The True Cost of Aftermarket Parts: Why Insurers’ Short-Sighted Cost Cutting is Costing Everyone More

by Coverall Law and Sean Preston (Managing Attorney)

Insurance companies insist that their use of aftermarket (AM) parts is about cost savings, but the reality is far more complex – and far more costly.

Every day, insurers direct repair shops to install AM parts, claiming that these components meet the legal standard of “like kind and quality” (LKQ) as required under 211 CMR 133. But this standard, as applied, is grossly problematic. Vehicles are engineered as a complete system, with every single part – down to the ounce – playing a role in how that vehicle performs in everyday driving and, more critically, in a collision. A part that differs in material composition, weight or structure – no matter how slightly – was not part of the manufacturer’s design for crash performance. That means that even if a replacement AM part bolts into place, it has already failed to meet the definition of LKQ because it was never tested in the original system it is replacing.

Beyond the fundamental engineering concerns, there is also the issue of true cost. Insurers insist that AM parts represent the “lowest overall repair cost,” but this definition is skewed in their favor. They consider only the immediate cost of the part itself, while ignoring a host of real-world expenses: rental car costs when the wrong part is shipped, additional labor required to make an AM part fit, supplements when a non-OEM part fails and even the long-term impact on vehicle value. In some cases, OEM parts are price-matched to AM parts, eliminating any cost savings insurers claim. And even when they are not, the savings disappear quickly when considering delays, additional work and the safety risks associated with AM parts.

This article takes a deep dive into the real costs of AM parts – not just to vehicle owners, but to repair shops, insurers and the public at large. It examines why the insurer-driven AM parts mandate is flawed, how Massachusetts law already supports the use of OEM parts more than insurers acknowledge and what consumers and repairers can do when faced with a demand to use parts that compromise safety, value and accountability. The bottom line? Insurers’ push for AM parts does not save money – it merely shifts costs onto consumers, repair shops and future accidents.

The Financial Myth of Aftermarket Parts

AM Parts Are Not Always Cheaper

Insurers justify the use of AM parts primarily on the basis of the part cost savings, but in many cases, those savings are an illusion. While AM parts often carry a lower sticker price than their OEM counterparts, the actual cost of using them in repairs is often equal to or greater than using OEM parts. Price-matching programs offered by OEMs frequently bring the cost of an original part in line with its aftermarket substitute, eliminating any price advantage insurers claim. Even when AM parts do cost less upfront, they frequently require additional modifications to fit properly, increasing labor time and pushing up the total cost of repair. Freight and handling charges can also add up, especially when shops receive incorrect or defective AM parts and must reorder, leading to supplemental appraisals and repair delays.

Delays Lead to Additional Costs

Time is money in the collision repair world, and every delay adds costs that insurers fail to consider. When an AM part arrives late or fails to fit, the repair shop must spend extra time sourcing a replacement, while the vehicle owner racks up additional rental car expenses. These costs directly impact the total repair cost, even though insurers rarely factor them into their calculations.

Furthermore, repair shops that attempt to comply with insurer-mandated AM part use often find themselves in a no-win situation. When a defective part is returned to a supplier for a refund or exchange, the shop risks being blackballed by AM suppliers, cutting off their access to certain parts. In Massachusetts, the Auto Damage Appraiser Licensing Board (ADALB) has ruled that parts that are “unavailable” cannot be required under the regulations – but that does not stop insurers from continuing to push AM options, even when they are logistically impractical. And they are fully aware that the chosen shop has been “black balled” in the past.

The Legal and Market Implications of AM Parts

Insurers Deduct for “Betterment,” But What About Devaluation?

Insurers routinely deduct payments to claimants under the concept of betterment, arguing that if a new part makes a vehicle “better” than before, the claimant should pay the difference. This practice applies in cases like new tires or batteries replacing worn-out ones, effectively reducing the insurer’s payout. But what happens when a vehicle is made worse due to the installation of AM parts?

