Thanks to eveyone for the much needed feedback on this suject, every comment was helpfull.

I called the insurace rep handeling my claim and what they explaied to me was that on a 12 year old car its normal practice for the claims adjuster to specify recycled parts. Insurance companies are not required to use new parts, only to get your vehicle running as it was prior to the accident. If you want to pay extra for new parts then you can pay the differance.

In my situation its a little different. The price for the recycled parts is higher than the new parts. For example:

Recycled radiator $414

New Behr Radiator $326.95 (benzbin.com)

Recycled AC Condenser $400

New AC condenser $331.49 (Car Parts Wholesale)

The list goes on, for headlights, grill, etc...

Why would I want used parts when new parts cost less and they will probably last longer?

I really don't know who I should be going after here. The BodyShop says I should talk to the person doing the estimate for the insurance company (claims adjuster), the claims adjuster said I need to talk directly with insurance rep who is handeling the claim, the insurance rep says its beetween me and the body shop.

The bodyshop will not tell me who they get thier parts from, so I don't know what they are actually paying. They will not guarntee parts unless they purchase them, and they will not purchase parts from any of the places that I suggested or let me buy the parts myself. They keep telling me that I need to put preasure on the insurance company to ok OEM parts.

I may be wrong, but I think this bodyshop is using me to drive up the estimate. In the end they will probably be buying the same parts from? for how much? and I will never know what really happened.

This whole thing seems really shady, is this how it is supposed to work? I'd rather not post the shops name until this whole thing has been resolved.