BILL ANALYSIS                                                                                                                                                                                                    �






                             SENATE JUDICIARY COMMITTEE
                             Senator Noreen Evans, Chair
                              2011-2012 Regular Session


          SB 1460 (Yee)
          As Amended April 17, 2012
          Hearing Date: April 24, 2012
          Fiscal: Yes
          Urgency: No
          TW


                                        SUBJECT
                                           
                        Automotive Repair:  Replacement Parts

                                      DESCRIPTION  

          This bill would repeal and recast statutory provisions for an 
          automobile insurer's authorization of nonoriginal equipment 
          manufacturer (non-OEM) aftermarket crash parts used to repair an 
          insured's vehicle.  This bill would authorize, in an automotive 
          insurance policy, the inclusion of terms specifying that the 
          insurer may use non-OEM aftermarket crash parts to repair the 
          insured's vehicle.  This bill would provide a presumption that 
          certified new non-OEM parts used to repair the insured's damaged 
          vehicle are sufficient to return the vehicle to its preloss 
          condition.  This bill would require the supplier of a certified 
          new non-OEM crash part to provide a written consumer warranty 
          and a 60-day service guarantee to the auto body repair shop.

                                      BACKGROUND  

          In 1971, the Automotive Repair Act was enacted, which provided 
          various requirements applicable to automotive repair dealers, 
          including the requirement that a customer be given a written 
          estimated price for labor and parts and that the consumer 
          authorize the repair before the work can be done and charges can 
          accrue.  (See Bus. & Prof. Code Sec. 9880 et seq.)  Although the 
          Automotive Repair Act provided consumers with labor and parts 
          pricing information, it did not require that consumers be 
          advised of the kinds of crash parts used to repair their 
          vehicles.  In many cases, consumers were not receiving quality 
          products because imported, imitation crash parts (i.e. 
          nonoriginal equipment manufacturer (non-OEM) aftermarket crash 
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          parts) were being used to repair their vehicles.  As a result of 
          the use of non-OEM crash parts, consumers experienced problems 
          involving the fit, finish, or corrosion protection of the 
          non-OEM parts, and the use of the non-OEM parts potentially 
          invalidated the vehicle manufacturer's warranty on the use of 
          any non-OEM part.  

          To provide consumer protections for the use of non-OEM parts, AB 
          1120 (Areias, Ch. 817, Stats. 1989) was enacted and required 
          disclosures to a consumer regarding the use of aftermarket crash 
          parts to repair the vehicle in order to give the consumer a 
          choice in selecting either OEM parts or non-OEM parts.  AB 1120 
          was opposed by the American Insurance Association (AIA), which 
          argued that non-OEM crash parts are as safe as OEM crash parts 
          and OEM crash parts are considerably more expensive than non-OEM 
          crash parts.  AIA also argued that requiring the vehicle owner's 
          consent to the use of non-OEM crash parts would only serve to 
          delay the repair process.

          Since 1989, various attempts have been made to expand an 
          insurer's ability to authorize the use of non-OEM crash parts, 
          change the certification procedure of such crash parts, and 
          alter the warranty provisions of such parts.  Recent attempts 
          include AB 1163 (Yee, 2005), which would have provided that the 
          categories of "aftermarket crash parts" could be expanded as new 
          certification standards were developed by "independent 
          third-party certifiers" and would have provided that certified 
          aftermarket crash parts were of like kind and quality to 
          manufacturer parts.  AB 1163 died in the Assembly Business and 
          Professions Committee.

          AB 1852 (Yee, 2006) also would have altered certification of 
          aftermarket crash parts.  AB 1852 was referred to the Assembly 
          Business and Professions Committee but was gutted and amended in 
          that committee to pertain to a different subject matter.  SB 350 
          (Yee, 2010) would have repealed the consumer protections enacted 
          under AB 1120 and replaced those provisions with, among other 
          things, similar provisions as in SB 1460.  SB 350 was withdrawn 
          from hearing by the author and died in the Assembly Business, 
          Professions and Consumer Protection Committee.

