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US Workshops Suing Insurers For Pushing Cheap Parts, Labour Photo:
Trevor Collett | Feb, 19 2015 | 1 Comment

Insurance companies in the US have been accused of pushing cheap and arguably dangerous repairs on damaged vehicles in order to keep costs down.

Workshops tasked with repairing vehicles damaged in collisions believe that the use of cheap non-genuine parts are putting lives at risk.

The issue, and it is one that is a similar point of friction in the Australian crash repair sector, is of insurance companies putting undue pressure on crash repairers and insisting on cheaper substitute parts to drive repair costs down.

Customers report being ‘guided’ toward workshops that follow an insurance company’s ‘rules’, with workshops that object to the practice of cut-price repairs quickly falling from the list of recommended repairers.

So workshops in the US are doing what the US does best; they’re suing the insurance companies. More than 500 workshops from 36 states are involved in the class action.

CNN reports that cars have been sent back out into the traffic with superglued headlights, damaged wheels, rusted second-hand parts and faulty aftermarket panels; according to some panel beaters and attorneys general.

Workshops have told of supposedly ‘new’ parts arriving neatly wrapped and packaged from insurers, but the part itself is clearly damaged or second-hand.

US Senator Richard Blumenthal, a former attorney general in Connecticut, has called for an investigation by the US Department Of Justice.

"Safety concerns are raised by this practice of ‘steering’ (encouraging customers to use certain workshops),” Senator Blumenthal said.

“Often [parts] may be salvaged or inferior or even counterfeit and that is a real urgent and imminent safety concern for the consumer who may have no idea what the origin of the parts are, who made them, or even whether they're installed properly."

The major insurers in the US deny any wrongdoing, with State Farm saying in a statement to CNN that customers are always able to choose their preferred repairer.

Poor repairs would simply take up time and money on subsequent repairs, an industry representative said, and most aftermarket parts were purely cosmetic.

In Australia, insurers were accused of a similar practice last year during an ABC television report, which highlighted individual cases brought to the attention of a parliamentary inquiry into the industry in NSW.

The Motor Traders Association in NSW said it was keeping a list of cases reported by concerned customers, containing everything from peeling paintwork to loose structural components.

A case study identified in the report points to an Audi that broke down after being collected from a repairer.

The owner lost faith in the original repairer, and took the car elsewhere for a second opinion.

That second workshop believed the car should have initially been written off, telling the owner that key structural components were bent and that the true cost of repairs should have been around four times what was originally quoted.

The Audi was insured by AAMI, who told the ABC at the time that it wanted a chance to reinspect the car.

“We don't want cars going off our repairer's lots that require rework,” AAMI’s Reuben Aitchison said.

“We back our repairs with a lifetime guarantee so it is in our interest to make sure it is right the first time and that aligns with the customer's interests as well. Most repairers that we work with have a very strong commitment to quality but cars are incredibly complex and some repairers have a bad day on very, very rare occasions.”

The inquiry wound up last year when a report was handed down to the NSW State Government in July. The government will support in full or in part 18 of the inquiry’s 21 recommendations.

MORE: NSW Fair Trading Vehicle Repair Reforms ‘Delayed’
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