A proposed rule for aftermarket crash parts has been issued in D.C. that would allow insurers to require the use of aftermarket crash parts if an independent third party certifies that parts are equivalent to an OEM part in terms of fit, finish, quality and performance. ASA opposes the proposal and anticipates such certification proposals will continue to appear in states until they or the federal government move aggressively toward consumer notice and consent statutes.

On May 2, the Department of Insurance and Securities Regulation of the District of Columbia issued a proposed ruling for aftermarket crash parts. The proposed rule is similar to draft legislation the Certified Aftermarket Parts Association (CAPA) has offered in various states over the past few years. CAPA's principal funding is from the insurance industry.

The heart of the proposal can be found in the proposed new section 512.1: No insurer shall require the use of aftermarket crash parts in the repair of an automobile unless the aftermarket crash part is certified by an independent third-party certifier to be equivalent to or exceeds the original equipment manufacturer part in terms of fit, finish, quality and performance.

Estimates will be required to contain the following information in 12-point type:

THIS ESTIMATE HAS BEEN PREPARED BASED ON THE USE OF CRASH PARTS SUPPLIED BY THE MANUFACTURER OF YOUR VEHICLE OR CERTIFIED AFTERMARKET CRASH PARTS SUPPLIED BY AN INDEPENDENT MANUFACTURER. ALL AFTERMARKET CRASH PARTS USED IN THE PREPARATION OF THIS ESTIMATE ARE WARRANTED BY THE MANUFACTURER OR DISTRIBUTOR OF SUCH PARTS AND/OR AN INSURER FOR WHICH THE ESTIMATE WAS WRITTEN.

The Automotive Service Association submitted comments on the proposed regulation in May. ASA asked that the department reconsider its proposal. ASA argued, "Despite the appearance of protecting vehicle owners, this particular proposed regulation has been rejected in states over the last few years as some insurers have attempted to implement state parts certification programs. It does not protect the vehicle owner." ASA continued in its comments to the department, "Generally, the insurance industry's interest in these parts is from a cost savings perspective. ASA does not believe this proposed regulation will preclude third-party parts certification by entities having, at a minimum, a financial relationship with insurers."

The "independent third-party certifier" is a major issue. The language in the proposal does not ensure the certifier will be "independent." The number of parts certification organizations is very small. Without a more cautious approach to this certification process, it could be abused.

ASA also encouraged the department to review the ASA position on replacement crash parts. If the agency wants to protect the consumer, allow for a substantive notice process as to the use of these parts and the written consent of the vehicle owner prior to the part being applied. ASA developed the notice and consent proposal along with the new car dealers and the automakers after the West Virginia crash parts legislation in the mid-1990s.

ASA met recently with the commissioner of the D.C. Department of Insurance and Securities Regulation to discuss the proposal. The commissioner involved several key members of his staff including the director of policy and public affairs. The commissioner stressed the department's interest in having a better D.C. regulation to protect the consumer, but emphasized that no final decision had been made relative to the proposed regulation. ASA was encouraged that the commissioner acknowledged significant opposition to the proposed regulation.

ASA has made clear its opposition to the regulation and is hopeful the proposed regulation will be eliminated or substantially altered in order to be acceptable to repairers and vehicle owners. No date has been set by the department for a final decision on this issue.

ASA recently analyzed existing state statutes governing the use of replacement crash parts. It was determined that 44 states have laws governing the use of replacement crash parts.

Thirty-six states require notice only to consumers when aftermarket crash parts are used. Seven require the notice and consent of the consumer. Eight states do not require any notice or consent.

ASA has provided a list of Web site links accessing the states' provisions of interest. This new report can be found on the ASA Web site, www.asashop.org.

Clearly, mere notice is not sufficient to protect vehicle owners at the time of a repair. Most notice statutes are satisfied with disclosures in the original policy agreement. The educational process as to the types of parts used in a repair occurs after the vehicle is brought to the repair facility. The burden falls on the repairer to educate and be the principal advocate for the vehicle owner as to the parts used in the repair. The consent form will assist in the educational process and ensures the vehicle owner is fully aware of the quality and safety of the part used in making his or her vehicle whole.

The D.C. proposal is not the first case of the third-party certification initiative. ASA anticipates the certification proposal will continue to appear in states around the country until states or the federal government move aggressively toward protecting vehicle owners through legitimate notice and consent statutes.

ASA encourages repair facility owners to contact their state legislators and regulators asking that they consider proposing vehicle owner notice and consent laws in their states.

Bob Redding is the Automotive Service Association's Washington, D.C., representative. He is a member of several federal and state advisory committees involved in the automotive industry. For more information about the legislative activities of ASA, visit www.TakingTheHill.com.

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