Utah Bill Mandates Transparency on Auto Insurance Crash Parts
A Utah bill mandating transparency regarding the use of original equipment manufacturer (OEM) crash parts has advanced in the state legislature, following endorsement from the Transportation Committee. The amended legislation, HB 119, requires auto insurance policies to clearly disclose at the time of purchase whether OEM or non-OEM aftermarket crash parts will be utilized for repairs.
The bill compels insurers to use crash parts "substantially equivalent" to OEM parts. Initially, the proposal allowed vehicle owners to pursue legal action against insurers for non-compliance, but this provision was removed during a committee hearing on February 13. Representative Colin Jack, the bill's sponsor, emphasized the necessity of using appropriate parts due to the integration of advanced technologies such as sensors and radar in modern vehicles. Jack stressed that this issue transitions from aesthetic considerations to safety concerns.
The legislation aims to ensure policyholders are informed about the type of replacement parts included in their insurance coverage. According to Gavin Magor of Weiss Ratings, while insurers argue that non-OEM parts help reduce costs, the financial performance of property and casualty insurers in Utah shows significant profitability. He suggested the core issue is consumer choice and transparency, asserting that policyholders should be aware of the implications of their premiums concerning the parts used.
During the hearing, testimonies raised concerns about the quality of replacement parts. Sam Plumb from Alpine Auto Renovation criticized the selection process, alleging that insurers prioritize cost over quality, without regard for factors like origin or crash performance. Jack clarified that the bill does not mandate the use of OEM parts, but any non-OEM parts must meet OEM quality standards. Supporters such as Alpine Body Shop and Higgins Body and Paint backed the bill, citing consumer unawareness about their options for replacement parts.
Richard Seaman from Salt Lake Valley Auto Group and Sky Auto Group expressed concerns that insurers focus on cost savings and rapid repairs over vehicle safety. He noted that OEMs often offer competitive pricing for used parts, which are generally cheaper than new parts. However, opposition to the bill arose from Dave Kallas of the National Association of Mutual Insurance Companies, who argued that the legislation could effectively prohibit the use of non-OEM parts and cited the challenge of ensuring quality assurance through manufacturers' specifications.
LKQ Corp. also opposed the bill, arguing it imposes restrictions on aftermarket crash parts and enforces misleading disclosures that could negatively impact the aftermarket industry. This ongoing debate highlights the crucial balance between regulatory compliance requirements and consumer transparency within the auto insurance industry.