          This bill, sponsored by the Personal Insurance Federation of 
          California, would repeal and recast the consumer protection 
          provisions established under AB 1120 and modify the provisions 
          of the Automotive Repair Act.  This bill was heard by the Senate 
          Business, Professions and Economic Development Committee on 
                                                                      



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          April 16, 2012 and passed out on a vote of 5-1.

                                CHANGES TO EXISTING LAW
           
          1.  Existing law  provides the following definitions relating to 
            vehicle replacement parts:
                 "aftermarket crash part" means a replacement for any of 
               the nonmechanical sheet metal or plastic parts which 
               generally constitute the exterior of a motor vehicle, 
               including inner and outer panels; and
                 "nonoriginal equipment manufacturer (Non-OEM) 
               aftermarket crash part" means aftermarket crash parts not 
               made for or by the manufacturer of the automobile.  (Bus. & 
               Prof. Code Sec. 9875.)

             This bill  would repeal and recast this statute and provide, 
            among others, new definitions for the following:
                 "original equipment manufacturer (OEM) crash part" would 
               mean a replacement crash part manufactured or commissioned 
               by a car company, under its own name, for vehicles that the 
               car company manufactures or distributes under its own name;
                 "certified new non-OEM crash part" would mean a new 
               non-OEM replacement crash part that: (1) has been certified 
               by an American National Standards Institute accredited 
               standards developer that develops and maintains a consensus 
               of quality standards for competitive crash repair parts; 
               (2) is identified by a unique serial number or production 
               lot number to enable full traceability; and (3) has a 
               manufacturer's warranty that meets or exceeds the original 
               equipment manufacturer's warranty for the applicable 
               original equipment manufacturer crash part;
                 "new non-OEM crash part" would mean a replacement crash 
               part manufactured or sold by an entity other than the OEM;
                 "recycled crash part" would mean a crash part removed 
               from a vehicle; and
                 "remanufactured or reconditioned crash part" would mean 
               a recycled crash part that has been refurbished or restored 
               to its original condition or appearance for use on another 
               vehicle.

          2.     Existing law  provides that no insurer shall require the 
            use of non-OEM aftermarket crash parts in the repair of an 
            insured's vehicle, unless the insured is advised in a written 
            estimate of the use of non-OEM aftermarket crash parts, listed 
            with the name of the manufacturer or distributor, before 
            repairs are made, and a disclosure, attached to the written 
                                                                      



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            estimate, is provided as follows:  "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."  (Bus. & Prof. 
            Code Sec. 9875.1.)

             This bill  would repeal this statute and instead authorize an 
            insurer to require the use of recycled, remanufactured, or 
            reconditioned OEM, or certified new non-OEM crash parts if:
                 the insurer discloses in writing, in either the 
               insurance policy or in a separate notification, that the 
               insurer may use parts other than OEM parts to determine the 
               amount to be paid to repair the insured's vehicle in a 
               manner sufficient to restore the vehicle to its preloss 
               condition; and
                 the auto body repair shop discloses in writing what type 
               of crash part will be used to repair the vehicle.

             This bill  would provide a presumption that the use of a 
            certified new non-OEM crash part, if installed and a 
            reasonable fit, shall be presumed sufficient to return the 
            vehicle to its preloss condition, unless:
                 the certified new non-OEM crash part is installed on a 
               vehicle that is subject to a lease with the OEM in which 
               the lease contract requires only OEM crash parts to be used 
               to repair the vehicle; 
                 the installation of the crash part would permit the OEM 
               to void its warranty; or
                 the vehicle is less than one year old.

          3.  Existing law  , the Automotive Repair Act (ARA), provides that 
            an "automotive repair dealer" means a person who, for 
            compensation, engages in the business of repairing or 
            diagnosing malfunctions of vehicles.  (Bus. & Prof. Code Sec. 
            9880.1(a).)

             This bill  would include auto body repair shops in this 
            definition.

