When you take an auto insurance claim after a collision, the insurance company will provide you with a thorough repair estimate. While insurers must reimburse the covered losses, they may use various strategies to reduce the reimbursements. Carriers can reduce losses by paying for aftermarket parts instead of OEM (original equipment manufacturer) parts.
On the other hand, a basic auto insurance policy may not cover aftermarket parts you added yourself as a vehicle modification. If you want that coverage for your car’s customized parts, you might consider obtaining supplemental coverage. Let’s understand the connection between aftermarket parts, vehicle modifications, and insurance in detail.
What Are Aftermarket Parts?
Aftermarket parts are the spare parts you use to repair your vehicle or to upgrade it after you buy it. These parts don’t originate from the automobile’s original manufacturer. Aftermarket parts are sometimes used to enhance an automobile’s performance, efficiency, or look. It should be noted that these parts are new, not used items from other cars.
These can be classified into two groups: spare or replacement parts and vehicle modifications. Replacement parts are components you install in your car when it requires routine maintenance or after an accident. Vehicle modifications are items you add to your vehicle to change its appearance or operation.
What Is the Distinction Between OEM and Aftermarket Parts?
When replacing components on your car, you usually have two choices: OEM (original equipment manufacturer) or aftermarket parts. The distinction between them is who makes them. Aftermarket components come from manufacturers other than the one that built your car. These are often called third-party manufacturers. OEM components come directly from the car’s original company.
There’s a frequent assumption that OEM components are superior to aftermarket parts since they come from the original maker. However, aftermarket components may be even better than the corresponding OEM part. Auto manufacturers will often subcontract aftermarket manufacturers to make parts for them. For example, they may have an aftermarket suspension manufacturer build the OEM suspension components for a particular model. This manufacturer may sell these same parts under their name, rather than the OEM, at a lower price, despite being an identical part.
Why Do Insurance Providers Give Repair Estimates That Include Aftermarket Parts?
Insurance providers issue repair estimates that include aftermarket parts because they may have to restore the vehicle to its pre-loss condition, and aftermarket parts are often less expensive than OEM parts. This helps reduce repair costs, resulting in cheaper rates for all policyholders. On an older vehicle, aftermarket parts may be the only ones available, as manufacturers are only required to make parts for seven years after a model is discontinued. If you or your preferred shop use OEM components to restore the vehicle to pre-loss condition, then you may be required to pay the difference in price between OEM and aftermarket parts out of pocket.
Are There State Insurance Regulations Governing Aftermarket Parts?
Some states may have regulations regarding the inclusion of aftermarket parts in insurance estimates. The regulation of aftermarket components in your state may differ from those of other jurisdictions. Read more about OEM parts regulations by researching your state’s insurance code. For instance, New Hampshire law mandates insurance carriers to pay for OEM components for new cars that are at the most two years old and have less than 30,000 miles. This regulation applies to leased automobiles where non-OEM components may impair the car’s worth.
What Are the Insurance Considerations Regarding Aftermarket Parts?
After an accident, you may want your body shop to order brand-new replacement parts from the OEM. In many circumstances, your insurance company might agree to reimburse for aftermarket items, as replacement or aftermarket parts are usually cheaper than using original parts. There are a few things to consider here:
- Aftermarket components in your car may lower its value. You can choose to pay the difference between aftermarket and new, original manufacturer components.
- The non-OEM components can function just as well as OEM ones. However, some automobile owners insist on using OEM components for all repairs. Keeping original parts may provide a higher trade-in value if you often change your car.
- Remember that insisting on OEM components will cost extra in some manner. You may ask for an OEM parts endorsement in your auto insurance policy, which may raise your premium rate.
- OEM components may be valued more than your car’s pre-accident value, leaving you with a hefty repair price or causing your automobile to be ruled a total loss.
So, it’s always advisable to go through your auto insurance policy to ensure you’re aware of what the policy covers. With certain insurance providers, collision and comprehensive coverage will always include some minor amount for aftermarket items, often $1,000. Other policies don’t cover aftermarket parts at all. After an accident, insurance providers often only replace the damaged items with aftermarket parts.
Does Insurance Cover Aftermarket Vehicle Modifications?
You may get insurance for vehicle modifications. However, it’s generally costly and may not be offered via a standard auto insurance carrier. If you want to verify that your car has coverage for vehicle modifications, there are a few actions you may take.
First, check with your insurance carrier to see whether they provide this coverage. You might likely agree on a price for your automobile ahead of time. Alternatively, as part of your collision and comprehensive insurance, the insurance company could provide varying levels of coverage related to aftermarket parts. There are also specialist insurance firms that offer insurance for one-of-a-kind automobiles. Do proper research before buying a policy to get the coverage you need.
Will Insurance Providers Pay if a Vehicle Has Modifications?
When you add vehicle modifications to your car, it modifies what your insurance policy agreed to cover. If you don’t take care of it before an accident, you could be disappointed to learn that your insurance company won’t pay for your upgraded components. Even if your modifications boost the market value of your car, you may discover that your insurance plan doesn’t cover the upgrades you made.
The vast majority of insurance plans fit into one of two types. Your plan is likely to either exclude modifications from coverage altogether or it may merely cover a tiny portion of the parts’ cost. To know if you have coverage for aftermarket modifications, check the collision and comprehensive section of your insurance policy.
At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.