Following a crash, many vehicles owners file a claim with their insurance company, take the vehicle to a repair shop and expect the repairs will be made using manufacturer parts.
However, this is not typically so.
According to a federal lawsuit filed in Florida by numerous auto repair shops, car insurance companies insist repair firms use after-market or ill-fitting parts, ultimately putting consumers at risk by reducing safety. The auto repair shop owners say when they protest these requirements, arguing it won’t keep the driver and passengers safe, the insurance companies threaten or follow through with threats to drop them from a coveted spot as a “preferred provider.”
Additionally, shops are often expected to provide labor at significantly reduced costs, which can inevitably lead to shoddy work, unless the repair shop agrees to take the financial hit in order to stay in the insurance company’s good graces.
Insurance companies deny these claims. After all, they still have to provide coverage for these vehicles and drivers, so they have incentive to make sure they are roadworthy, the people inside are protected and that a future auto accident is prevented.
This argument holds some weight, but we also know auto insurance companies are notorious for cutting corners wherever possible.
The lawsuit involves hundreds of repair shop owners from 36 states as well as dozens of high-profile auto insurance providers, such as Progressive, Geico and State Farm.
What began as a number of different lawsuits filed nationally was recently consolidated in the U.S. District Court for the Middle District of Florida, Orlando Division.
Plaintiffs say there is a time and a place for used parts in repairs. Typically, that time is when consumers need to save expenses on an out-of-pocket repair. But repair facilities need to warn consumers of the risks. In most cases when a used replacement part is installed at the request of an insurance company, the vehicle owner is never informed or given a choice.
Repair shop owners say even when safety concerns are raised, insurers insist after-market parts be used because they won’t pay for newer, pricier parts. This means in many cases, shop owners have no choice but to use substandard repair parts.
These individuals aren’t the only ones who have raised concerns about the auto industry’s practices.
For example, the Mississippi attorney general and a U.S. senator from Connecticut have both asked the U.S. Department of Justice to launch an investigation on this issue. Specifically, they want to know whether insurance companies are violating an agreement signed in 1963 that barred auto insurance companies from corroborating with repair shops to deceive consumers. The repair shops that are deemed “preferred” by insurance companies may not necessarily earn that title because they consistently do the best repairs. Instead, there is concern those “preferred” providers are actually the ones most willing to do the shoddiest work with the cheapest parts.
Plaintiffs assert that while the majority of shop owners are dedicated to safety – and most will take a financial hit before sending a customer off in an unsafe car – those aren’t choices they should have to make.
If you have been a victim of a traffic accident, call Chalik & Chalik at (954) 476-1000 or 1 (800) 873-9040.
Auto Insurance Giants Accused of Pushing Cheap Repairs, April 17, 2015, By Sarah Cooke, NerdWallet.com
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