Recycled Parts Program 2014 Business Rules July, 2014
The following document outlines the Recycled Parts Program (RPP) for Manitoba Public Insurance (MPI). The RPP was created to locate quality recycled parts from participating Recyclers. These parts are then used in repairing damaged vehicles for MPI claims. The RPP broadcasts to Recyclers (participants in the program) parts that will be needed for the repair. The RPP assists repair facilities and Recyclers in obtaining quality recycled parts. The MPI Alternate Parts Coordinators assist in negotiations when issues or disputes arise. The Program is available on claims involving passenger vehicles and trucks including commercial vehicles, regardless of age and condition. Exceptions to the program are; Any year vehicle with less than 20,000 km Updates posted to the MPI Partners website (www.mpipartners.ca) automatically become part of the RPP Business Rules. 1. Pricing a) Unless otherwise indicated herein, MPI will pay the repair facility for recycled parts a price that is up to but no greater than a percentage of the Original Equipment Manufacturers (OEM) Suggested List Price. Percentages will be as follows: Up to but no greater than 60% of the OEM list price on vehicles up to 10 calendar years old Up to but no greater than 45% of the OEM list price on vehicles eleven years and older (excluding classic, antique, obsolete and unique application parts) 65% on Heavy/Commercial trucks all years. b) MPI and the participating Recyclers recognize that the repair facility may purchase parts from the RPP Recycler of their choice, with the cost to MPI not to be greater than the original price quoted through the RPP. Participating members of RPP will only respond with recycled parts from the same model year or newer for sheet metal and trim items. In the case of hard parts (excludes sheet metal), replacement parts having less or equal mileage may be responded to regardless of year. c) Recycled parts supplied are to be priced assuming they are undamaged and the repair of any damage will be negotiated between the Recycler and the repair 1 Page
facility. d) Recyclers should be willing to negotiate the price of their parts if the condition of the parts is not as agreed or as originally quoted. e) When the repair facility chooses an alternate supplier to the one specified by the RPP, the repair facility may be required to supply the original invoice to MPI when the claim is submitted for payment. f) When a vehicle is a marginal repair or a total loss and the insured prefers to have the vehicle repaired, an MPI Alternate Parts Coordinator may negotiate with the Recycler to reduce the cost of the parts to ensure the sale for the Recycler while maintaining good customer service with the insured. The primary Adjuster will have final authority regarding the reparability of the vehicle. g) For items supplied as assemblies, these are to be priced as a quote and negotiated between an MPI Alternate Parts Coordinator and the Recycler. h) Recycled special ordered cut parts such as quarter panels, rocker panels, aperture panels, etc, will be paid up to but no greater than 45% of OEM List. MPI will pay the costs of trim time when economically feasible to do so. i) Where replacement wheels or wheel covers are required, the estimator will specify part numbers when available. Refinished and repainted wheels may be supplied at a price not to exceed 70% of the OEM price. When requested by the repair facility or the insured that the recycled wheel must be refinished, the RPP will add a notification to the file. j) Exchange bumpers with an OEM list price over $200 will be paid at a 30% discount from the OEM list price. Those with an OEM list price under $200 will be paid at a 10% discount from the OEM list price. Repair facilities may purchase from the supplier of their choice. Repair facilities are responsible to attach an original invoice to accounts submitted for payment in cases where Manitoba Public Insurance is being charged for an exchange or aftermarket bumper. k) Recycled bumpers and reinforcement bars will be supplied at a price up to but no greater than 75% of the exchange bumper price. 2. Customer Service Standards a) Recyclers will uphold the highest standards of professional conduct in the Automotive Recycling Industry. b) Recyclers will employ and train knowledgeable people to insure the highest level 2 Page