          4.  This bill  would add to the ARA that a supplier of certified 
            new non-OEM crash parts shall do all of the following:
                 provide a written consumer warranty that equals or 
               exceeds the warranty provided by the car company for the 
               type of OEM crash part;
                                                                      



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                 utilize an electronic tracking system that tracks the 
               manufacturer part number, lot number, and repair shop 
               license number for recall purposes;
                 analyze any crash part returned as defective and report 
               the defective part number, lot number, and nature of the 
               defect to the manufacturer and to the certifying entity;
                 annually report to the Bureau of Automotive Repair 
               defect rates greater than five percent for certified new 
               non-OEM crash parts installed in 1,000 or more vehicles; 
               and
                 provide the auto body repair shop with a 60-day service 
               guarantee on any defective certified new non-OEM crash 
               part.

          5.  Existing law  requires an automotive repair dealer to record 
            on an invoice all work, including warranty work, done by the 
            automotive repair dealer and parts used in the repair to be 
            separately listed, including the type of crash part used, with 
            subtotal prices for the work and parts.  (Bus. & Prof. Code 
            Sec. 9884.8.)

             Existing law  requires an automotive repair dealer to give the 
            customer a written estimate for the price of labor and parts, 
            which must be listed separately and indicate whether any crash 
            parts used are OEM or non-OEM aftermarket crash parts.  (Bus. 
            & Prof. Code Sec. 9884.9.)

             This bill  would require the automotive repair dealer to list 
            this information in a final invoice and include the following 
            additional information:
                 whether a replacement crash part is an OEM, new non-OEM, 
               certified new non-OEM, recycled, remanufactured, or 
               reconditioned;
                 the supplier providing the warranty for each certified 
               new non-OEM crash part, and the tracking information with 
               one copy of the final invoice to be provided to the 
               customer and one copy retained by the automotive repair 
               dealer;
                 disclosure of an estimated price for labor and parts; 
               and
                 the unique identification information of any installed 
               certified new non-OEM crash part.

             This bill  would require a replacement crash part supplier to 
            provide to the automotive repair dealer a form to be filled 
            out and returned by the automotive repair dealer reporting the 
                                                                      



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            installation of a certified new non-OEM crash part and the 
            tracking information to enable traceability.

             This bill  would require a written estimate to include the 
            following information:
                 an identification of each part and whether the part is 
               new, used, rebuilt, or reconditioned, OEM, certified new 
               non-OEM, new non-OEM, recycled, or remanufactured; and
                 a disclosure of the replacement crash part warranty 
               provided by the supplier.

                                        COMMENT
           
          1.  Stated need for the bill  
          
          The author writes:
          
            This bill adds consumer protections to existing law by 
            requiring the use of only certified parts if aftermarket parts 
            are specified by insurers.  It strengthens the disclosure 
            requirements by requiring disclosure on the estimate as well 
            as the final bill of itemized aftermarket parts.  It further 
            imposes warranty obligations on suppliers of these parts that 
            must equal or exceed the manufacturer's warranty.
          
          The Personal Insurance Federation of California (PIFC), the 
          sponsor of this bill, writes:

            SB 1460 contains three provisions designed to benefit 
            insurance customers.  First, the measure would provide an 
            important incentive for auto insurance companies to pay for 
            higher-quality replacement car parts than current law 
            requires.  Second, the measure encourages auto insurance 
            companies to pay for replacement car parts that are easier to 
            track and recall, which would improve the accountability of 
            replacement part makers.  Third, the measure would require 
            suppliers of replacement parts that are not made by the 
            original car makers to provide new consumer warranties, in 
            addition to existing consumer protections.

          2.  This bill's new contractual terms would remove the insured's 
            ability to reject the use of aftermarket crash parts  

          This bill would authorize an automobile insurer to include in an 
          insurance policy, as part of the terms of the contract, that the 
          automobile insurer may use non-OEM parts to repair the insured's 
                                                                      



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          vehicle in the event of an accident.  Existing law requires that 
          before an automobile insurer can require the use of non-original 
          equipment manufacturer (non-OEM) aftermarket crash parts to 
          repair an insured's vehicle, the insurer must disclose to the 
          insured in a written estimate, as specified, that the insurer 
          will require the use of such aftermarket parts before the 
          repairs are made.  (Bus. & Prof. Code Sec. 9875.1.)

