Many dealerships perform bodywork and mechanical repairs on vehicles which have been in accidents. Generally these repairs are paid for by insurance companies who are doing their best to repair a consumer’s vehicle for the lowest possible cost. One of the ways many insurance companies attempt to cut costs is by using aftermarket or salvage parts instead of Original Equipment Manufacturer (OEM) parts.
Most large insurance companies such as Allstate, Farmers, Progressive, and State Farm claim that recycled and after-market parts are like-kind and quality to OEM parts and many require service providers to use them where allowed by law. However, most manufacturers advise against use of after-market and salvage parts and dealerships that use these parts may run the risk of exposing themselves to liability in the event of a subsequent accident.
Ford Motor Company issued a press release as well as the results of tests performed by Ford’s Material Composition and Computer Aided Engineering (CAE) department comparing OEM bumper beams, bumper isolators, bumper brackets, and radiator supports to their after-market equivalents. Ford found major differences between genuine Ford original equipment replacement parts and aftermarket copies. Ford found that the parts were not of like kind and quality and that the parts performed differently than OEM parts in a crash.
Specifically Ford found that several of the after-market parts tested would cause more damage in subsequent collisions if used in place of OEM parts in vehicle repairs. Ford’s press release also pointed out that after-market parts are excluded from its warranties as is any damage caused by use of after-market parts and that, in addition to possibly voiding Ford’s warranty and causing additional damage in subsequent accidents, use of non-OEM parts may increase the risk of injury and diminish the value of a consumer’s vehicle. The same is true of almost every other manufacturer’s warranty as well.
Honda also recently has issued a position statement in which Honda advised its customers not to use after-market, salvaged, or recycled parts. In the statement, Honda states that Honda does not support the use of aftermarket, alternative, reverse-engineered or anything other than original equipment Honda or Acura parts for the collision repairs of any Honda or Acura vehicle. Ford and Honda are not alone, as almost every manufacturer has issues some variety of advisory against the use of any parts other than OEM parts in collision repairs.
In addition to automobile manufacturers, many state governments have attempted to curtail the insurance companies’ widespread use of requiring after-market and salvage parts. Some states like New Hampshire mandate the use of OEM parts in vehicles, which are newer or have lower mileage. Other states have passed more stringent regulations, such as West Virginia, which requires OEM parts to be used on all vehicles less than three years old unless the consumer expressly agrees to the use of after-market parts.
It is also important to note that most after-market and nearly all recycled or salvaged parts are not subject to the same testing and safety requirements as parts made by the manufacturer. There is an organization, the Certified Automotive Part Association (CAPA), which does set minimum standards, for most after-market parts, but CAPA does not certify used, reconditioned, salvage, or recycled parts at all.
The debate between insurance companies, manufacturers, state governments and consumers places dealers in a precarious situation which could potentially lead a dealer to be sued or to be pulled into the middle of litigation between any combination of these parties.
So what can dealers do to protect themselves from liability? First, make sure to advise customers what replacement parts will be put in their vehicle and explain the difference between OEM, after-market, and recycled or salvage parts, preferably in writing. Recommend that your customers try and convince their insurance company to pay for OEM parts. If the insurance company refuses, suggest that the customer pay the difference for OEM parts if their insurance company will allow them to do so. However, if the insurance company will not pay for OEM parts and the customer is not willing to bear the additional expense, it might be a good idea to have a waiver of liability prepared by an attorney to explain the safety and warranty implications of not using OEM parts and agreeing to hold the dealership harmless.
By following these simple steps, not only can you avoid potential liability, but you can protect the safety of your customers and your reputation.