Some lawyers and auto body technicians think your "good neighbor" is ripping you off.
A class-action lawsuit against State Farm Mutual Automobile Insurance Co. over the use of imitation parts for collision claims is not scheduled to be heard for another year. But the case against the nation's largest personal automobile insurer could help settle the growing national controversy over the use of so-called "after-market parts" for insurance claims.
State Farm, which advertises itself as "like a good neighbor," is far from the only insurer adjusting claims based on after-market parts. Several other insurance companies use similar business practices.
Lawyers pushing the lawsuit think State Farm is deceiving customers by processing claims based on the most inexpensive parts available. Paying claims based on after-market parts violates the insurer's responsibility to restore the damaged car to its "original condition," the lawsuit claims.
State Farm contends its policies clearly state "parts of like kind and quality" may be used for collision repairs. The company only uses parts approved by the Certified Automotive Parts Association and it guarantees the parts for the life of the car.
"We contend that the after-market parts are just as good as the original manufacturer's," said Dave Hurst, a spokesman for State Farm in Bloomington, Ill.
Local auto body professionals think State Farm is making an erroneous quality claim. Imitation parts are generally of inferior quality to parts made by America's Big Three and top foreign automakers, according to Richard Skora, co-owner of Mike Skora's Collision in Blasdell.
Most imitation parts do not have the same fit and finish as original equipment manufacturer (OEM) parts, Skora said. The imitation parts typically rust quicker because they do not receive the same galvanized coating as original parts, Skora said.
"The sad part about it is that the customer is getting ripped off," said Skora, president of the New York State Auto Collision Technicians Association.
Local body shops are often stuck in the middle between a customer who wants the best repair job and the insurance company only paying for less-expensive parts. Sometimes repair shops just eat the cost difference to make the customer happy, Skora said.
Dennis Keicher, an auto body technician at a local car dealership, also believes after-market fenders, hoods, trunks and other parts are of lower quality.
"The sheet metal is not as thick and it's an inferior grade of steel," said Keicher, who has done auto body work for 23 years.
Some local auto body technicians call imitation parts "Taiwan tin," a reference to where most of the parts are manufactured.
Keicher said he believes the imitation parts controversy is more important in the Rust Belt, where snow and salt devour car bodies, than in other regions of the country.
Automobile manufacturers can take part of the credit for the growth of the imitation parts industry in the 1980s and 1990s, according to one local repair shop's supervisor, who asked not to be named. When an automaker charges $300 for a fender that costs $50 to make, it is easy to see why competition entered the market, he said.
State Farm officials said they are holding down premiums through efficient claims management. If the company were forced to buy all replacement parts from original manufacturers, increased costs would be passed on to customers through higher premiums, Hurst said.
The cost issue comes into play when the auto body industry lobbies state regulators and legislators to get tough on after-market parts, Skora said. No elected official wants to be responsible for driving up insurance premiums, he said.
Scott Nealy, one of the attorneys arguing the case against State Farm, said customer awareness is the important issue.
"The class does not seek to ban the use of imitation parts . . . If State Farm wants to put at the top of its policies, 'we will use the cheapest parts available to repair your vehicle,' and that's clear to all its policy holders, then that's fine with us," said Nealy, of Lieff, Cabraser, Heimann & Bernstein in San Francisco.
The case of Tammy Snider and Michael Avery, on behalf of themselves and all other similarly situated, plaintiffs vs. State Farm Mutual Automobile Insurance Company, defendant, will be argued in Williamson County, Ill.
Because the case is a class-action suit, any local State Farm customers who had a claim adjusted based on imitation parts could be eligible for money if the class wins.
The payout would likely be a small amount, covering the difference between original parts and the imitation parts used in the repair. Possible class-action members need do nothing. The attorneys are responsible for disseminating any damages, if State Farm is forced to pay.
Any local class-action members who wish to opt out of the case, because they may want to sue State Farm on their own or any other personal reason, need to do so by June 5 by sending a letter to: Snider, et. al. vs. State Farm; Plaintiff's Class Counsel; P.O. Box 1500; Marion, Ill., 62959.