          As discussed above, AB 1120 (Areias, Ch. 817, Stats. 1989) was 
          enacted to address consumer problems involving the fit, finish, 
          or corrosion protection of non-OEM parts.  Since the use of 
          non-OEM parts also potentially invalidated the vehicle 
          manufacturer's warranty on the use of any non-OEM part, AB 1120 
          required disclosures to a consumer regarding the use of 
          aftermarket crash parts to repair the vehicle in order to give 
          the consumer a choice in selecting either OEM parts or non-OEM 
          parts.  

          This bill would repeal these provisions of AB 1120 and instead 
          authorize the insurer to disclose to the insured, potentially 
          hidden in the initial policy, that the insurer may use 
          aftermarket crash parts that are non-OEM crash parts to repair 
          the insured's vehicle.  The author states that "�t]his bill adds 
          consumer protections to existing law by requiring the use of 
          only certified parts if aftermarket parts are specified by 
          insurers," and that this bill would strengthen disclosure 
          requirements by requiring disclosure on estimates as well as in 
          the final bill of itemized aftermarket parts.  

          However, staff notes that the new insurer disclosure 
          requirements in this bill would change the contractual 
          relationship between insurance companies and policyholders with 
          respect to the quality of repair the insurance company would 
          provide.  By agreeing to the terms in the policy which, under 
          the provisions of this bill, could include the insurer's use of 
          non-OEM parts, the policyholder will no longer have a choice 
          about the kind of part used to repair their car if they expect 
          their insurer to cover the costs of repair, regardless of 
          whether the consumer later receives a written estimate or 
          invoice disclosing the use of non-OEM parts.  

          Existing statutory law prohibits an insurer from requiring the 
          use of non-OEM parts unless certain conditions are met.  (Bus. & 
          Prof. Code Sec. 9875.1.)  This bill would repeal this 
          prohibition.  Existing regulatory law also prohibits an insurer 
          from requiring the use of non-OEM parts unless certain condition 
                                                                      



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          are met (Cal. Code Regs., tit. 10, ch. 5, subch. 7.5, sec. 
          2695.8(g).), but because the statutory prohibition would be 
          removed under this bill and instead allow the insurer to include 
          use of non-OEM parts as a term within the insurance policy, the 
          new ambiguous statutory authorization to use non-OEM parts could 
          be argued as superseding the regulatory prohibition.

          State Farm, a supporter of this bill, states that this bill 
          would "help keep insurers costs down, which will allow lower 
          premiums for their customers in the future."  The California New 
          Car Dealers Association (CNCDA), on the other hand, notes that 
          this bill would not provide any assurance that the insurer's 
          savings from using cheaper non-OEM parts will in fact be passed 
          on to the consumer.  Instead, the insurer could continue to 
          charge policyholders existing rates for expensive OEM 
          replacement part and keep the money saved by using only non-OEM 
          parts.

          The author argues that "�c]onsumers will also have peace of mind 
          that certified, quality replacement crash parts are used when 
          available  . . . ."  PIFC states that "�i]nsurers' contracts set 
          the terms of their promises to customers.  A typical insurance 
          contract promises to restore a customer's vehicle to 'pre-loss' 
          condition, which courts have defined as 'substantially the same 
          condition it was before the accident.'  Ray v. Farmers Insurance 
          Exchange, 200 Cal.App.3d 1411, 1416 (1988).  Insurance contracts 
          do not require the use of a replacement part that is in all 
          manners 'equivalent.'  Insurance contracts just require 
          restoration to substantially the same condition as before the 
          crash."  Global Automakers, however, argues that insurers only 
          promise to restore a customer's vehicle to pre-loss, but not 
          equivalent, condition, and this bill would provide that the 
          insurer could further only agree in the insurance policy to use 
          non-OEM parts.  As such, the consumer would not have any 
          assurance that their vehicle would be repaired properly.  As 
          seen in 1989, consumers experience numerous problems with 
          non-OEM parts.  This bill would repeal and arguably inhibit the 
          consumer protections intended by the Legislature when it enacted 
          AB 1120.

