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Model insurance law regulating use of aftermarket crash parts hits deadend
By Insure.com staff

A model act that would have set rules for the use of aftermarket crash parts when car insurance companies pay for vehicle repairs failed to win approval from the National Conference of Insurance Legislators (NCOIL).

Aftermarket crash parts are replacement parts that are not made by the original equipment manufacturer. The proposal would have required insurers to get consent from policyholders before using aftermarket crash parts, mandate labeling of crash parts, and establish conditions for when insurance companies could limit payment to the cost of aftermarket crash parts.

The NCOIL is a group of state lawmakers who are leaders or members of committees responsible for insurance legislation in their states. Model laws adopted by the group serve as templates for state bills.

The Property Casualty Insurers Association of America (PCI) praised the proposal's defeat.

"We believe this model is unnecessary because almost every state has laws already to deal with these issues," Robert Passmore, PCI's senior director of personal lines, said in a statement. "Unfortunately, the model act had become a vehicle to create impediments to the use of competitive crash parts. We support the availability of alternative crash repair parts and commend NCOIL on its decision."

PCI estimates that if the use of aftermarket crash parts were eliminated, annual insurance loss costs would increase by more than $2.2 billion, which would drive up car insurance rates. Availability of alternative parts can make the difference between a car that is repairable and a total loss, PCI said.

 

 

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