Insurance Tip #7: Your auto insurance should cover replacement with original parts

This post is part of a series where personal finance expert Dan Solin provides 10 insurance tips no one else will tell you. See all 10, plus one bonus tip!

When it comes to buying auto insurance, the focus is mainly on the premiums.

Premiums are important. Fortunately, there are many web sites that permit consumers to do comparison shopping.

However, everyone knows that there is more to shopping for auto insurance than getting the lowest price. Among the issues to consider are:

  • Bodily injury and liability insurance -- covers injury to others if you are at fault
  • Collision insurance -- covers damage to your car
  • Comprehensive coverage -- covers damage to your car caused by an event other than an accident
  • Car rental -- while yours is being repaired
  • Glass -- eliminates deductibles for broken glass
  • Medical -- covers your medical expenses
  • No-fault personal injury protection -- covers medical and related expenses for everyone injured in an accident, regardless of fault
  • Liability -- covers damage you cause to the car or property of others
  • Uninsured motorist -- covers injuries (bodily and property) caused to you by uninsured drivers
Here's a tip on buying auto insurance that most agents won't tell you:

Your insurance should cover the cost of repairing your car with original equipment manufacturer (OEM) parts. Most insurance permits the use of aftermarket parts.

Why should you care?

There is much debate about whether aftermarket parts really are of the same quality as OEM. They are significantly less expensive, but the real issue is whether using them returns your vehicle to its "pre-accident condition."

If you lease your car, read the fine print. It may require the use of OEM parts. Unless your insurance covers OEM parts, the difference in cost will be borne by you.

Finally, if you have a luxury vehicle, its resale value may be reduced if repairs are made with aftermarket parts.

Policies that cover OEM parts are more expensive. But it could be money well spent.

See 10 more insurance tips from Dan.

Dan Solin is the author of The Smartest Investment Book You'll Ever Read (Perigee Books, 2006) and The Smartest 401(k) Book You'll Ever Read (Perigee Books, 2008).

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