STAND. COM. REP. NO. 3422

 

Honolulu, Hawaii

                  

 

RE:    H.B. No. 1620

       H.D. 2

       S.D. 1

 

 

 

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Ninth State Legislature

Regular Session of 2018

State of Hawaii

 

Sir:

 

     Your Committee on Commerce, Consumer Protection, and Health, to which was referred H.B. No. 1620, H.D. 2, entitled:

 

"A BILL FOR AN ACT RELATING TO MOTOR VEHICLE REPAIRS,"

 

begs leave to report as follows:

 

     The purpose and intent of this measure is to establish the Vehicle Repair Practices Task Force to study and report on motor vehicle repairs made with original equipment manufacturer parts versus aftermarket parts and the effects of the use of these parts on automobile insurance coverage and costs.

 

     Your Committee received testimony in support of this measure from the Department of Commerce and Consumer Affairs, Hawaii Insurers Council, National Association of Mutual Insurance Companies, Property Casualty Insurers Association of America, GEICO, and LKQ Corporation.  Your Committee received testimony in opposition to this measure from the Automotive Body and Painting Association of Hawaii, Sigs Collision Center, and three individuals.  Your Committee received comments on this measure from the Office of Information Practices and State Farm Mutual Automobile Insurance Company.

 

     Your Committee finds that as the motor vehicle industry evolves, motor vehicles have become increasingly complicated.  Safety features on a motor vehicle are no longer limited to impact-absorbing bumpers, safety glass, and airbags, and may now include back-up cameras, lane departure systems, automatic braking sensors, and other electronic devices located in parts of a car susceptible to crash damage.  It is therefore important to ensure consumer safety when choosing a crash part to repair damage to a vehicle after a collision.  This measure addresses the issues surrounding motor vehicle repairs by establishing the Vehicle Repair Practices Task Force to study and report on motor vehicle repairs made with original equipment manufacturer parts versus aftermarket parts and the effects of the use of these parts on automobile insurance coverage and costs.

 

     Your Committee notes that the companion to this measure, S.B. No. 2243, S.D. 1, which was previously passed by the Senate, is a measure which also addresses the use of original equipment manufacturer crash parts and aftermarket crash parts, also known as like kind and quality, crash parts.  Your Committee finds that under existing law, insureds and claimants are required to pay the difference between the cost of cheaper aftermarket crash parts and the original equipment manufacturer crash parts.

 

     According to testimony received by your Committee, although crash parts were originally cosmetic in design, for today's newer motor vehicles, many crash parts are no longer merely cosmetic and are engineered and crash tested as part of a complex safety system.  The language in S.B. No. 2243, S.D. 1, is therefore preferable because it requires motor vehicle insurers to provide consumers with a choice of authorizing a repair provider to utilize a like kind and quality crash part or the original equipment manufacturer crash part; specifies that like kind and quality parts must meet certain quality and performance standards; and clarifies when a consumer will not have to pay the difference between the cost of an aftermarket crash part and an original equipment manufacturer crash part.

 

     Your Committee has amended this measure by:

 

     (1)  Deleting its contents and inserting the contents of S.B. No. 2243, S.D. 1, a measure which:

 

          (A)  Requires insurers to provide a choice to the insured consumer of authorizing a repair provider to utilize a like kind and quality crash part or the original equipment manufacturer crash part;

 

          (B)  Specifies that an insured consumer who chooses the use of an original equipment manufacturer crash part that would affect the insured consumer's crash avoidance or safety systems shall not be required to pay the additional cost for repairs using that original equipment manufacturer crash part;

 

          (C)  Specifies that an insured consumer who chooses the use of an original equipment manufacturer crash part that would not affect the insured consumer's crash avoidance or safety systems shall pay the additional cost of the original equipment manufacturer crash part that is in excess of the equivalent like kind and quality crash part, unless original equipment manufacturer crash parts are required by the vehicle manufacturer's warranty or the use of a like kind and quality crash part would void an existing manufacturer's warranty or the insured consumer's vehicle lease agreement;

 

          (D)  Inserts an effective date of July 1, 2050, to encourage further discussion; and

 

          (E)  Inserts a sunset date of July 1, 2023;

 

     (2)  Requiring a repair provider to disclose to an insured consumer any potential impact on a vehicle manufacturer's warranty of the use of a like kind and quality crash part, or whether any crash part that meets the vehicle manufacturer's specifications is acceptable for purposes of maintaining a vehicle manufacturer's warranty; and

 

     (3)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

 

     Your Committee notes that under existing law, motor vehicle repair dealers and motor vehicle repair mechanics must be licensed.  However, neither a shop that performs cosmetic repairs nor the individuals performing cosmetic work on a vehicle need to be licensed.  In light of the continuing discussions surrounding original equipment manufacturer crash parts and like kind and quality crash parts, your Committee requests the Motor Vehicle Repair Industry Board to consider whether certifying shops and individuals that perform cosmetic work on motor vehicles would be appropriate.  Your Committee also requests the Motor Vehicle Repair Industry Board to examine the area of law covered by this amended measure and its impact on the area of law that is within the Board's purview.

 

     As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection, and Health that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1620, H.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1620, H.D. 2, S.D. 1, and be placed on the calendar for Third Reading.

 

Respectfully submitted on behalf of the members of the Committee on Commerce, Consumer Protection, and Health,

 

 

 

________________________________

ROSALYN H. BAKER, Chair