Auto Insurer Alert - The California Insurance Regs Have Been Changed!

February 27, 2013

The changes were made to two sections of the regs and concern:

  1. written estimates of auto repairs; and
  2. the use of non-original equipment manufacturer (non-OEM) replacement crash parts, aka aftermarket parts.

Changes to §2695.8 (f) concern written estimates and require that:

  • The written estimate regarding an auto repair prepared by or for the insurer must comply with the standards described in the regulation. These specified standards are "accepted trade standards for good and workmanlike automotive repairs by an auto body repair shop" licensed by the Bureau of Automotive Repair that are stated in California statutes and regulations identified in amended Subsection (f).
  • If claimant contends, based on a written estimate claimant obtains, that necessary repairs will exceed the estimate prepared by or on behalf of the insurer, and the insurer wants to "reasonably adjust" the claimant's repair shop's estimate, the insurer has to (1) follow the procedure described in amended Subsection (f), and (2) provide the adjusted estimate to both claimant and claimant's repair shop.

Changes to §2695.8 (g) concern non-OEM parts and require that:

  • If an insurer specifies the use of non-OEM replacement crash parts, the insurer must provide a written disclosure in the repair estimate prepared by or on the insurer's behalf that the insurer warrants that these parts are at least equal to the original equipment manufacturer (OEM) parts in terms of kind, quality, safety, fit, and performance.
  • If an insurer specifies the use of non-OEM replacement crash parts and the insurer becomes aware that a non-OEM replacement crash part is not equal to the OEM part, the insurer must (1) immediately cease specifying the use of the part, and (2) within 30 calendar days, notify the distributor of the noncompliant aspect of the part.
  • If an insurer specifies the use of a non-OEM replacement crash part that is not equal to the OEM part, the insurer must pay costs associated with return, removal and replacement of this non-OEM part.
  • The insurer can seek reimbursement or indemnity from a third party for the costs of compliance with Subsection (g), but the insurer retains primary responsibility for full compliance with Subsection (g) and cannot refuse to comply or delay its compliance with Subsection (g) on the ground that a third party should be responsible.