While it’s easy to understand the labor that goes into collision repair, the parts can be confusing. Is there really a difference between OEM parts and aftermarket parts? What do acronyms like “LKQ” and “A/M” mean? What happens if I modified my car? Here’s what you need to know to decipher the parts section of your estimate and make the right choices when insuring your car and having it repaired.
How Replacement Parts are Categorized
There are about a dozen terms used to describe parts on insurance estimates, but they all refer to three basic parts types: “OEM,” “Aftermarket” and “Like Kind and Quality.”
OEM – Original Equipment Manufacturer parts are brand new parts made by the automotive company that built your vehicle or one of their suppliers. These parts are labeled “OEM” or “New” on your estimate.
These parts aren’t always labeled with the car brand. Some companies sell replacement parts under a separate brand name, like Fiat Chrysler’s “Mopar” parts division. Many parts in your vehicle are made by a supplier or “second party” company. You may see brand names like Delphi, Magna, Johnson Controls, Denso, TRW or Bosch stamped on the part. However, in both cases, you’re still getting the exact part used at the factory.
LKQ – Like Kind and Quality parts are used and remanufactured parts. These are labeled “LKQ,” “Reman,” “Remanufactured,” “Quality Recycled” or “Used” on estimates.
Remanufactured parts are used parts that have been professionally rebuilt. This is common for major components made of smaller parts like engines, transmissions, alternators, and brake master cylinders. The component is disassembled, cleaned and inspected by a professional. Parts are machined to bring them back to factory specifications, and wear components like seals are replaced. The end result is functionally like a brand new component, but at a lower cost.
Quality recycled or used parts come off of other vehicles, typically from a salvage yard. Depending on their condition, they may be used directly on the vehicle or reconditioned. For example, a vehicle involved in a front end collision still has perfectly serviceable rear quarter panels. These panels are fitted to your car, and any imperfections are removed. These parts are then repainted. The result is something that looks and functions like new.
Aftermarket Parts – These are new parts that are manufactured and sold outside OEM channels. These can be made by the same company that makes the OEM part, or by a totally unrelated company. These parts may be listed as “A/M,” “PXN” or “Quality Replacement” on your estimate. Quality can vary widely, but both shops and insurance companies have an incentive to choose high-quality replacements.
Insurance companies want to restore the safety and value of the vehicle, while shops want to preserve their reputation.
There are two key advantages to choosing aftermarket parts over OEM: these parts are often warrantied longer, and they’re more commonly available locally. That means your car can be repaired sooner, and there’s less worry if the part fails.
What is Betterment?
If you’ve ever filed a home insurance claim, you’ve dealt with prorating. Let’s say your home’s roof is damaged by hail or wind. The roof is 10 years old. The insurance company figures that the roof would need to be replaced in 20 years, so you got 50% of the roof’s use before it was damaged. As a result, they pay for 50% of the material costs for replacement.
When it comes to auto repair, insurance companies apply the same logic. If an old, worn part is replaced with a new OEM replacement, that part is now better than the old one was before the accident. The company will prorate their payment based on the “percentage of betterment,” the perceived difference in value between the new part and the worn one.
How this is applied varies from state to state. In Wisconsin, insurance companies can only use betterment to pay less for a part if that replacement directly increases the value of the vehicle. For all practical purposes, this means it can only be applied if major components like the engine or transmission are replaced, but it does apply to tires in Wisconsin.
Are Performance and Appearance Parts Covered?
Repairs are supposed to return your vehicle to its functional pre-crash condition. This does not include non-factory function parts including aftermarket wheels, intakes, audio, and other modifications. How these parts are handled will depend on your policy: state regulations do not require insurance companies to cover these parts. At most, you will be offered the value of OEM-equivalent parts, leaving you to pay the difference for an exact replacement. If you have a heavily modified car, you should talk to your insurance agent about adding supplemental coverage for these parts.
Take the Guesswork Out of Collision Repair
Merton Auto Body has earned the trust of the people of Lake Country by delivering quick, consistent repairs for over 70 years. We have an auto body estimation center to get your vehicle appraised immediately and work with your insurance company on adjustments. Our shop is just up the road from Ironwood Golf Course in Merton, just a short distance away from Pewaukee, Lisbon and North Lake.