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Big Insurance Companies Short-Change Drivers and Repair Shops to Pad Profits

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When someone is injured in an auto collision, getting healthy is the first priority. Also important, however, is repairing one's car, often the only way to get to the doctor, physical therapist, and work. Drivers frequently look to the collision coverage from their own insurance company, to whom they dutifully send a sizable check every month, to handle the repairs. After all, that's what they're paid to do. Yet as The Dallas Morning News reports, insurers often secretly short-change their customers and the repair shops who service the cars by insisting on so-called "after-market" parts, which are often inferior to what the car owners had before. (Terry Box, "Some area body shops fighting insurance companies over repairs," The Dallas Morning News, March 14, 2015, available here.)

After-market parts are car parts not made by the original manufacturer. While they cost less than original components, they frequently are of lesser quality and do not fit or function as well as the original parts. Years ago, insurance companies covering repairs for their insured customers began ordering the auto repair shops they used to replace damaged parts with after-market products while pressuring the shops to reduce wages.

The consequences have been twofold: First, the repair shops see their margins squeezed and pay their mechanics and laborers less in turn. Second, consumers who come to pick up their cars after the repairs drive away unaware that they are less safe than before the accident, given the inferiority of the after-market components. (As noted in the article, Honda testing revealed that the timing of airbag deployment in cars using after-market parts were affected, posing a potentially deadly safety risk to drivers.) Workers and consumers lose. Meanwhile, the insurance companies pocket the savings from using these cheaper, low-quality parts.

Fortunately, a fight against this practice is gathering steam. Over 500 shops across the country have joined a lawsuit seeking to expose its illegality, although most Texas repair shops have yet to join. In parallel, U.S. Senator Richard Blumenthal of Connecticut is prodding the Justice Department to investigate the threat to consumers. As both an unfair trade practice and a public safety hazard, big insurance companies need to be held accountable for this heavy-handed tactic. Given the captive hold the insurers' corporate dollars have over state legislatures and Congress, progress is likely to come through the courts, if at all.

The lawyers at Abraham Watkins have been fighting to protect the rights of consumers, workers, and small businesses for over sixty years. If you are someone you know has been harmed by the wrongdoing of an insurance company, contact us at by calling 713-222-7211 or toll free at 1-800-870-9584.

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