The Downfall of Aftermarket Parts in Rhode Island
Without a signature from Gov. Gina Raimondo, Senate Bill 2679 (SB 2679) was passed into law by the Rhode Island legislature on Independence Day, making it official that insurers can no longer request a repairer to deviate from OEM repair procedures when OEM parts are used.
SB 2679 and its companion bill that was also passed, House Bill 8013 (HB 8013), resparked an age-old debate about whether shops should use OEM parts for repairs or have the freedom to utilize alternative parts. On one side of the debate, there are OEM advocates like Aaron Schulenburg, executive director for the Society of Collision Repair Specialists, who do not trust how non-OEM parts affect a vehicle’s system performance.
On the other side, people like Edward Salamy, executive director for the Automotive Body Parts Association, who penned an op-ed piece for a Rhode Island newspaper, state that eliminating aftermarket parts could create a monopoly and take the customer out of the driver seat.
On top of those two, OEMs introduced statements in the last few months that detail their position on the use of aftermarket parts. For instance, GM stated it did not approve the use of aftermarket, reconditioned or salvage bumpers or fascias on vehicles equipped with ADAS.
In Rhode Island, legislators participated in the debate as well. Here’s a breakdown of how the bills that were passed and what national precedent they could set.
A Brief Law Overview
The Senate bill has passed through the state Senate and has become law, but not before being amended a few times. Bob Redding, the Washington, D.C. representative for the Automotive Service Association (ASA), says it is common for amendments to be added to bills and for those changes to become law.
Along with the Senate bill, representatives passed companion bill HB 8013 with an amendment declaring the legislation would not apply to glass repair.
In this case, the Senate bill that has passed into law significantly impacts collision repairers. According to Redding, the key factors are that insurance companies may not mandate the use of aftermarket parts without the owner’s consent on vehicles less than 30 months to less than 48 months beyond the manufacture date, and that no insurance company may require any repairer to use repair procedures not in compliance with OEM procedures when OEM parts are used in the repair process.
The Senate bill, SB 2679, was introduced March 20 by Senators Maryellen Goodwin, Dominick Ruggerio and Michael McCaffrey. The bill sought to expand restrictions currently in place on non-OEM collision repair body parts in first-party claims to any collision-damaged parts.
ASA submitted written testimony in support of HB 8013. According to the testimony, “Too often, undefined ‘industry standards’ are equated with the manufacturers’ procedures. When this happens, the shop and the consumer are jeopardized if the repair doesn’t perform like manufacturers’ recommendations. Compliance is not only critical to protect the shops from litigation, but to ensure the safety of the customers.”
While similar types of law have been introduced in other state legislatures, Redding says Rhode Island has been the only state so far to pass the bill.
Redding says the new provisions in SB 2679 are “quite limiting” and do not provide for process protections for the consumer and the repairer that had been included in the original legislature.
“The most important public policy impact of this legislation was that it forced the discussion of whether OEM repair procedures should be required in auto body repair,” Redding says.
He says this won’t be the last state to consider requiring shops to use OEM repair procedures or pre- and post-repair scans.
In Illinois, a similar bill, House Bill 4926 was introduced in February 2018. The Illinois law amended the Illinois Insurance Code and the Automotive Collision Repair Act to say that the use of aftermarket parts may not be included in the estimate of a repair unless the customer is advised of that fact in writing.
Other states introduced similar legislature in 2017. These states included West Virginia, Arkansas and Tennessee.
In the West Virginia–proposed law, body shops would be required to use new OEM parts in repairs in order to maintain the manufacturer’s new vehicle warranty for fit, finish, structural integrity, corrosion resistance, dent resistance and crash performance.
The Shop Effect
Since the new procedures are covered by law, there should be little effect, says Darrell Amberson, president of operations for LaMettry’s Collision in Minnesota and ASA board of directors member. Now, shops will all have to go through the process of consumer consent and pay for the parts accordingly.
“One possible difference could be that when non-OE parts are used it appears the requirements around OEM repair procedures are not in effect,” Amberson says. “Since as an industry we don’t have clearly defined industry repair procedures or standards, there could be differences between insurers regarding what repair methodology is used.”
Typically, OEM repair parts are more readily obtained and typically have fewer quality issues, making the repair process faster, smoother and more predictable, Amberson says.
“In some cases, they may offer more profit for the repairer, but not necessarily as often, as the aftermarket parts providers offer a bigger discount percentage off of list price,” he says.
The customer consent requirement may require a few extra steps but that is usually a conversation and a signed document for the file, he says. In Indiana, where a similar bill was introduced, for example, the Indiana Department of Insurance provides specific forms to ensure compliance with the bill. One form provides the written notice to the insureds. The second form is enclosed with the written notice and an envelope addressed to the insurer, proper postage and pre-paid, Schulenburg says.