of customer satisfaction. 3. Delivery, Freight and Restocking a) All parts to be supplied by Recyclers, who have obtained an order through the RPP, will be shipped pre-paid to the repair facility. b) Delivery time for initial recycled parts orders will be no greater than what would be expected if OEM or Aftermarket parts were used, typically two business days. Because scheduling is important to repair facilities, every effort will be made to achieve promised delivery times. Any delay must be reported to the repair facility immediately. c) Rush airfreight, expedited service if essential, will be the responsibility of the repair facility. MPI will not consider reimbursing for expedited service unless prior approval has been obtained. d) Recyclers will not charge restocking fees to repair facilities when parts do not meet the quality criteria as outlined in section 4.0 of the recycled business rules. e) MPI will pay a maximum of 20% restocking fee to cover the cost of freight in cases where parts were shipped to rural repair facilities, but returned to the Recycler because of unforeseen circumstances, such as the insured s vehicle being written off because of a second accident, hidden damage, or for voided claims. The above pertains to rural repair facilities only. For city repair facilities, where special order and labour intensive items are involved, a maximum of 10% will be paid. MPI will not pay restocking charges for freight and other expenses for parts that were incorrectly listed on the claim. It is the repair facility s responsibility to ensure that the listed parts are correct prior to ordering. For this reason, any restocking charges will be a matter between the Recycler and the repair facility. f) MPI will pay the cost of special cut items returned for the same reasons shown in the previous paragraph. Without limiting the generality of the foregoing, these items shall include specially cut quarter panels, sills, doglegs, posts and roofs. 3 Page
4. Quality a) MPI is committed to placing the insured s vehicle back into the same condition it was prior to the loss therefore recycled parts shall be of like, kind and quality to the parts being replaced. MPI endorses the Parts Grading Guidelines set by the Automotive Recyclers Association (ARA) The ARA Parts Grading and Description Guidelines are intended to improve communication between recyclers and the repair facilities. b) All recycled parts offered are deemed to be Original Equipment Manufacturers (OEM) and must be accurately represented (graded) by the Recycler as per the ARA Damage Code Criteria in describing the condition of the part. c) Recyclers that continually fail to provide repair facilities with MPI quality recycled parts as outlined above in 4 (a) and (b) will be notified and given an opportunity to improve after a meeting with MPI s Parts Control Unit (PCU) on the documented quality issues. A second infraction will result in a written notice from MPI. MPI s PCU may choose to audit the recycler s facility or audit recycled parts supplied at a repair facility to monitor conformance. A third infraction will result in MPI s PCU working closely with, monitoring and auditing the recycled parts quality with the recycler for up to a 3 month (90 day) period. It will be the responsibility of the recycler to demonstrate during this period, improvements to quality as outlined in this document in section 4 (a) and (b). A fourth infraction after the 90 day period will result in suspension or removal from the RPP program. d) The recycler should respond to any quality issues a repair facility has the same day as reported, and satisfactory arrangements to resolve the issue should be made within the next business day. e) Recyclers will not repair any damage on recycled parts without the knowledge of the repair facility. 5. Warranties a) The participating Recyclers agree to provide a parts warranty on all body parts equal to or better than the Original Manufacturer s (typically 1 year or until the vehicle is retained by the Claimant, the greater time period of the two will apply) and a one year labour warranty, payable up to a maximum of MPI labour rates. If for some reason a part needs replacement within the 1 year and a replacement part cannot be supplied by the Recycler, the Recycler will reimburse the repair facility the original cost. Poor workmanship and/or faulty installation will not be covered. The insured will not incur any costs. 4 Page
b) Participating Recyclers agree to provide a parts warranty on major mechanical parts (engines, transmission, differential, and transfer case assemblies) if off of Original Manufacturer s warranty for a period of one year or 20,000 kilometers whichever occurs first this includes labour. c) The participating Recyclers agree to provide a parts warranty equal to or better than the Original Manufacturer s warranty on major mechanical parts and assemblies (such as engines, transmission differential and transfer case assemblies). These will meet all existing Original Manufacturer s warranty for the remaining years at 20,000 kilometers per year, this also includes labour. d) The participating Recyclers agree to provide a parts warranty on all other mechanical parts, a parts warranty of one year or 20,000 kilometers whichever occurs first, along with a 90 days labour warranty. e) The