Consumer Advisory:Insurance Companies' Use of 'Imitation' Auto Parts Draws Criticism, Lawsuits and Possible Legislation

Business Wire, August 2, 1999

MIDDLETOWN,Conn.--(BUSINESS WIRE)--Aug. 2, 1999--

Majority of Insurance Companies Demand Autobody Shops Use

"Imitation" Parts

Insurance companies across the nation have come under recent fire from consumer groups, auto repairers and legislators for their use of so-called "imitation" parts in accident repairs.

These parts are not manufactured or sanctioned by vehicle manufacturers. Further, testing by a leading consumer magazine has shown many of these parts to be inferior to original equipment manufacturer (OEM) parts in several key ways. (See attachment)

The majority of insurance companies specify the use of "imitation" parts because of their cheaper cost. Middlesex Mutual Assurance Co. in Middletown, Conn. is one of a select few insurance companies in Connecticut that pays for OEM parts in repairs. In fact, Middlesex has provided their customers with full coverage for OEM parts since they sold their first auto insurance policy. Middlesex's claim practice specifies the use of OEM parts on every repair, every time. In addition, Middlesex is the only auto insurance company in Connecticut to provide specific written coverage for original factory parts in every policy they sell.

Mike Wilkowski, president of the Auto Body Association of Connecticut, says, "The problem with "imitation" parts is that they don't fit, they rust prematurely, and they're not crash-tested. In my experience, if I use "imitation" parts, the customer will notice the difference and will demand that I fix the car with OEM parts." Wilkowski is also co-owner of Stanley's Auto Body in Waterbury, Conn.

Current Connecticut law requires that the customer be notified by the repairer if "imitation" parts are used in repairing the vehicle. Legislation recently considered would allow the insured to specify the use of OEM parts in repairs made to their vehicles.

This legislative push comes on the heels of several class-action lawsuits that have been filed nationwide. The suits, filed in Illinois, Florida, and Arizona contend that the companies named are guilty of breach of contract because the language in their policies states that the vehicle will be returned to "pre-crash condition" using parts of "like kind and quality."

Eddie Lupinek, owner of Eddie's Auto Body in East Haddam, Conn. has witnessed many independent crash tests performed on after market and OEM parts. He says, "After market parts are a fraud. They're made with the intention of being a cheap replacement part, with little concern for safety and quality." Lupinek, an expert on the issue, has testified to the Connecticut State Legislature regarding the inferiority of "imitation" parts.

"For example, "imitation" bumpers are made from cheaper steel," he continued. "This affects the deployment of airbags, making them go off further into a collision than the manufacturer intended, and they do not provide the same protection that they usually would."

"The role of an insurance company should be to repair your car to the same condition that it was prior to an accident," said Larry Johnson, vice president of claims of Middlesex. "We write our policies to reflect this. We want your car to be repaired the same way we would have our own cars repaired," Johnson said. (more) page 3 Middlesex Mutual

Formed in 1836, Middlesex provides auto and home insurance to residents of Connecticut and Maine. Middlesex is also one of the largest underwriters of auto insurance in Connecticut.

OEM Parts Issue at a Glance

"Imitation" parts have been shown to be inferior in several ways:

Compromised vehicle safety:

-- non-original bumper covers shatter more easily, and some

"imitation" inner bumper assemblies may collapse under a slight

impact -- in one case a "imitation" hood latch failed, causing the hood to

fly up, blocking the driver's view. -- structural sheet metal often lacks the OEM-engineered crumple

zones that absorb impact in a collision

Faster corrosion:

-- imitation fenders and hoods are made from thinner, inferior

grades of steel -- they lack the phosphate corrosion protection applied at the OEM

factory, resulting in quicker and more severe corrosion

Inferior fit and finish:

-- fenders often do not line up properly, and they have to be

modified by the bodyshop for installation

Diminished vehicle value:

-- when the fit and finish of the vehicle differs from when it left

the factory, aside from normal wear and tear, the resale value or

trade in value of the vehicle may be reduced

Leases require OEM parts:

-- dealership leases require that the vehicle be returned as close

to its original pre-leased condition - the lessee could be

charged the cost to return the vehicle to its actual pre-crash

condition if imitation parts have been used, especially if the

fit and finish are visibly inferior

The reasons above have been cited by a leading consumer magazine report and by body repairmen as the main reasons why "imitation" parts are inferior to original equipment manufacturer (OEM) replacement parts.