Auto insurers accused of pushing cheap and sometimes dangerous repairs. CNN's Drew Griffin investigates claims that some insurance companies are skimping on repairing damaged vehicles to pad their profits.
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.
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 faster, 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.