States consider OEM repair laws but few enact them

By John Yoswick

More than a dozen state legislatures have considered proposed legislation over the past three years related to the use of OEM collision repair procedures, and this year is no exception.

A bill (AB 1359) introduced in the New York Assembly this year, for example, would prohibit both shops and insurers from deviating from OEM procedures and recommendations without written authorization from the vehicle owner. 

The Alliance of Automotive Service Professionals (AASP) of Illinois is backing a bill (HB 3133) introduced there in February that would prohibit an insurer from specifying the use of repair procedures that are not in compliance with OEM directives. It similarly prohibits shops from using procedures that are not in compliance.

The Washington legislature held a hearing in February on a bill (HB 1428) that would require auto claims to be paid “based upon the reasonable and necessary costs at the claimant’s chosen repair facility,” placing the burden on the insurer of proving the unreasonableness of any procedure or charge being billed.

“Payment of the claims must not intentionally disregard or deny repair processes necessary to restore the automobile to its condition prior to the loss,” the bill states.

The Washington bill would define “repair processes” as the steps, tolerances and technical requirements or instructions that the automaker makes available.

Two former insurance adjusters testified in support of the bill at the hearing, saying they received inadequate technical training, and saw their companies as focused more on costs than repair quality or safety. Some consumers testified in favor of the bill as well, describing their experiences in trying to get an insurance company to pay for the full cost of repairs to their vehicle. 

A bill (HB 310) introduced in New Hampshire this year would have established a legal presumption that automaker recommendations for scans and calibrations are necessary to bring a vehicle to pre-loss condition, and would have made it an unfair insurance practice to fail to pay for those procedures unless there is “evidence that the scan and calibration are not necessary.”

The New Hampshire bill did something few pieces of legislation do: Bring Democrats and Republicans together to vote unanimously. Unfortunately for backers of the New Hampshire bill, all 18 members of a House committee gave a thumbs-down to the proposal.

So why have nearly all state legislative proposals related to OEM procedures failed to be enacted? That was the question at the heart of a “Governmental Committee” panel discussion during a recent virtual Collision Industry Conference (CIC). One reason cited: Opposition to the idea of pushing for or requiring the use of OEM procedures from alternative parts industry.

“I think the biggest problem we have is there are OEM repair procedures that very blatantly deny the use of aftermarket or recycled original equipment parts,” panelist Sandy Blalock, executive director of the Automotive Recyclers Association, said. “So we have very serious concerns that that would be pushed even more if any of these pieces of legislation get passed.”

Panelist Wayne Weikel of the Alliance for Automotive Innovation, a trade group representing the automakers that manufacture nearly all the passenger vehicles sold in the U.S., pointed out that in some of the state legislative efforts, automakers “took parts off the table,” by agreeing to legislative language “saying that, notwithstanding what OEM repair procedures may say about parts, you’re supposed to follow the repair procedures.”

The proposal in Washington state, for example, much like a similar legislative proposal there last year, excludes any position statements or directives regarding the use of any particular parts, tools or equipment. It states that it does not require the use of OEM parts nor OEM advanced driver assistance system (ADAS) calibration tools “if the repair parts or calibration tools used are at least equal” to OEM and “otherwise conform to OEM directives.”

But Blalock said the OEM position statements remain.

“As long as there’s anything out there that is telling people it’s not wise to use [alternative] parts, or that they do not recommend that they be used, this is going to be an issue for us,” she said.

“And that’s why you see why compromise on this will be difficult,” Weikel said. “Against all of my members’ views on parts, we tried to focus just on procedures, and even after we’ve done that, we continue to hear objections such as these. I can tell you, our manufacturers are not going to walk away from saying that the best part is a new OEM part. That’s just the reality.”

The insurance industry also pushes back against proposed state legislation that would require them to pay claims based on OEM repair procedure. Insurance industry representatives at the hearing in Washington state this year said they didn’t see the legislation as necessary and that it would lead to more disputes and litigation. 

