Insurers: Aftermarket Parts Required

Aftermarket parts are replacement parts made by any manufacturer that isn't the vehicle's original manufacturer. They are usually cheaper than original parts, and insurance companies often prefer to use them to save money. While some insurance policies do cover aftermarket parts, others don't, and it's important to check your policy carefully. If you've made modifications to your vehicle with aftermarket parts, you may need to add extra coverage to your policy to ensure you're not out of pocket if something happens.

Aftermarket parts vs. Original Equipment Manufacturer (OEM) parts

Aftermarket parts and Original Equipment Manufacturer (OEM) parts are two types of replacement parts for vehicles. While both are regulated and inspected, they differ in terms of who makes them, their cost, availability, quality, compatibility, and warranty.

Who Makes Them?

Aftermarket parts are manufactured by third-party companies and are alternatives to parts made by original car manufacturers. They are not sourced from the original car manufacturers but can sometimes be made by the same factory that sold them to the car maker.

On the other hand, OEM parts are made by the same manufacturer that made the original parts in a car. They are designed by car manufacturers and are the same as the parts that came with the vehicle from the factory.

Cost

Aftermarket parts are generally less expensive than OEM parts, although the price varies by brand. According to the Property Casualty Insurers Association of America, OEM parts cost about 50-60% more than aftermarket parts. This is because OEM parts are designed for specific makes and models, so manufacturers charge more per unit to make a profit.

Availability

Aftermarket parts are more readily available and can be sourced from any auto shop, gas station, or mechanic shop. In contrast, OEM parts can only be sourced from original manufacturers or their authorised dealerships, limiting the options for sourcing these parts.

Quality

The quality of aftermarket parts varies greatly, so there is a higher level of uncertainty regarding their quality. While some aftermarket parts are of lower quality due to the use of inferior materials, others offer equal or greater quality than OEM parts. This is because aftermarket manufacturers reverse-engineer OEM parts, allowing them to improve on their weaknesses.

OEM parts, on the other hand, offer greater assurance of quality as they are the same as the parts on new cars and provide the same level of performance.

Compatibility

Aftermarket parts tend to fit many cars across different brands. They are similar to OEM parts in kind and quality and usually fit well. However, they carry the potential of not being fully compatible with a vehicle.

OEM parts, being designed by the car manufacturer for specific vehicles, tend to fit perfectly.

Warranty

Most OEM parts come with warranties, meaning the manufacturer will cover the cost of fixing or replacing a defective or malfunctioning part.

On the other hand, aftermarket parts typically do not come with warranties, and the buyer is responsible for the entire cost of fixing or replacing a defective or incompatible part.

Aftermarket parts and insurance coverage

Aftermarket parts are replacement parts made by a third-party manufacturer, rather than the vehicle's original manufacturer. They are typically used to repair or modify a vehicle's performance or appearance. Aftermarket parts are new and can be more cost-effective than original equipment manufacturer (OEM) parts.

When it comes to insurance coverage, most companies include the use of aftermarket parts in repair estimates after an accident. This is because they can restore a vehicle to its pre-loss condition and are usually cheaper than OEM parts, keeping repair costs down and resulting in lower premiums for all policyholders. However, the use of aftermarket parts may void a vehicle's warranty and could also lower its fair market value.

In some cases, insurance companies may suggest the use of aftermarket parts to repair a vehicle. This can depend on the make, model, and year of the vehicle, as well as the type of repairs needed. It's important to note that not all states have laws addressing the use of aftermarket parts, and regulations can vary. As of 2017, 31 states required insurers to disclose repair estimates when using non-OEM parts, 20 states required the manufacturer of aftermarket parts to be identified, 13 states required aftermarket parts to be of "like kind and quality" to OEM parts, and six states required the vehicle owner's consent before using aftermarket parts.

If you have a liability-only policy, you typically have zero coverage for your vehicle, and collision and comprehensive insurance is necessary for repairs or replacements. Some insurance companies automatically include a small amount for aftermarket parts in their collision and comprehensive coverage, but this varies between companies. If you have made significant modifications to your vehicle, it is recommended to check with your insurance company to ensure these parts are covered under your policy. Supplemental coverage for custom parts and equipment may be needed if you require more coverage for aftermarket parts.

Vehicle modifications and insurance

Any non-standard changes made to your car since it was manufactured count as a modification. Whether it's adding a roof rack, tinted windows, suspension and engine changes, or alloy wheels, you need to inform your insurance company. Failure to do so could invalidate your insurance policy and cause issues with future insurance.