          3.  This bill's new warranty provisions would shift warranty 
            obligations and dilute consumer protections  

          Existing law provides that if an insurer requires the use of 
          non-OEM replacement crash parts to repair a vehicle, the parts 
          must be at least equal to the OEM in terms of kind, quality, 
                                                                      



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          safety, fit, and performance and insurers specifying the use of 
          non-OEM replacement crash parts must provide a warranty to the 
          policyholder that the parts meet these terms.  (Cal. Code Regs., 
          tit. 10, ch. 5, subch. 7.5, sec. 2695.8(g).)  This bill would 
          require the supplier of certified new non-OEM crash parts to 
          provide a written consumer warranty that equals or exceeds the 
          warranty provided by the car company for the type of OEM crash 
          part.  

          This bill would impose warranty obligations on suppliers of 
          these parts that must equal or exceed the manufacturer's 
          warranty.  CNCDA argues that the language in this bill does not 
          specify that the supplier's warranty must equal or exceed the 
          manufacturer's warranty.  Rather, the bill provides that the 
          supplier's warranty must equal or exceed the warranty provided 
          by the "car company for the type of OEM crash part."  As used in 
          this context, the term "car company" is ambiguous since the 
          non-OEM part supplier, the car manufacturer, the car dealer, 
          even the automobile insurer, all of which are companies doing 
          business related to cars, could be considered the "car company." 
           

          The California Department of Insurance (CDI), an opponent of 
          this bill, also notes that the term "supplier" is not defined in 
          this bill "and could be interpreted to mean aftermarket parts 
          distributors, foreign aftermarket parts manufacturers, or auto 
          body shops unaffiliated with insurance companies.  This leaves 
          consumers with a difficult, unknown path in seeking 
          reimbursement for defective aftermarket parts - a path that 
          should not be borne by the consumer; instead, by continuing to 
          have insurers stand by the parts they require and warrant these 
          parts - an obligation that is expected of insurers today - it 
          provides the highest level of consumer protection."
          PIFC argues that this bill improves consumer protections by 
          requiring "suppliers of new non-OEM crash parts to provide a 
          warranty for the parts at least equivalent to Original Equipment 
          Manufacturer warranty."  CDI points out, however, that this 
          warranty provision "significantly shifts the duty of an existing 
          insurer, which is to fully warrant an aftermarket part, to an 
          unspecified "supplier" to fulfill these insurer obligations 
          without any of the protections that a state insurance regulator, 
          or any regulator for that matter, can provide to California."  

          4.  This bill would provide a legal presumption that certain 
            crash parts return the insured's vehicle to preloss condition  

                                                                      



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          This bill would provide that the use of a certified new non-OEM 
          crash part, if installed and a reasonable fit, shall be presumed 
          sufficient to return the vehicle to its preloss condition.  This 
          bill would provide exemptions from this presumption for the 
          following:
           certified new non-OEM crash parts installed on a vehicle 
            leased from an OEM and the lease contract requires damage to 
            be repaired only using OEM crash parts; or 
           if use of a certified new non-OEM crash part would permit the 
            OEM to void its manufacturer's vehicle warranty under 
            permission of a Federal Trade Commission waiver of the 
                                          "tie-in" sales prohibition under the Magnuson-Moss Warranty 
            Act of 1975.

          PIFC argues in favor of this legal presumption provision because 
          they "strongly believe this presumption is justified and will 
          encourage insurers to use certified crash parts in the absence 
          of a group agreement to do so.  CDI argues, on the other hand, 
          that "�t]his presumption would allow insurers to rely on the 
          certifiers to show that the part complied with the requirements 
          under current law, thereby absolving the insurer of any 
          obligated responsibility for an aftermarket crash part.  This 
          provision could even result in many, if not all, insurers 
          choosing to proscribe certified aftermarket parts, rather than 
          OEM parts, merely to achieve the benefit of this presumption's 
          protection of insurers.  It is important to note that such a 
          broad presumption does not even exist for OEM parts today."

