Canadian Underwriter

CIAG concerned with OEM provisions in draft Ontario bill

September 27, 2002   by Canadian Underwriter

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A group representing collision repair shops is concerned by provisions of the draft proposals set out by Ontario’s Auto Insurance Review Committee. Those provisions relate to insurers’ ability to use non-OEM (original equipment manufacturer) parts when repairing vehicles.
The proposal reads, “For consumers who have a preference for original parts, require insurers to offer optional coverage where only original equipment parts may be used in collision repairs.”
In effect, policyholders would have to pay extra in order to get OEM parts to restore their vehicles, the Collision Industry Action Group (CIAG) says.
“Shop and consumer complaints are epidemic, and lawsuits are still outstanding from consumers who found that the “aftermarket” parts installed, often without their knowledge, failed to fit, perform or had acceptable finish, compared to the original equipment parts,” says John Norris of the CIAG. “To now charge these consumers additional premiums to repair their car back to the way it was before the accident using the car manufacturer’s own parts is a slap in the face to motorists who value their vehicle and will add fuel to claims of diminished value of their car.”
The use of aftermarket, or non-OEM parts has been an ongoing battle between insurers and policyholders, with State Farm in the U.S. hit with a US$1.2 billion fine for using non-OEM parts without informing claimants. Similar lawsuits are ongoing in Canada. One force behind these suits is the understanding that a vehicle with aftermarket parts will have reduced resale value compared to one with OEM parts.
Some insurers have made the claim that using aftermarket parts will reduce claims costs, citing the relationship between rising claims costs and rising premiums.

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