One panelist at CIC, Darrell Amberson of LaMettry’s Collision in Minnesota, said his state’s association twice pushed for legislation that would have made it an unfair claims practice for an insurer to refuse payment for a repair procedure called for by an OEM. The first year the bill didn’t even receive a hearing. The association then worked with insurers on some “watered down” compromise language introduced in 2019, but even then insurers opposed the bill during a hearing. (AASP-Illinois in April similarly said that “industry stakeholders…will be meeting over the following weeks to negotiate legislation regarding OEM procedures.”)

Amberson said the state’s legislature has a high percentage of members who currently work for, or have previously worked for, insurance companies, including the committee member most critical at the hearing of the bill’s language.

“It didn’t get out of that committee,” Amberson said of the 2019 bill. “It’s been difficult to reason with some entities out there. I’m not saying every insurer is against proper repairs. But there are those out there that frankly are inclined to imply that it’s okay to essentially cut some corners. The phrase ‘case-by-case’ implies you can make a judgement, questioning the repair procedures the manufacturer established.”

New Hampshire lawmakers passed OEM repair procedure legislation in 2019, but it was vetoed by Republican Governor John Sununu, who said the bill “would increase the cost of auto insurance premiums by limiting the ability of insurers to negotiate what is reasonable in the repair process.” Weikel pointed to what he sees as the irony in that argument.

“Be that true or not true, by acknowledging that these prices were going to change, he was acknowledging on its face that repairs are not being done the way they should be,” Weikel said. “Because if they are, the price isn’t going to change.”

Panelist Jina Petrarca-Karampetsos of the Auto Body Association of Rhode Island said the association successfully passed such OEM procedure legislation there in 2018 after spending “many, many years building momentum.” The association has a history of getting legislation enacted that is designed to ensure consumers have information and choice, she said. That includes an anti-steering bill, a two-tier ‘Class A’ and ‘Class B’ shop designation system, a total loss threshold of 75 percent that prevents a vehicle with lesser damage from being totaled without consumer consent, and a law that requires consumer consent for use of anything other than OEM parts for vehicles up to four years old.

“Knowledge is power, and choice is power,” Petrarca-Karampetsos said. “If you’re doing the right thing, giving consumers a choice is never going to be a negative in your business.”

The Rhode Island OEM procedure regulation is tied to the parts legislation. It originally prohibited insurance companies from requiring any repairer “to use repair procedures that are not in compliance with the recommendations of the original equipment manufacturer.” But Petrarca-Karampetsos said in a compromise – based on opposition from the non-OEM parts industry – the bill was amended to say the requirement for automaker procedures applies only “when OEM parts are used.”

“It’s been a major success. And it was a compromise,” Petrarca-Karampetsos said.

Blalock said such compromise is not “out of reach,” particularly in states like Rhode Island that has generally viewed used parts as OEM (unless they were non-OEM originally). 

“But I think the biggest compromise is we need to stop thinking we have to go pass legislation to protect every facet of our businesses,” Blalock said. “We need to stop going to our legislatures and asking them to protect a certain segment of our industry.”

Petrarca-Karampetsos said she disagreed with the idea that legislation is not necessary, given consumers’ lack of awareness and understanding of issues related to insurance and collision repair.

“They aren’t versed in this,” Petrarca-Karampetsos said. “They go to a shop. They expect to have their car repaired safely. They expect their insurance companies will treat them fairly. They’re not aware of the nuances.”

She said the association at one point took a year off from its legislative efforts to meet with insurers in an effort to find “useful solutions” to issues of conflict, but there were no such solutions that the “insurers would implement without legislation,” she said. 

“That has been proven here over and over,” Petrarca-Karampetsos said.

Amberson said he agreed that finding solutions short of legislation “would be wonderful,” but “it’s very hard to accomplish,” particularly when it comes to OEM repair procedures.

“Who among us are experts on this to the point that we can claim to be more knowledgeable about the proper repair than the vehicle manufacturer,” Amberson said. “Hence, we as repairers are caught in the middle, and unfortunately have to pursue legislative solutions to be able to fix cars properly, to protect ourselves as well as the consumer.”  •

John Yoswick, a freelance writer based in Portland, Ore., who has been writing about the automotive industry since 1988, is also the editor of the weekly CRASH Network bulletin (www.CrashNetwork.com). He can be contacted by email at john@CrashNetwork.com.