Modifying your car can make your insurance more expensive and limit your choice of insurers. Insurers consider modified cars to be at a higher risk of accidents, theft, or vandalism. However, certain modifications can reduce your premiums as they improve safety, such as adding an immobiliser, tracker, or dash cam.

Aftermarket parts are replacement parts made by a third-party manufacturer, not the vehicle's original manufacturer. They are often used for repairs or vehicle modifications. Aftermarket parts are usually cheaper than original equipment manufacturer (OEM) parts but may not always be of lower quality. Some states and insurance companies have specific regulations and disclosures regarding the use of aftermarket parts.

If you plan to modify your car, it is essential to consult your insurer beforehand to understand how it will impact your insurance policy and coverage. Each insurer has different criteria for modifications, and some may offer better rates for modified vehicles. It is also crucial to ensure that any modifications you make are legal and comply with safety standards.

Aftermarket parts and vehicle repairs after an accident

Aftermarket parts are vehicle parts purchased from independent manufacturers rather than the original equipment manufacturer (OEM). They are generic versions of the parts that come from the vehicle manufacturer. Aftermarket parts are new and not used. They are suitable for a specific vehicle make and model.

After an accident, most insurance companies include the use of aftermarket parts in estimates for repairs. This is because they can return a vehicle to pre-loss condition and usually cost less than OEM parts. This helps keep repair costs in check, resulting in lower premiums for all policyholders.

However, there is much debate about whether aftermarket parts are as safe as OEM parts. Some argue that aftermarket parts are lower-quality car parts, especially when they cost much less than OEM parts. In addition, some aftermarket parts do not have the certifications to prove they have the same crash ratings as OEM parts.

The Certified Automotive Parks Association (CAPA) reviews aftermarket parts. CAPA conducts tests to determine the quality and suitability of aftermarket parts. Aftermarket parts with the CAPA seal of approval are safe, suitable, and of good quality.

If you have been involved in an accident that has damaged your car, you have the right to request that your vehicle be repaired only with OEM parts. These parts are important to ensure proper fit, function, and safety. However, if you were at fault for the accident and have filed a claim with your own insurance company, you will need to check your insurance policy to see what allowances are made for certain replacement parts. If your policy does not require that your insurance company pay for OEM parts, you will likely have to pay the difference in cost between the OEM parts and the cheaper aftermarket parts.

If the accident was not your fault, and you have filed a claim with the guilty driver's insurance company, you can insist that your vehicle be repaired with OEM parts. However, if there are comparable aftermarket parts available, the insurance company might refuse to use OEM parts because of the higher cost. In this case, you may have to pay the difference in cost between the aftermarket and OEM parts.

Using aftermarket parts for repairs could also void a vehicle's warranty and lower its fair market value.

Aftermarket parts and patent infringement

Intellectual Property Rights

The use of aftermarket parts often raises questions about intellectual property, including patents, registered designs, and trademarks. In the automotive industry, for example, car manufacturers secure design patents for specific parts, such as hoods, fenders, and bumpers, to prevent competition from the aftermarket. These patents allow them to exclude aftermarket parts manufacturers from making or selling substantially similar parts. However, it's important to note that these patents have a limited duration, typically 14 years for design patents in the US.

Functionality

Courts have also considered the functionality of parts when assessing patent infringement claims. In the US, trademark law recognises two forms of functionality: utilitarian functionality (an advantage in terms of product performance) and aesthetic functionality (enhancing the attractiveness of a product). In the case of Automotive Body Parts Association v. Ford Global Technologies, LLC, the court held that even if consumers prefer a particular design to match their vehicle, the aesthetic appeal alone does not render that design functional. This means that aesthetic functionality is generally not a valid argument to invalidate a design patent.

Consumer Choice

The availability of aftermarket parts provides consumers with more affordable options for repairing their vehicles. Aftermarket parts are often significantly cheaper than original equipment manufacturer (OEM) parts, sometimes costing only 25-50% of the OEM price. This can be crucial for consumers with limited financial resources, as it enables them to afford necessary repairs. Additionally, the presence of a competitive aftermarket parts industry helps keep OEM prices in check, benefiting all consumers.

While car manufacturers have legitimate interests in protecting their intellectual property, it is essential to balance those rights with the rights of consumers to access affordable and competitive repair options. Aftermarket parts play a vital role in this regard, and the law has generally allowed their use as long as certain boundaries, such as trademark usage and clear disclaimers, are respected. However, each case is unique, and seeking legal advice is essential before engaging in the production and sale of aftermarket parts to avoid potential patent infringement claims.

Frequently asked questions