R.I. bill: Auto insurers' recycled parts ought to be in region, have similar or less mileage, age

A Rhode Island bill would require insurers to pick recycled parts with equal “fit, quality, performance and warranty” as new ones and carry “exactly the same year or newer” and “exactly the same or less mileage” because the customer’s vehicle.

“You need the same specs,” sponsor and House Corporations Committee Vice Chairman William O’Brien, D-North Providence, said while discussing part age during a committee hearing May 20.

The bill would also give insurers five other paragraphs of standards associated with sourcing used parts.

“Towards the extent practical, an insurer shall not require the use of multiple parts distributors to supply parts for any single repair and shall limit the distance from the sourced parts to fifty miles, and provide delivery unless decided to by the vehicle owner,” House Bill 6235 states. Rhode Island is only 48 miles long from north to south and 37 miles wide from east to west, based on the state.

Insurers must pay for the cost of modifying suitable used parts but for the expenses associated with dealing with “used parts that do not increase the risk for vehicle being repaired to the condition prior to the loss,” based on HB 6235.

If the part chosen by an insurer failed to restore the automobile towards the “condition prior to the loss,” the insurer must use an OEM part, according to the fourth of six standards established through the bill.

The bill describes a process for a shop and insurer to handle an unsuitable part within the next two standards:

Casale’s Auto Body President Thomas Casale told the committee that bill and HB 6234, that was also heard by the panel May 20, “will help clarify constant problems within our industry.”

The Corporations Committee voted to hold HB 6235 and all sorts of other bills on the agenda for further study.

National Association of Mutual Insurance providers Northeast regional V . p . Rory Whelan said “our main concerns” were Standards No. 4 and 5 within the bill: The mandate that an OEM part be utilized if a part was inadequate and also the language regarding the repair shop notifying the appraiser of this deficiency.

Whelan said the word what didn’t require repair shop to provide evidence a part was insufficient. “The car repair shop simply says so,” he said.

However, Standard No. 5 does describe an adjuster getting the to “reinspect the automobile,” and Standard No. 6 requires a store “provide documentation of used parts, that do not meet the requirements of this section, as reasonably requested through the insurer.”

But Whelan said the balance offered absolutely no way to have an adjuster to challenge this determination. The repairer has got the “exclusive capacity to say no,” he explained.

Whelan said the word what could yield higher costs and yield longer repair times.

Distant parts

However, appraiser Robert Godfrey argued that the status quo of sourcing parts from farther away extended cycle times.

“That tends to delay the repair process,” he explained. This posed an issue when the claimant was running out of rental car coverage, he explained.

Godfrey argued that although “shops have no problem” with used parts, it shouldn’t be a situation for “multiple finds” of parts sourced from a variety of suppliers.

Repairers desire to cope with people they knew and native businesses, plus they could refuse an unsuitable part if one were delivered, according to Godfrey. But when a part ended up being to be shipped from the few hundred miles away, the supplier would want to be paid ahead of time, he said. If there’s a problem with the part, “the chase is on” for the repairer, he explained.

“Let them deal with the neighborhood market,” Godfrey said.

Randy Bottella, owner and operator of Reliable Collision, said a common insurer practice today involved finding parts in faraway states that could be had for $50-$75 cheaper than a local part. If there’s a problem with one of these parts, it’s a “logistical nightmare” to address, he said.

Local suppliers that the shop had a current relationship won’t sell inadequate parts, Bottella said. “It does far better,” he said.

He also noticed that in a situation in which a major savings might be realized from the distant part, the geographical restriction could be lifted using the vehicle owner’s consent.

“Not a problem,” Bottella said. “That can happen.”

The point ended up being to prevent some insurance company from first picking a part halfway across the country based on price, he explained.

Automotive Recyclers Association Executive Director Sandy Blalock known as the 50-mile guideline “completely impractical” and in violation from the Constitution’s “dormant Commerce Clause,” an idea which prevents states from restricting interstate commerce.

She also argued that no such distance restriction existed on sourcing OEM parts. However, she also argued that OEMs aren’t making parts older than Ten years available, and few dealers keep parts that old. The ones that do may not be located within 50 miles, she said.

The average vehicle on the highway is 11.Nine years old, based on IHS Markit. However, the average repairable vehicle claim only involves an automobile averaging 6.17 years old, and the average vehicle winds up totaled by an insurer at 9.68 years, according to CCC.

