BILL ANALYSIS
SB 350
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Date of Hearing: June 29, 2010
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
SB 350 (Yee) - As Amended: June 15, 2010
SENATE VOTE : 37-0
SUBJECT : Aftermarket crash parts.
SUMMARY : Prohibits an insurer from requiring the use of
nonoriginal equipment manufacturer (non-OEM) aftermarket crash
parts (ACPs) unless all of the following requirements are met:
1)The non-OEM ACPs are at least equal to the original equipment
manufacturer (OEM) parts in terms of kind, quality, safety,
fit, and performance.
2)The insurer specifying the use of non-OEM ACPs shall pay the
cost of any modifications to the parts that may become
necessary to effect the repair.
3)The insurer specifying the use of non-OEM ACPs shall warrant
that those parts are of like kind, quality, safety, fit, and
performance as OEM ACPs.
4)All original and non-OEM ACPs, manufactured on or after
January 1, 2011, when supplied by auto body repair shops, as
specified, shall carry sufficient permanent, nonremovable
identification so as to identify the manufacturer. This
identification shall be accessible to the greatest extent
possible after installation.
EXISTING LAW :
1)Prohibits an insurer from requiring the use of non-OEM ACPs in
the repair of an insured's motor vehicle unless the consumer
is advised in a written estimate of the use of non-OEM ACPs
before repairs are made.
2)Requires the written estimate to clearly identify each non-OEM
ACP with the name of its non-OEM or distributor and the
SB 350
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consumer must be provided a disclosure document (in 10-point
type or larger type and attached to the insured's copy of the
estimate) which states: "This estimate has been prepared based
on the use of crash parts supplied by a source other than the
manufacturer of your motor vehicle. Any warranties applicable
to these replacement parts are provided by the manufacturer or
distributor of the parts, rather than by the original
manufacturer of your vehicle."
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill . According to the author's office, "SB 350
sets into statute a regulatory disclosure requirement by an
insurer to their consumer as part of an automotive repair
activity. Due to many recent references to aftermarket part
uses in repair of consumers' cars, the author feels it's
important to bring this particular regulation into the purview
of the Legislature. ACPs are used in many insurer and
non-insurer repair jobs."
Background . "Crash parts," or "body parts," constitute the
exterior of a motor vehicle, and are generally made of sheet
metal, plastic, or glass and serve a cosmetic function.
Examples of crash parts include bumper reinforcements and
absorbers, hoods, fenders, door shells, rear outer panels, deck
and trunk lids, quarter panels, truck beds and box sides, body
side panels, tailgates, and lift gates.
OEM crash parts are made by the manufacturer of a given motor
vehicle for use on that vehicle. Non-OEM parts are auto parts
made by an independent manufacturer, generally not affiliated
with the manufacturer of the motor vehicle for which the part is
intended.
Non-OEM manufacturers must reverse-engineer the replacement
parts because they do not have access to the OEM manufacturer's
proprietary engineering specifications. Non-OEM crash parts
typically cost 20% to 65% less than OEM crash parts.
The California Department of Insurance regulation codified in
this bill is found within broader provisions of the California
Code of Regulations Title 10, Chapter 5, Subchapter 7.5, Article
SB 350
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1, Fair Claims and Settlement Practices Regulations, Section
2695.8(g). This regulation was developed in 1992.
Related legislation . SB 427 (Negrete McLeod) of 2009 increases
the fine for failing to repair an air bag under the Automotive
Repair Act, requires a consumer disclosure regarding auto repair
fraud, and makes minor technical amendments. This bill is
currently in Assembly Appropriations Committee.
Arguments in support . Certified Automotive Parts Association
writes, "This bill recognizes that not all aftermarket parts are
made to high standards and part quality must be an important
component of crash repair. ? Poor quality parts cheat both the
consumer and the car companies. In these tough economic times,
consumers are keeping cars longer and do not want to lose their
vehicles to the scrap yard after an accident. Consumers deserve
and expect a quality part at a reasonable price."
Arguments in opposition . The Personal Insurance Federation of
California (PIFC) writes, "PIFC members are supportive of a
competitive aftermarket crash parts industry, which can help to
bring about lower costs for auto repairs. However, we believe
[this bill] is redundant, unnecessary, and would do nothing to
improve or enhance the current marketplace for aftermarket
parts."
REGISTERED SUPPORT / OPPOSITION :
Support
Certified Automotive Parts Association (sponsor)
Opposition
Alliance of Automobile Manufacturers
Association of California Insurance Companies
Consumer Attorneys of California
The Personal Insurance Federation of California
Analysis Prepared by : Sarah Weaver / B.,P. & C.P. / (916)
319-3301