CNN INVESTIGATION
(CNN)Car
repair shops say auto insurance companies are coercing them to use cheap parts
and sometimes dangerous practices to fix vehicles involved in accidents.
Headlights
held together by glue, dented rims and a new hood that's already coming apart
are among the kinds of parts allegedly being pushed to go into cars as part of
the repairs, according to some repair shops and attorneys general.
A body shop
says it was being pushed to use this rusty part in a repair, according to the
Louisiana Attorney General's office.
Owners say
the insurance companies steer their policy holders toward body shops that
follow their rules, providing a vital source of business. And they add, if a
body shop refuses to make the suggested repairs because of quality issues, the
insurers steer their clients elsewhere.
Major
insurers deny the claims of impropriety.
More than
500 garages from 36 states are joining in a lawsuit against the top insurance
companies, and states like Louisiana, Mississippi and Oklahoma are also getting
involved.
Buddy
Caldwell, attorney general of Louisiana, has filed suit against State Farm
insurance, saying its low-cost repair program could be dangerous for customers
who get back on the road in vehicles that are not roadworthy.
He said he
fears thousands of Americans could be driving round in vehicles repaired with
what he calls junkyard parts after seeking repairs from body shops recommended
by their auto insurance companies who took their premiums and picked up the
bill.
The issue
is a nationwide one, said John Eaves, the lead attorney for the body shops
involved in the lawsuit.
"It
involves people from Maine to Mississippi to California. Every state in the
Union has experienced the same sort of struggle here between the body shops
trying to do the work the right way, and the insurance companies trying to cut
corners and force them to use unsafe parts and unsafe methods on their
cars," he said.
Risky
business for shops, customers
U.S. Sen.
Richard Blumenthal, who used to be Connecticut's attorney general, says not
only is there a potential for small businesses to be hurt, but he, too,
believes cars repaired through insurance company's preferred service centers
pose a safety risk. He has asked the U.S. Department of Justice to investigate.
"The
practice of steering involves jeopardy to the consumer because of the concern
about parts," said Blumenthal, referring to the practice of steering
customers towards certain preferred service centers.
"Safety
concerns are raised by this practice of steering because often it involves the
use of parts that may be salvaged or inferior or even counterfeit and that is a
real urgent and imminent safety concern for the consumer who may have no idea
what the origin of the parts are, who made them, or even whether they're
installed properly."
"I
have been concerned for years about it and why I think the Department of
Justice should be investigating," he said.
"I
believe strongly that federal watchdog agencies have a role in protecting
consumers because serious safety concerns are raised by this practice of
steering often involving the use of inferior or even salvaged or counterfeit
parts," Blumenthal said.
John
Mosley, an auto body shop owner in Clinton, Mississippi, explained how he saw
insurance companies pushing consumers to "preferred" shops where
repairs are done f aster, cheaper, and at times unsafely.
"The
insurance industry has set up networks of shops, direct repair programs,"
he said. "And the way these shops' performance are measured is by the
amount that it cost to repair cars at that particular shop. ... Just get the
car in, make it look like it's fixed and get it out the door."
Insurance
companies can cut costs by approving recycled parts or those not made by the
original car manufacturer.
'This is
junk'
In Parker
Auto Body shop in Monroe, Louisiana, Matt Parker has plenty of examples. He
takes a replacement Toyota Tacoma headlight out of its wrapping. It's clearly
been damaged and later glued and screwed back together.
"You
can see right here where this bracket was knocked off from a previous
accident," Parker told CNN. "It's got a hole in it here, and you can
see where they screwed this bracket back on the vehicle. You can see here where
all these parts were knocked off and glued back together."
Parker
pointed to a crack in the lens that he says will fill with water the first time
it rains.
"This
came wrapped up, out of this box, like it was supposed to be a new part,"
he said.
"The
insurance company wants us to put this stuff on their cars. If we refuse to use
the part, then they label us as a shop not willing to go along with their
program, and then they try to steer our business away from us.
"This
is refurbished junk is what it is," he said. "This is junk."
Louisiana
Attorney General Caldwell said he chose to sue State Farm Insurance because
State Farm is the biggest insurer in his state.
The
Louisiana Attorney General's office says when this car was in a wreck, an
"aftermarket" bumper didn't perform as it should.
The
Louisiana Attorney General says this car had what it calls an
"aftermarket" hood part, and when the car was in a wreck, the hood
crumpled in a way it should not have.
In legal
filings, the company denies all the allegations, including that it insists on
using aftermarket parts.
State Farm
would not grant an interview, but said in a statement: "Our customers
choose where their vehicles are going to be repaired. We provide information
about our Select Service program while at the same time making it clear they
can select which shop will do the work."
State Farm
told CNN to talk to Neil Alldredge, of the National Association of Mutual
Insurance Companies, for more specifics.
"It is
just not in the economic interest of the insurer to have a car go in and out of
an auto body shop three or four times to get it right," said Alldredge.
"And so the notion that somehow this is meant to ... do shoddy work or to
encourage the idea that we have to get it done quickly and move on to the next
one really isn't in the insurance company's economic interest."
When asked
why insurance companies would require or recommend used parts, fixed parts, or
aftermarket parts, he said: "Most companies don't require this. Most
companies offer a choice to consumer. Any sort of aftermarket part that you
might hear about are usually cosmetic parts. So they're nothing related to the
safety, the mechanical parts of the operation of the vehicle. ... In many cases
these parts are no different. They're made in the same factories. One just
comes out with an auto manufacturer's name on it."
He declined
to comment on recycled parts -- such as the broken headlight CNN saw -- saying
he did not know the circumstances.
Alldredge
said he did not believe "steering" was happening. He said a benefit
of a preferred-shop program came for customers getting repairs done quickly,
but it was always a customer's choice.
"The
insurance company may provide a list of auto body shops, and the customer can
say, 'No. I wanna go to Joe's Body Shop around the corner.' And that's their
choice. The issue of steering is already something that's not consistent with
state law and not something that insurance companies do," he said.