Advanced Remarketing Service CEO Joseph Hearn said the bill “narrows the commercially available” options to spend less and said he opposed “localism” and a “locally sourced” parts mandate. He said while he could comprehend the preference to operate locally, consumers lived within an e-commerce age, and shops could develop relationships beyond their area. A part with similar cost and expense in the “same time window” should be fine, he explained.

Despite the geographic limitation seeming to favor them, LKQ Northeast government affairs manager Andreas Heiss said the balance would put LKQ’s two Rhode Island facilities in danger. He explained it hurts the recycled parts industry in Rhode Island. He known as the 50-mile radius “irrational” as well as cited the Commerce Clause.

“These parts aren’t coming via horse and buggy,” Heiss said.

Heiss said the balance would “only help the repair shops” and increase repair costs “while putting hard-working Rhode Island used part suppliers bankrupt.”

Age, mileage standard

American Property Casualty Insurance Association state relations Vice President Frank O’Brien called HB 6235 a “constructive ban on the use of recycled parts” and said his group felt “strong opposition” into it.

He said his trade group objected to the “nonsensical requirements” forbidding sourcing “beyond a certain geographical area” as well as on mileage.

“We have no issues with the provisions from the bill which cope with the use of appropriate parts, spending money on their fit, paying for them to be finished, all that sort of stuff,” O’Brien said.

Bottella called it “absolutely untrue” the balance restricted using recycled parts.

It simply established a typical for used parts, a thing that didn’t currently exist, according to Bottella. “There’s absolutely zero,” he explained.

Bottella asked should you would want a mature spend extensive mileage utilized on your vehicle. “Obviously not,” he said.

Godfrey called HB 6235 a “good bill” because it defined a used part.

“There isn't any meaning of what a used part is,” Godfrey said.

Godfrey said he had been an appraiser for several years. Historically, the term “LKQ” — “like kind and quality” — was applied to recycled parts, and the concept seemed understood. “We actually had no issues,” Godfrey said.

But the aftermarket parts industry now employs the word, and used parts are left “in limbo,” based on Godfrey. Appraisers now declare that the idea of like kind and quality refers instead to aftermarket parts, and there’s no used part definition, he explained.

Godfrey said that in the case of a 2011 vehicle which uses the same fender as a 2007 model, some appraisers would make an effort to make use of the 2007 version.

“It will be needs a definition,” he explained.

But Blalock argued that recycled parts from the same vehicle model series “ought to always be allowed.”

“They all are exactly the same parts,” Heiss agreed. He explained newer and more effective OEM parts might also be older than age the vehicle.

Of course, such OEM parts have no mileage. But Heiss said insisting that the used part have a similar or less mileage as the policyholder’s vehicle “isn't a good standard,” and Blalock said mileage had no bearing on the purpose of many components.

Blalock used the illustration of a 2021 Subaru Outback with 30,000 miles kept in a garage in a state with low humidity and out of doors of the Snow Belt. Its parts would be ineligible for 2021-19 Subarus within the same series, though it could be an “ideal part” for all those vehicles.

Blalock said the balance imposed “discriminatory conditions” and “severe limitations.”

She said its standards were actually “baseless restrictions” designed to bar everything but new OEM parts, and she or he noted the language wasn’t imposed on new OEM parts or remanufactured components.

Performance parts

Auto Care Association state affairs senior director Tom Tucker told lawmakers the balance would prohibit specialty aftermarket parts. As he described it, the issue lay using the language that the insurer must write for a new OEM part if their used part failed to return the automobile to preloss condition.

The “consumer did not have or want OEM parts” in situations where specialty parts like oversized tires have been installed on the automobile introduced for repair, he said.

This customer could possibly still get their wish. HB 6235 seems to simply be creating law associated with used OEM parts, not new or used aftermarket parts.

The bill adds a definition to Rhode Island General Law 27-10.2-1 that the “Used part” is “a used original equipment manufacturer part.”

The term “Original equipment manufacturer” and “OEM” had recently been defined under 27-10.2-1 as “the manufacturer from the motor vehicle being repaired.” So

27-10.2-1 also already defines “Aftermarket part” as any part “that is not an authentic equipment manufacturer part.” And General Law 27-10.2-2 offers customers the option to request aftermarket parts in insurance claims.