Salvage Air Bags

Collision repairers report the sale of salvage airbags from some recycling facilities that provide no protection for the airbags from weather or other tampering. The lack of any guidelines or restrictions for the sale of these airbags, in most states, adds to the concern for the use of salvage airbags. One repairer reported that his recycler sold most of the salvage airbags on the weekends to non-professional or do-it-yourself repairers: without training, a professionally equipped facility, or a license, and at a high risk. Automotive airbags and their related engineered parts cannot be compromised in any way without additional risk to the consumer.

State and federal policymakers have focused on airbag fraud, the use of false covers, and repairs that do not include the airbag but are typically shocked to learn that this is an unregulated marketplace that reaches far beyond salvage airbags. A senior U.S. Senate Judiciary Committee member was surprised that many states have no regulations for these policy issues.

Model Laws

The National Conference of Insurance Legislators (NCOIL) has continued to keep the salvage airbag issue in play by proposing various model bills. The most recent is the Model Act for Airbag Fraud. NCOIL proposed to address automotive airbag fraud at the state level. Although NCOIL made an attempt to address critical fraud issues, tough penalties, recordkeeping, consumer notice stipulations, and law enforcement requirements, it left open the option of installing salvage airbags.

While the use of salvage airbags can reduce costs, safety could be compromised, and shop owners are placed at risk for installing salvage airbags. ASA recommends that all shops inquire with their insurance carriers before installing salvage airbags regarding coverage and increases in rates, and to get this information in writing.

In testimony before the NCOIL committee with jurisdiction for automotive parts, Pennsylvania collision repair shop owner Harry Moppert stated, "Repairers want to use original equipment manufacturer (OEM) airbags where reliability and performance are tested, warranted, and proven. Administering a law as proposed by NCOIL will be a nightmare for state regulators and law enforcement. With states suffering from diminished economic resources, proper enforcement of this statute would be difficult, at best." Moppert also pointed out that there is no one test to determine that a salvage airbag will deploy in that split second when lives depend on its function.

Despite revisions, as of this writing, NCOIL's model bill proposal for airbags still encourages the use of salvage airbags.

Beyond the Bags

The lack of regulation of parts does not stop at the salvage airbag but includes many replacement crash parts. For example, many imported aftermarket crash parts are not inspected or reviewed by NHTSA. Automobiles are the second-largest investment most Americans make in their lifetimes. The quality and safety of the parts used in the repair of their vehicles is of critical importance.

Although most states have a notice requirement for the use of non-OEM parts, typically these are buried in policy agreements and provide no consent requirement or include this consent in the original policy agreement. Most vehicle owners do not read — or possibly consider important — various information items in the policy agreement. These voluminous documents are overwhelming to vehicle owners and most people never consider that they will be involved in an accident and that the insurance policy will be relevant to their lives.

ASA has advocated for a number of years that vehicle owners should have notice of the types of replacement crash parts used in the repair of the vehicle and consent to the use of those particular parts in writing. We support disclosure laws that require insurers and auto collision facilities to obtain the express written consent of vehicle owners before installing alternative replacement crash parts.

NCOIL has tried to advance private sector certification of aftermarket crash parts for a number of years. In 2005, Minnesota collision shop owner and ASA member Darrell Amberson testified before NCOIL's Property/Casualty Insurance Committee in opposition to state certification of aftermarket crash parts. He said, "Before establishing state-sanctioned certification bureaucracies, I ask that you first allow our federal policymakers to get their house in order at NHTSA in relation to aftermarket crash parts. Crash parts policy at NHTSA has a long way to go, but the law is in place to address safety concerns. If NHTSA disagrees, Congress should bear the burden of establishing authority for NHTSA."

Amberson's comments are very relevant today as Congress reviews financial services reform. Collision repairers support the federal regulation of property and casualty insurers. Salvage airbag policy and the void we have with aftermarket crash parts regulation fall at the doorstep of state insurance regulators. State regulators have had ample opportunity to address replacement crash parts policy. Some have taken the initiative, but most have not.

State governments are not prepared to inspect replacement crash parts. The private sector has a poor track record for such an expansive task, too. To date, parts-certification entities have failed to make a dent in the certification of aftermarket parts even with the support of the insurance and parts industries. The monetary surpluses of these industries far outweigh any surpluses most state governments have in their budgets for such a task.

Safety First

Until there are enforced regulations that protect consumers and diminish the risk for small businesspersons, salvage airbags should not be in the marketplace. Parts policy should not stop with airbags. There is a void in state and federal law that ensures replacement crash parts are safe and of the quality consumers deserve. A formal notice and consumer written consent regulatory structure is a first step toward a national replacement crash parts policy that works for consumers.

Crash parts policy, the use of salvage airbags, and a host of other issues in the collision industry have not been addressed for decades by state insurance departments. U.S. Representatives Melissa Bean (D-Ill.) and Ed Royce (R-Calif.) have introduced legislation, H.R. 1880, that provides for a federal regulatory option for property/casualty insurers. We believe this federal regulatory structure will provide policyholders with a much higher level of service than what now exists under a state regulatory structure.

During this Congress, insurers and repairers have an opportunity to work together to achieve the federal regulation of the insurance industry. For the past several congresses, this issue has been debated and multiple hearings held in both the House and Senate. Several of the major auto insurers have publicly endorsed this legislation. ASA has endorsed this legislation.

Resolving automotive parts policy state-by-state will be very difficult and has not been successful to date. A federal regulatory approach is the answer. With regard to vehicle repair, insurers and repairers have a common goal after an automobile accident, that the vehicle owner has a safe, quality repair. Working together to pass federal legislation that allows the federal government to regulate property/casualty insurers is the best first-step toward protecting the consumer.