          CNCDA notes that CDI regulations "prohibit manufacturers from 
          requiring the use of imitation crash parts if not of like kind, 
          quality, safety, fit and performance as automaker crash parts.  
          SB 1460 would create a statutory presumption that certified 
          imitation parts are sufficient to render a vehicle to pre-loss 
          condition.  Since regulations are 'trumped' by inconsistent 
          statutes, the statutory presumption proposed by SB 1460 may have 
          the legal effect of eliminating the existing regulatory 
          requirement - a consumer protection nightmare."  Although 
          providing a statutory presumption may encourage insurers to use 
          certified new non-OEM parts, it will effectively prohibit a 
          policyholder from seeking any remedy from the insurer, who would 
          authorize the use of the crash part in compliance with the 
          contractual obligations to repair the policyholder's vehicle, if 
          the certified new non-OEM part is defective and does not provide 
          effective repair of the policyholder's vehicle.
          5.  This bill's certification provisions do not appear to provide 
            additional consumer protections  
                                                                      



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          This bill would provide that a certification standard for new 
          non-OEM crash parts that would require that the part:
           be certified by an American National Standards Institute 
            (ANSI) accredited standards developer that develops and 
            maintains a consensus of quality standards for competitive 
            crash repair parts;
           be identified by a unique serial number or production lot 
            number that enables full traceability; and
           have a manufacturer's warranty that meets or exceeds the 
            original equipment manufacturer's warranty for the applicable 
            OEM crash part.

          Although this bill would provide a certification standard for 
          new non-OEM crash parts, Consumer Attorneys of California (CAOC) 
          argues in opposition that the certification standard "is 
          pointless because ANSI does not provide any comprehensive 
          protocols for identifying the functions for, designing, 
          manufacturing or even shipping copies of automobile parts. . . . 
           �A]n ANSI accredited part certifier could still certify crash 
          parts made out of paper mache, as long as they 'reasonably fit' 
          the vehicle."  

          CNCDA notes that the 2003 Crash Part Certification Study 
          prepared by the Bureau of Automotive Repair demonstrated that 
          "certification has no value to the customer; if there are 
          problems with the certified product the certifying entity does 
          not stand behind their own certification process."  (Bureau of 
          Automotive Repair, Crash Part Certification Study Conducted 
          Pursuant to Senate Bill 1178, Jan. 1, 2003, at p. 25.)  This 
          Study concluded that "�c]onsumers are afforded adequate 
          protection with the disclosure on the written estimate and final 
          invoice as to whether the crash parts are OEM or non-OEM, and 
          the requirement that the repair dealer receive their customer's 
          authorization prior to any work being started.  Furthermore, 
          consumer protection should be enhanced with the warranty 
          provided by the insurance company when they require the use of 
          non-OEM crash parts, provided that the auto insurers stand 
          behind these warranties.  (Id. at pp. 29-30.)  Contrary to the 
          expected consumer protection contemplated in this Study, this 
          bill would provide an insurer a contractual right to use 
          aftermarket crash parts to repair the consumer's vehicle, which 
          would substantially decrease the disclosure protection in 
          existing law.

          Further, this bill would authorize the insurer to notify the 
                                                                      



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          policyholder that it may use "parts other than OEM crash parts," 
          which would not require the insurer to explicitly state whether 
          the insured will authorize the use of certified new non-OEM 
          crash parts or any crash part with any kind of quality standard. 
           Rather, the insured may mistakenly assume that their vehicle 
          would be repaired properly and returned to the "preloss 
          condition" mentioned in this bill, even though the actual terms 
          of their insurance policy state that the insured can use any 
          kind of part, certified or not.

          6.  This bill would preempt the regulatory process currently 
            being undertaken by the California Department of Insurance  

          This bill would establish statutory provisions for the use of 
          new types of aftermarket crash parts not provided for under 
          existing law.  PIFC argues that these provisions will encourage 
          insurers to pay for certified new non-OEM crash parts instead of 
          non-certified parts.

