Federal Lawsuit Targets Auto Insurance Carriers

A federal lawsuit filed by auto body shops claims that the auto insurance carriers will only cover repairs that use after-market parts. The auto insurance lawsuit alleges that the parts that auto insurance companies cover are less safe than new parts. The suit claims that the difference between new and after-market parts reduces the insurer’s costs, but places both the repairs shops and their customers at risk. Shop owners must choose between installing parts they believe are less reliable, or taking on the cost difference in installing newer parts.

Details of the Auto Insurance Lawsuit

More than 500 auto body shop owners in 38 states have joined the auto insurance lawsuit. The suit claims that auto insurance carriers require that the shop owners purchase aftermarket parts, rather than the more expensive factory-new parts. The shop owners want to compel the insurance carriers to provide them with fair compensation for newer, more reliable parts. The suit would also call on insurance companies to apply the same standards for parts across the country, as different states have different laws regarding the quality of replacement parts.

Auto Insurance Shortcuts Could Endanger Drivers

The use of aftermarket parts keeps costs down for auto insurance carriers. However, some auto shop owners argue that these parts could pose a danger to drivers. Most aftermarket parts are not made by the original manufacturer. Some of these manufacturers do not employ the same level of testing on their parts as original equipment manufacturers, or OEMs, of the same parts. While the variations between new and aftermarket parts can be slight, those slight variations can mean the difference between a mild fender-bender and a serious injury accident.

Auto Insurance Industry Seeks “Cost Containment”

A major point of contention in the auto insurance lawsuit comes from which party should cover the cost of new parts. Repair shop owners who rely on auto insurance claims for much of their income must choose between using the aftermarket parts and paying the difference for new parts from their own profits. Jeff Butler, owner of the Butler Body Shop in Michigan, told reporters that insurance carriers use the term “cost containment” to describe the practice. Mr. Butler also said that, when an aftermarket part fails, the customer will blame his shop, rather than their insurance carrier, for the problem.

Attorney: Auto Insurance Lawsuit About “Saving People’s Lives”

An attorney for one of the repair shop owners involved in the auto insurance lawsuit says that the lawsuit is about more than protecting a shop owner’s profits. “This is all about saving people’s lives,” the attorney told local reporters. “Insurance companies worry about insurance companies, and not about the people in the car,” he said. He also stated that auto insurance carries see the drivers and passengers who could be injured by the failure of aftermarket parts as “just a dollar sign.”

Source: WWMT-TV

Get Answers For Your Auto Insurance Lawsuit Questions

To find out how we can answer your questions about auto insurance lawsuits, contact one of our attorneys today. Our intake team will take down the details of your case and quickly connect you to an attorney who understands how to get the most from your auto insurance lawsuit. You can also fill out the “Free Case Evaluation” form at the top of this page.

NOTE: This blog post is a news story and is not an endorsement of Arguello Law Firm by any party mentioned herein.