap replacement part issue. If a design patent is in place that covers the headlight or fender (that was very rare until recently) then it cannot be knocked off. This is not all rosy though. The non-OEM replacement parts that new car buyers don't want their insurance companies using are going to be the non-OEM replacement parts that people restoring cars are desperate are desperate for down the line. The really big way that insurance companies screw people is called comparative negligence. Most states used to have absolute negligence. You run a red light and hit someone, it's your fault. But the insurance companies have been progressively lobbying for comparative negligence. Someone runs a red light and hits you, but you are going 5 mph over the limit, its 10% your fault. What that basically means is that the insurance companies get to screw you out of your deductible and raise your rates even the other guy really caused it.
The only thing I didn't see discussed was the pressure subrogation puts on insurers to keep costs down. Once they pay you for the repairs to your vehicle, they then have to take that estimate, photos, and police report and try to convince the insurance carrier of the person who hit you to pay up. If you got brand new doors on your rusty beater, the carrier of the at-fault party will balk at paying for it since the legal principal is to return your vehicle to its pre-accident condition. This means your carrier has to eat whatever they can't convince the other carrier to pay, even after years of litigation. And they hate that.