After-Market Crash Parts Act

Policy Status

  • Type: Model Policy
  • Status: Final
  • Date Finalized: January 1, 1995
  • Date Amended: November 16, 2017

Issues

  • Economic Development
  • Insurance

    • Task Forces

  • Commerce, Insurance and Economic Development

    • Tags

  • Commerce Insurance and Economic Development Task Force
  • Insurance

    • Summary

    Since only bodily injury claims are litigated, no-fault insurance only saves money in the bodily injury component of insurance premiums. However, savings can be achieved in the property damage component of premiums, as well. Often, the price of a replacement part reflects whether or not the original manufacturer has competition from a non-original manufacturer. Naturally, insurers have sought to utilize these less expensive non-original equipment manufacturer crash parts (fenders, quarter panels, hoods, etc.), and as the market develops, it is likely that its beneficial effect will be seen through the lowering of the costs to repair cars. In fact, in many states collision coverage rates have stabilized or come down as a result of the availability and use of competitive replacement parts. Many insurers warrant these parts and the distributors for many of these parts offer warranties on them, as well. However, warranty restrictions in several states restrict the free market in this area and threaten to drive non-original manufacturers out of business.
    Draft

    After-Market Crash Parts Act

    Model Policy

    (Title, enacting clause, etc.)

    Section 1. {Title.} This Act shall be known and may be cited as the After Market Crash Parts Act.

    Section 2. {Definitions.} As used in this Act:

    (A) “Insurer” includes an insurance company and any person authorized to represent the insurer with respect to a claim.

    (B) “After-market crash part” means a replacement for any of the non-mechanical sheet metal or plastic parts that generally constitute the exterior of a motor vehicle, including inner and outer panels.

    (C) “Non-original equipment manufacturer (non-OEM) after-market crash part” means after-market crash parts not made for or by the manufacturer of the motor vehicle.

    Section 3. {Identification.} Any after-market crash part supplied by a non–original equipment manufacturer for use in this state after the effective date of this regulation shall have affixed thereto or inscribed thereon the logo or name of its manufacturer. Such manufacturer’s logo or name shall be visible after installation whenever practicable.

    Section 4. {Disclosure.} No insurer shall specify directly or indirectly the use of non-OEM after-market crash parts in the repair of an insured’s motor vehicle without disclosing the intended use of such parts. In all instances where non-OEM after-market crash parts are intended for use by an insurer:

    (A) the written estimate shall clearly identify each such part;

    (B) the disclosure document containing the following information in 10-point or larger type shall appear on or be attached to the insured’s copy of the estimate: “This estimate has been prepared based on the use of one or more crash parts supplied by a source other than the manufacturer of your motor vehicle. Warranties applicable to these replacement parts are provided by the parts manufacturer or distributor rather than by the manufacturer of your vehicle.”

    Section 5. {Enforcement.} Violations of this regulation shall be enforced through the Unfair Trade Practices Act by the penalties provided for in said Act.

    Section 6. {Severability clause.}

    Section 7. {Repealer clause.}

    Section 8. {Effective Date.}

     

    Approved by the ALEC Board of Directors on January 1995. 

    Reapproved by the ALEC Board of Directors on January 28, 2013.

    Reapproved by ALEC Board of Directors on November 16, 2017.