W.Va. Attorney General Sues Insurer Over Repair Practices

West Virginia Attorney General Darrell McGraw is suing Liberty Mutual and a Saint Albans auto repair shop, claiming the pair broke state law by using “junkyard parts” to repair policyholders’ vehicles.

State consumer protection laws contain strict provisions prohibiting insurers and body shops under certain conditions from requiring the use of so-called “aftermarket crash parts” to replace door panels and other parts damaged in accidents unless the vehicle owner agrees to it in writing.  But McGraw’s office claims Liberty Mutual and Greg Chandler’s Frame & Body repeatedly violated those statutes.

“My office will always work to insure that West Virginians receive safe, high-quality, competent and lawful repairs to their vehicles,” McGraw said in a news release. “Implementing policies that thwart state law in an effort to increase profits is unacceptable.”

Crash parts are the sheet metal components of vehicles that are most frequently damaged in auto accidents, including fenders, hoods and door panels. According to the Insurance Information Institute (III), most states have enacted laws regarding whether it is necessary to inform an auto owner that an aftermarket part is being used in a repair.

But those laws vary, with about 30 states requiring that repair estimate statements identify the use of aftermarket parts and at least 9 states–including West Virginia, if the car is three years old or younger–mandating that consent be obtained from the vehicle owner before work using aftermarket parts can be carried out.

Auto repairsThere are three main types of replacement parts that are used in vehicle repairs. Original equipment manufacturer—or OEM—parts are made by the company that built the vehicle. Aftermarket, or non-OEM, parts are generic components made by a third-party company, and like kind and quality (LKQ) parts are taken from cars sent to salvage yards that have typically been declared total losses but still have some undamaged parts that may be used for repairs.

West Virginia law bars insurers from requiring the use of salvaged, used or reconditioned crash parts within three years of the vehicle’s manufacture, unless the owner consents in writing at the time of repair. It also mandates that body shops identify on estimates any aftermarket parts used and stipulates that any violation of those provisions is considered an “unfair or deceptive act or practice.”

The use of aftermarket versus original parts is one that revolves around both safety and expense. Automakers stand to profit from exclusive use of their original parts—and also maintain that those parts are safer—while providers of inexpensive car insurance and other types of vehicle coverage would often prefer to save a little money while paying for repairs by using non-OEM parts, which are generally less expensive.

Critics claim that using anything but original parts could compromise a vehicle’s safety. But the III says crash testing has demonstrated that use of aftermarket parts for door panels and other “cosmetic” purposes—not including parts such as hoods and bumpers, which play a more crucial role in protecting vehicle occupants—has little if any safety implication.

In a lawsuit, filed last week in Circuit Court of Kanawha County, the attorney general claims Liberty Mutual “required body shops to repair vehicles with reconditioned, remanufactured and used parts in violation of West Virginia law,” according to a release from McGraw’s office. The suit also alleges that the insurer failed to provide consumers with “the proper notices and written statements.”

The suit reportedly asks the court to enjoin the defendants from continuing violating the auto repair provisions of state law and seeks unspecified civil penalties and restitution for policyholders whose cars were illegally repaired.

A spokeswoman for Liberty Mutual denied the allegations, saying that, although West Virginia law provides insurers with many options for which types of crash parts to use to repair policyholder vehicles, the company puts the safety and economic well-being of its customers first and foremost.

“Liberty Mutual chooses to use only original manufacturer’s equipment crash parts,” spokeswoman Adrianne L. Kauffman said in an email. “Any decision we make concerning the use of a specific part for a damaged vehicle is made so that neither safety nor the manufacturer’s warranty are in any way compromised.”

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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