OEM stands for Original Equipment Manufacturer and indicates that the manufacturer was the original producer. Every piece of the car as it exists in the factory is an original part. Anything that is replaced, including a tail light, is no longer an original part. OEM parts are the same as the original in the sense that they are made by the same manufacturer, with the same materials, and to the same specifications.
By using OEM parts, car owners know that not only they receive a vehicle that is completely returned to factory standard in appearance, they also know their car is restored in structural integrity as well. After a collision, your car may need repairs to the body. While the replacement parts will not be original to the vehicle, they will be OEM parts that seamlessly fit in with your vehicle and ensure its resale value, structural integrity, and restored appearance.
Auto insurance policies don’t always cover OEM parts
When you file an auto insurance claim following an accident, the insurance company will (or at least should) provide you with a detailed repair estimate. Although insurers must pay for covered losses, they employ different tactics to mitigate the amount of money they must pay. One way insurers diminish the value of insureds' losses is by not covering OEM parts.
To find out if your insurance policy covers OEM parts, review its “Insuring Agreement” section. If your insurer will not pay for OEM parts, it may offer you the option to pay the difference between non-OEM and OEM costs.
OEM insurance is an optional coverage that makes it compulsory for repair shops to add only original factory equipment to the car at the time of repair after an accident or part failure. Generally, an auto insurance policy doesn't cover OEM parts without a specific endorsement added to it.
Tips to help you choose the best OEM auto insurance coverage
You can shop for auto insurance that allows you to request OEM parts for repairs.
If you have an older car or a discontinued model, OEM parts might not be available, even if your insurance policy covers them.
If your auto insurance doesn't cover OEM parts, you can still obtain OEM parts to repair your vehicle if you purchase an OEM insurance rider or endorsement, or you agree to pay for the price difference between aftermarket and OEM parts.
Insurers prefer aftermarket parts in order to keep costs down, while body shops prefer OEM parts so they can make more of a profit on repairs.
Disclaimer: This post is for informational purposes only. It does not create an attorney-client relationship, and isn't intended and should not be construed as the providing of legal advice.
About the Author
Rabih Hamawi is a principal at the Law Office of Rabih Hamawi, P.C. and focuses his practice on representing policyholders in fire, property damage, and insurance-coverage disputes against insurance companies and in errors-and-omissions cases against insurance agents. He may be reached at (248) 905-1133.