Legislators Debate Model for Auto Insurance Law

Court buildingAn association of legislators that puts together model laws to serve as the framework for state insurance regulation has postponed a planned vote on an outline for legislation regarding insurers’ use of aftermarket crash parts, according to National Underwriter.

The National Conference of Insurance Legislators is currently debating a model law under which car insurance companies would be required to disclose to and get consent from policyholders when their cars will be repaired with such parts. It would also require permanent identification of aftermarket parts and “establish conditions in which insurers could specify use of aftermarket crash parts.”

Current levels of regulation regarding aftermarket parts vary widely from state to state, with some requiring disclosure and consent and some having no regulation at all.

The auto parts in question — also known as non-OEM parts — are those made by third-party manufacturers that resemble those made by the original producer. Many insurance companies prefer to use this type of part because they often cost significantly less than those sold by the original vehicle manufacturer. Proponents of the use of the parts contend that they help keep low cost auto insurance in existence.

A vote on the proposed model has been postponed until March 2011.

About John Pirro
John Pirro is a licensed fire and casualty insurance agent specializing in various aspects of the auto insurance industry. He worked in the auto body repair industry before taking a reporting position at Online Auto Insurance News.

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