          On October 20, 2011, CDI submitted proposed regulations of 
          aftermarket crash parts for public review and comment.  CDI 
          argues that this bill "at best, obfuscates a rulemaking process 
          already underway on this matter at CDI to update and improve 
          existing law and, at worst, appears to reverse a long-standing 
          law �the Fair Claims Settlement Practices Regulations] that has 
          served to protect consumers from defective or inferior 
          aftermarket parts for almost 20 years."  The public review 
          process of these proposed regulations has not yet been 
          completed.  These proposed regulations would:
           require an insurer to pay for any additional costs associated 
            with inspecting and testing the aftermarket part, as well as 
            requiring the insurer to pay for the costs associated with 
            returning a defective part and the cost to remove and replace 
            the defective part with an OEM part;
           require the current insurer's warranty be expressly stated in 
            the estimate of repair generated by the insurer;
           require the insurer to cease requiring the use of the 
            defective part and notify the collision repair estimating 
            software provider, the part's distributer, and the part's 
            certifying entity of the defect; and
           require the insurer to pay for costs associated with loss of 
            use or rental car expenses caused by the use or replacement of 
            the defective part.

          These proposed regulations were promulgated after CDI received 
          numerous consumer auto body repair shop complaints that insurers 
                                                                      



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          are not abiding by existing aftermarket crash part regulations.  
          Importantly, the CDI regulations appear to make consumer 
          warranties stronger, whereas this bill potentially weakens 
          consumer protections.

          7.  Author's proposed amendments  

          The author has submitted amendments well past the committee's 
          amendment deadline that, the author argues, would address the 
          concerns raised by CAOC.  According to PIFC, these amendments 
          would do the following:
           ensure the bill does not diminish existing insurer repair 
            obligations by providing a rebuttable presumption for not only 
            certified new non-OEM crash parts, but also for OEM, recycled, 
            remanufactured, or reconditioned crash parts that are 
            installed in a manner accepted by automobile repair shops and 
            insurers;
           Ensure a meaningful certification standard by adding to the 
            ANSI certification provision that the ANSI accredited 
            standards developer that develops and maintains a consensus of 
            quality standards for competitive crash repair parts of like, 
            kind and quality to an OEM crash part; and
           Alleviate concern about any problematic warranty language by 
            revising the definition of "certified new non-OEM crash part" 
            by requiring the crash part to have a warranty from the 
            supplier of the certified new non-OEM crash part that meets or 
            exceeds the warranty that would otherwise have been in force 
            if the vehicle was repaired with an OEM crash part.

          Due to the late submission of these proposed amendments, 
          opponents of this bill are currently reviewing the amendments 
          but have informed committee staff that these amendments do not 
          resolve their concerns.  Rather, they say these amendments 
          further compound issues regarding the warranty, certification, 
          and presumption provisions of this bill.


           Support  :  Allstate Insurance Company; Association of California 
          Insurance Companies; DirectRepair Shop Network; NSF 
          International; State Farm

           Opposition  :  A&B Collision; Alliance of Automotive 
          Manufacturers; Association of Global Automakers, Inc.; B&J Body 
          Shop and Towing; California Autobody Association; California 
          Department of Insurance; California New Car Dealers Association; 
          Consumer Attorneys of California; Consumer Federation of 
                                                                      



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          California; Walker's Auto Body & Fleet Repair

                                        HISTORY
           
           Source  :  Personal Insurance Federation of California

           Related Pending Legislation  :  

          AB 2505 (Ma, 2012) would require an automotive repair dealer to 
          include on a written estimate for repair services and on an 
          invoice whether the vehicle was supplied with nonoriginal 
          equipment manufacturer certified aftermarket crash parts and the 
          name of the certifying entity.  This bill has been referred to 
          the Assembly Business, Professions & Consumer Protection 
          Committee.

          AB 2065 (Galgiani, 2012) would amend the definitions of "repair 
          of motor vehicles" and "automotive technician" under to provide 
          for motor club or tow truck tire services and gasoline service 
          station repairs.  This bill passed out the Assembly Business, 
          Professions & Consumer Protection Committee on a vote of 8-0 and 
          has been referred to the Assembly Appropriations Committee.

           Prior Legislation  :

          SB 350 (Yee, 2010) See Background. 

          AB 1852 (Yee, 2006) See Background.

          AB 1163 (Yee, 2005) See Background.

          AB 1120 (Areias, Ch. 817, Stats. 1989) See Background, Comment 
          2.

           Prior Vote  :  Senate Committee on Business, Professions and 
          Economic Development (Ayes 5, Noes 1)

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