participating Recyclers agree to replace all wear items (e.g. Ball joints) with the best quality part and warranty available. f) The above warranty will start on the date the insured signs the certification of repairs. g) The Recycler is not responsible for incidentals such as courtesy vehicles, towing, shop supplies, lodging, Freon and fluids. h) MPI will pay the repair facility for any modifications required to use a recycled part to a maximum of one hour. It is agreed that in unusual circumstances MPI will assess the situation on a case by case basis. NOTE: Any and all aftermarket modifications to the part or related systems will void all warranties including labour (e.g. Suspension lift kits, Computer chip programming, etc.) 6. Parts Excluded a) The current parts agreement identifies parts which are not to be used on a recycled basis. This includes the following parts: Air Bag System Components ABS Modulating Valves Brake Master Cylinder Seat Belts Individual tie rod ends Glass Ball joints 5 Page
Note on Glass: In the event of dealer obsolescence or extended lead time, the Parts Control Unit will work closely with the repair shop and RPP participants to locate a recycled glass. b) There are certain parts that are not normally recommended for use due to safety and/or other concerns. The insured and repair facility may, however, wish to choose these parts deeming them to be of satisfactory quality, to save payment of depreciation or for other reasons. These parts include but are not limited to: Idler Arm Steering Link Struts Batteries Emergency brake cables Tires All bearings Anti lock brake system components Rack and Pinion Steering Assemblies Hubs with non serviceable bearings Note on Struts: The insured will be advised that if a new strut is installed, betterment may apply. If the insured objects to paying betterment, the option of a recycled strut will be provided. c) The following standard brake parts may be used provided they are rebuilt or machined and checked: Rotors Drums Wheel Cylinders Calipers d) Recycling firms will at times quote on parts that are offered as an option for the repair facility. These parts do not have to be used by the repair facility, however, should be considered as a method of expediting repairs when parts may not be readily available or when these optional parts provide a more desirable method 6 Page
of repair. These parts include, but are not limited to: Door shell (quoted when door repair panel is listed on the estimate) Alloy wheel (quoted when wheel is listed for repair on the estimate) 7. Disputes / Appeals a) A representative from the Parts Control Unit or RPP will get involved if issues with quality, part accuracy, delivery, and warranty cannot be resolved between the recycler and repair facility. b) In cases where a poor quality part arrives, the RPP will assist in locating a quality part for immediate delivery. c) In cases where participating Recyclers are unwilling to split orders, or cases where a repair facility provides some of the parts, the RPP will refer the repair facility to the next Recycler listed. In cases where the necessary parts are not available, the RPP will perform a re-broadcast to see if an alternate supplier can be found. If no alternate supplier is found, it will be the repair facilities responsibility to locate all parts listed by the RPP Recycler. Where no recycled parts are located, MPI s PCU will be contacted for direction. d) Where there is a dispute arising out of: a. A Recycler s responsibilities, as outlined in the Agreement or these business rules; b. The refusal to allow a Recycler to participate in the RPP; or c. A participant has been suspended; Such a dispute can be forwarded to an Appeal Committee. The Appeal Committee will be compromised of two representatives from Manitoba Public Insurance and two impartial representatives from the Recyclers. In the event that the Committee cannot arrive at a majority decision, the Committee will select a fifth arbitrator, whose decision will be final and binding. Where the parties cannot agree upon the said fifth arbitrator, one shall be appointed by the Court of Queen s Bench, pursuant to The Arbitration Act. Costs of the fifth arbitrator will be shared equally by Manitoba Public Insurance and the disputing recycling firm. e) The Appeal Committee will be granted the authority to uphold or change penalties where a Recycler is in violation of the Agreement or these business rules. These penalties may include the following: 7 Page
a. Suspension of membership to a maximum of six months for a first offense b. Suspension of membership to a maximum of twelve months for a second occurrence. c. In the event that a Recycler continues to refuse to abide by the rules and regulations set out in the Agreement or these business rules, they may face an indefinite suspension from the RPP. 8 Page