Understanding HB 636
As an independent agent, you understand the importance of keeping your clients informed about what their auto policy covers – especially when they are navigating repairs after an auto loss. These situations can be stressful for your client, and we know agents are committed to clearly explaining coverage and setting expectations during the claims process.
Recently, legislation was introduced that directly addresses auto repairs. Ohio House Bill 636, dubbed as the “Auto Insurance Transparency Act,” would impact Ohio’s insurance landscape by changing how replacement parts are disclosed and paid for following an auto loss. The OIA Advocacy team will break down current law and industry practices, outline what House Bill 636 would change, and discuss the potential implications for policyholders and our carrier partners.
Under current Ohio law, standard auto policies generally cover repairs based on like-kind and quality replacement parts. In practice, the system primarily utilizes non-original equipment manufacturer (OEM) parts as a cost-containment measure. Many policies in our state do not include OEM parts unless the insured has purchased an optional endorsement that specifically expands that coverage. Unless informed by their agent, many insureds might not know the distinction between OEM and non-OEM parts until they are faced with a repair estimate.
The current approach balances cost control with indemnification. However, trouble can occur when repair shops, insurers, and consumers, are not fully aligned on how parts are sourced. House Bill 636 aims to promote greater transparency and consumer choice when it comes to replacement parts. It is important to note that this legislation does not require insurers to include OEM parts even when their original policy does not include them. In a situation where a consumer did not have a policy with OEM parts, a carrier would be required to permit repairs using OEM parts, if the claimant agrees to pay the difference between the OEM part and the non-OEM alternative.
The term “required” is always an important word to analyze in a bill. Regardless of whether we agree or disagree with a policy, it is important to note the implications of a mandate. As mentioned, House Bill 636 would mandate insurers to permit repairs with OEM parts if the insured paid the difference. The language states that consumers must be informed of the availability of OEM parts and their right to choose them. Additionally, this bill requires that written repair estimates clearly identify each non-OEM part proposed, have a written disclosure stating that warranties for aftermarket parts are provided by the parts manufacturer, and require signed confirmation that the insured has received and approved the estimate.
The signature requirement may raise concerns, particularly given that consumers already signed their insurance policies and claims documentation. Adding another required approval step could introduce delays at a time when insurers are working to efficiently resolve auto claims.
For policyholders, HB 636 could offer greater clarity and transparency of the repair process. These disclosures may help prevent surprises after repairs are completed. Also, the bill makes an important distinction by requiring insureds to cover the difference between OEM and non-OEM parts. If the bill required carriers to universally cover OEM parts, we would enter a territory that would upset the foundations of auto insurance pricing and would lead to premium increases.
Supporters of the bill may view it as a consumer protection measure that enhances disclosure and helps consumers make informed decisions. Opponents may argue that the added requirements could create more administrative complexity or indirectly contribute to higher premiums if OEM selections become more common.
In conclusion, the Auto Insurance Transparency Act (Ohio House Bill 636) presents an interesting approach to aligning auto insurance practices with consumer expectations. Providing clear disclosures is a reasonable and fair business practice. However, the creation of new mandates for carriers will likely raise concerns among our carrier partners. OIA will be taking this issue to our Advocacy Committee to get their feedback. As this legislation moves forward, we will continue to engage in the process and closely monitor the bill’s progress.
Please reach out to Government Affairs Manager, George Christy, at george@ohioinsuranceagents.com for questions on this specific bill or other OIA Advocacy efforts.
About the Author:
George Christy joined the Ohio Insurance Agents (OIA) as the Government Affairs Manager in January 2025. George brings experience from his previous roles at the Ohio Department of Transportation (ODOT). At ODOT, he was part of the communications team, and he worked on legislative and regulatory issues with the Legislative Affairs team. George brings experience from his work on state legislative campaigns, his time as a Legislative Aide in the Ohio House of Representatives, and his roles at a state agency. George grew up in Delaware County and is a graduate of The Ohio State University where he studied Political Science and Economics.
