Auto insurers are under increasing pressure to stop promoting the use of non-original-equipment crash parts after an Illinois jury last week awarded $456 million in damages to policyholders of State Farm Insurance Cos.
Lawyers representing State Farm policyholders in a class action lawsuit argued that less expensive aftermarket crash parts are often ill-fitting and less functional and reduces the resale price of cars and trucks.
'They tremendously diminish the value of your vehicle,' said Gordon Ball, one of the lawyers representing 4.7 million State Farm customers.
Ball said his legal team is reviewing the possibility of suing other insurers.
State Farm said it was aware of at least seven pending lawsuits against insurance companies that promote the use of aftermarket parts.
The State Farm decision validates what automakers have been saying for years about the substandard quality of non-OEM crash parts, said Tom Murphy, general director of marketing at General Motors' Service Parts Operation.
State Farm, which vowed to appeal the jury verdict, argued that using non-OEM parts reduces repair costs and keeps a lid on insurance premiums. Safety is not compromised by using aftermarket body panels, the company said. State Farm policyholders are given the option of having OEM components installed if they pay extra for the parts.
State Farm, based in Blooming-ton, Ill., is the nation's largest auto insurer.
It has not announced whether it will stop encouraging the use of non-OEM crash parts.
At issue in the State Farm case were a wide variety of crash parts, mostly sheet metal body panels. Also involved was the use of non-OEM bumper systems, grilles, body moldings and headlamp and taillight components.
In the State Farm case, a jury in a Williamson County, Ill., court ruled that the insurer had breached its contract with policyholders by pushing non-OEM parts.
The presiding judge will rule on punitive damages and a request by plaintiffs' lawyers to bar State Farm from promoting the use of aftermarket parts.