There have been new legislation proposals on car repair that auto insurance companies strongly oppose. Insurance Networking News said that there were two types of bills that they do not want to agree with. The first type was prohibiting car insurance companies in using DRP or direct repair program. According auto insurance companies who uses this type of repair measure, direct repair program is an agreement between a car insurance company and an automobile collision or crash repair shop in case of an accident. Whenever a car crash happens and the car insurance policyholder will approach his or her car insurance company, they will direct their customers to the crash repair shop that they had a contract with.
A justification from auto insurance companies explains that the reason why they choose to have this type of program with their customers is that it is more convenient in terms of paperwork, quality, and also offers. Since the direct repair program provides collision shops with numerous customers, it is easy for them to offer policyholders a lifetime warranty for the repairs that they do. For paperwork on the other hand, since they are affiliated with the auto insurance company, they will do the paperwork for the policyholder when they file their claim.
When an auto insurance policyholder goes to a repair shop that is not affiliated with their auto insurance company, they will be responsible in filing their own papers just to get their claim processed. Another advantage that these car insurance companies emphasize is that when they use contracted crash repair shops, the cost is not that high. These shops use salvage parts or more commonly known as after market parts – these are less costly than OEM or original equipment manufacturer car parts.
The second type of legislation that car insurance companies are worried about would be the requirement to use OEM parts in the repairs whenever a car involved in an accident with car insurance is brought in. OEM parts are parts of an automobile that comes from the original maker of the car. Unlike the current freedom of repair shops to use salvage parts or the ones that are not the same as the manufacturer of the car, the new bill suggest that they need to be original.
All parts of the car that is going to be replace should have the same manufacturer as the car to ensure the quality. This is bad news for auto insurance companies because using salvage parts are less expensive than getting OEM ones. This would not be good news for insurers and their customers because of the cost. The higher the cost of repair, the higher the car insurance will be. So, they are trying to investigate on how they can have a compromise as to make cheap car insurance still available to people.
