Ohio recently introduced an “Auto Insurance Transparency Act” designed to ensure customers have the chance to choose original equipment manufacturer (OEM) parts instead of aftermarket parts.
State representative Mark Johnson introduced the bill to the Ohio House of Representatives on Dec. 23. It covers all motor vehicle parts or components “designed to replace a similar part or component as originally equipped by the manufacturer of a motor vehicle,” including glass.
“If an automobile insurance policy does not cover OEM replacement parts, the insurer shall allow a claimant to complete the repair using OEM replacement parts so long as the claimant pays any difference between the cost of OEM replacement parts and the maximum policy coverage for [an aftermarket part],” the bill says.
The Ohio House of Representatives introduced the “Auto Insurance Transparency Act” in December.Photo credit: Antony-22, CC BY-SA 4.0, via Wikimedia Commons
Notifying the Consumer
The bill requires the insurer, repair facility, or installer to provide either a written or verbal repair estimate that clearly identifies each non-OEM replacement part used and indicates whether OEM parts are readily available. If they are, the estimate provider must indicate whether using OEM parts would “require the repair to be completed by another repair facility.”
The bill requires auto glass shops providing estimates to inform customers of their right to choose OEM parts as long as the customer agrees to pay the difference.
Each written estimate must also include this statement:
“This estimate has been prepared based upon the use of one or more aftermarket replacement parts supplied by a source other than the manufacturer of your motor vehicle. Warranties applicable to these aftermarket replacement parts are provided by the parts manufacturer or distributor rather than by your own motor vehicle manufacturer.”
If the customer opts for an oral estimate or no estimate, the shop must include this statement in the final invoice.
If an insurer violates these rules, it would be subject to penalties for an “unfair and deceptive act or practice in the business of insurance.”
Offering OEM Coverage
If the bill is passed, all automotive insurers must “clearly and conspicuously offer” their Ohio policyholders “an option for the automobile insurance policy to include OEM part repair coverage.”
The bill clarifies that insurers can still adjust an insured’s premium if they opt for OEM coverage in their policy.
Violating this requirement would be an “unfair and deceptive [insurance] act or practice,” and insurers could face “administrative remedies.”
If the violation is due to “gross or willful misconduct,” the insurer may be required to reimburse any customer harmed by the breach. According to the bill, this includes reimbursing or paying for any insurance claims where a customer lost money by relying on “any policy summary containing any false, misleading or deceptive representation or statement.”
Similar Legislation
New York introduced a bill on Jan. 8 requiring automotive repair facilities to notify customers if they are using an OEM, aftermarket or recycled part to perform a repair. This bill will not likely affect the auto glass industry in New York, though, because it “does not include windows.”