AIA Pleased with Ill. Supreme Court’s Denial of Petition to Rehear Auto Repair Parts Case

September 28, 2005

Earlier this week, the Illinois Supreme Court denied a petition to rehear Avery, v. State Farm, a $1.06 billion class action judgment addressing the use of automobile collision repair parts by insurers which was overturned by the court last month.

“The Supreme Court’s decision to deny a rehearing in this case is a major win for consumers because the Court’s original ruling will foster price competition in automotive repair costs,” said David Snyder, AIA vice president and assistant general counsel.

In their original ruling, the Supreme Court held that the national class was improperly certified, and threw out all of the monetary damages awarded by lower courts and ruled that the use of aftermarket auto parts did not breach the insurance company’s contract with it’s policyholders. Avery – a nationwide class action lawsuit – originally was filed in Illinois state court during 1998 on behalf of all auto insurance policyholders (in Illinois and nearly every other state). The complaint involved insurer use of generic auto collision repair parts, which are also known as “aftermarket” or “non-OEM” (original equipment manufacturer) parts.

“When the court ruled in August, it addressed all of the harm that was done to consumers, including the many issues arising out of the establishment of the national class action, and Illinois imposing its public policy on the legislatures and insurance regulators of other states,” stated Snyder. “The court has recognized that, under Illinois law, use of like kind and quality, competitively priced aftermarket repair parts is recognized by the insurance code and not categorically prohibited. These parts have helped inject competitive pricing into physical damage insurance coverage, both collision and comprehensive, that account for over one-half of the premiums paid for by consumers. The vast majority of those premiums are spent to repair or replace motor vehicles.”

“By denying the petition to rehear the case, the Supreme Court is helping to insure that Illinois consumers will be allowed the same benefit as consumers in other states where regulators and legislators made the determination to allow non-OEM parts to assist in keeping down repair costs,” explained Snyder. “In fact, the costs of some sheet metal parts rose by nearly 300 percent within a few months of the original decision, and car companies were charging 60 percent more than the distributors selling identical certified aftermarket parts.”

“The Illinois Supreme Court recognizes that their original ruling in August should stand as a huge win for consumers as it continues to foster choice, competition and lower insurance costs,” added Snyder.

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