Monday, June 28, 2010

Your Auto Insurer and Gray Market Parts

I wrote an article recently for Hometown News and my blog entitled Your Car’s Collision Insurance; Do You Know Your Rights? The most important thing that you must remember if you ever incur body damage to your car (as most of us do at one time or another) is that Florida law gives you the right to have your car repaired by the body shop of your choice.

I have recently been made aware of yet another shady practice by insurance companies, including the two largest, All State and State Farm and that is the reason for this follow-up article to my original column.

You may not even know what a “gray market” auto part is. These are parts, both body and mechanical, that are manufactured outside of the United States and imported by a distributor not authorized by your car’s manufacturer. All auto manufacturers strongly discourage the use of these gray market parts by body shops and mechanical repair service departments. In fact, all manufacturers that I know of will not warranty the part if it is defective and fails.

The question you must be asking yourself is why would a body shop use a part that was not warrantable by the manufacturer and that the manufacturer recommended not be used in repairing your car? The answer is simply that your insurance company may insist that this much cheaper part be used to repair your car. In my previous article I mentioned several other ways that your insurance company may save themselves money at your expense like insisting on used parts or after-market (counterfeit) parts instead of new parts manufactured by your car’s manufacturer (OEM).

State Farm, All State, and most other insurance companies wrongly label the gray market parts on your insurance estimate as “used” parts. I’m not entirely sure about the reason for this deception but I have a good idea. If they listed the parts for what they really are, new parts not authorized or warranted by your car’s manufacturer, they would have to disclose this. If they mislabel them as used parts, they aren’t required to explain anything. Most people don’t read their estimates carefully anyway and are mainly concerned that their car is repaired ASAP before their rental reimbursement expires. They trust that their body shop and their insurance company are primarily committed to your car getting the safest and highest quality repair.

This is not always the case and the biggest reason for this is that you aren’t really looked upon as their “customer” by many body shops. Many body shops look upon the insurance company as their “real customers”. This is because 95%+ of their business is steered to them by insurance companies. The insurance company pays the body shop, not you. An insurance company won’t steer business to a body shop unless the body shop “plays ball”. This means backing up the insurance company with their insured when the insurance company insists on using cheap, unwarrantable parts or used parts to repair your car. If a body shop won’t “play ball” because they truly care about you having a safe, quality repair, the body shop will no longer steer their insured’s to that body shop. If 95%+ of a body shops work comes from insurance companies, this threat can be very convincing.

At the risk of repeating myself, this is why it’s very important that you exercise your right to have your car taken to a body shop that you know and trust. Beware the towing service that insists your car be towed to their storage yard or to another body shop than you desire. Towing companies want to keep your car in their storage yard as long as possible so they can collect a large storage bill. Some towing companies get cash kick-backs from body shops. Above all else, don’t allow your insurance company to tell you where to have your car repaired. They have a bag of tricks to frighten you such as “we won’t warranty the work if it’s not done by our “approved” body shop. The fact is that a good body shop will warranty your work for at least as long as the insurance company. Some insurance companies will go even further and tell you “off the record” why the body shop you prefer won’t do as good a job on your car. This is simply illegal as well as slanderous. If you ask them to put this in writing, they will decline.

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