On Tuesday, Louisiana Attorney General Buddy Caldwell filed a potentially precedent-setting lawsuit: He’s accusing major auto-insurance provider State Farm of forcing car repair shops to install unsafe replacement parts, endangering drivers across America.The lawsuit was filed in Baton Rouge’s 19th Judicial district and is currently being reviewed by State Farm. In a press conference, Caldwell said, “State Farm has created a culture of unsafe business practices in which consumer vehicle repairs are performed with cost savings as the primary goal, rather than safety and reliability.”Caldwell is focusing specifically on the use of after-market and junkyard parts for car repairs. These parts are cheaper to buy and install, but they may also be damaged or ill-fitting. Cheap parts often lack sufficient coating and rust quicker. All of these factors put drivers in danger of second accidents once they leave the repair shop.
These issues would seem to stem from the “direct repair program” shops insurers contract with to make sure repair work is done as cheaply as possible, but according to Caldwell, fault lies with the insurers, not the mechanics.
State law doesn’t allow State Farm to force its clients to use specific shops, but the company can determine what it will pay for at each shop. Caldwell says that insurance companies like State Farm use this loophole to restrict the types of parts they’ll pay for, forcing consumers to pay the difference if they want parts made by the original manufacturer.
“In some cases, you can actually buy the OE parts for only slightly more than the used parts themselves – especially some of the higher end safety components,” says Ray Weatherspoon, President Of Weatherspoon Automotive. “This practice really depends on what parts are being used, wear items are especially important to replace with new items and junkyard parts should never be used in these situations. In certain cases, junkyard parts are acceptable to use if the part is verified as being functional and if there is a major price difference.”
The focus is on State Farm because it’s the most prominent auto insurer in the state, covering almost 34% of all Louisiana policies. Caldwell and his supporters hope that a win against State Farm, a national leader, will encourage other auto insurance companies to reform their practices as well.The lawsuit accuses State Farm and its tradition of directing customers to specific shops over others of violating Louisiana’s unfair trading practices. The insurer also drives customers away from non-select shops by telling customers they’ll have to pay more for unreliable work as well as refusing to pay for repairs that take longer than they should, according to Caldwell’s allegations.To give the lawsuit weight, Caldwell distributed photos of a wrecked Honda with an aftermarket hood that split and crashed through the windshield instead of crumpling. The drivers were further endangered because the repair shop painted over the airbag trigger in the car’s bumper, preventing them from activating.
Caldwell is seeking $5,000 per violation in civil penalties in the lawsuit, as well as restitution for consumers who paid extra for the original parts their insurer denied.