When AM parts are used in place of OEM parts, the vehicle loses market value – a reality that insurers conveniently ignore. If a third-party claim is involved (where another driver was at fault), the at-fault party should be liable for the additional diminished value caused by the use of non-OEM components. In first-party claims (where a policyholder seeks coverage from their own insurer), the insurer is actively reducing the value of the insured’s vehicle – without any compensation for the loss. This double standard is indefensible.

The Hidden Liability of AM Parts

Beyond financial concerns, the use of AM parts introduces a serious liability question: who is responsible when these parts fail? Original equipment manufacturers (OEMs) design vehicles as integrated safety systems, where every part is tested and engineered to perform in a crash. When an insurer mandates an AM substitute, they are changing the way the vehicle will perform in a future accident – but who is accountable if that change results in injury or death?

Insurers frequently advertise that they “guarantee” repairs performed at their preferred repair shops, but Coverall Law reviewed 14 different Massachusetts insurer-referral contracts, and every single one placed liability back on the shop – not the insurer. This means that if an AM part fails, the repair shop is left holding the bag, even though the insurer mandated its use in the first place. While one can hope that an insurance carrier may be held at least partially liable since they are directly choosing the parts to be used; just like in the John Eagle case, the buck stops with the shop. 

The Quality and Safety Problem of Aftermarket Parts

AM Parts Are Not Always “Like, Kind, and Quality”

The legal standard in Massachusetts requires that AM parts be LKQ to OEM parts, but in practice, this standard is widely misapplied. Many AM parts arrive with incorrect fitment, forcing some repairers to not “rock the boat” when they feel they have no choice but to drill new bolt holes or modify components just to make them work. Other parts have weight differences that may seem minor but can drastically alter crash dynamics. Material quality varies widely, with some AM parts using cheaper plastics, inferior metals or lower-quality adhesives that do not meet OEM performance standards.

The biggest procedural issue is that insurers insist that a part is fit for use unless both the insurer and the repairer agree that it is unfit. This is problematic because insurers are already often delayed in viewing supplement requests, leaving shops in limbo while waiting for an insurance appraiser to confirm what they already know: the AM part does not meet LKQ standards. If an OEM part had been ordered from the outset, the repair process would be smoother, quicker and safer. Further exacerbating this issue is multiple shops showing the exact same part to the exact same insurer as unfit for use, and insurers continuing to dictate on list price alone. The insurers have no system in place to track the insufficient parts they have already failed in pushing onto the shops.

OEM Parts Come with Built-in Safety and Recall Protections

One of the most overlooked issues with AM parts is tracking and accountability. When an OEM part is used, the manufacturer is legally responsible for recalls, warranty claims and performance failures. In contrast, AM parts lack any structured tracking system, making it nearly impossible to recall a faulty component once it is installed in a repaired vehicle.

Groups like the Certified Automotive Parts Association (CAPA) send out monthly notices of AM parts that have been decertified, meaning they no longer meet even the minimum standards for quality. However, there is no established system for tracking and replacing these faulty AM parts once they have been installed. This means that vehicles with decertified parts are allowed to remain on the road, putting both drivers and the public at risk.

Insurers Ignore Future Liability

The issue of AM part liability extends beyond immediate repairs – it impacts how a vehicle will perform in future collisions. As Managing Attorney, I recently debated this point with an insurer’s appraiser over a frame sub-panel repair. The appraiser proposed attempting a repair first before approving a full replacement. But the question was simple.

“Even if you make the damaged piece work, will this vehicle perform the same in a subsequent collision?”

The shop owner was taken aback, the insurer appraiser could not answer. The truth is that insurers rarely consider follow-on liability, because their sole focus is immediate cost savings – even when that decision may put lives at risk in future accidents. (And Yes, John Eagle is a perfect example.)  

What “Lowest Overall Repair Cost” Must Mean

Under 211 CMR 133.04(1)(c), OEM parts can and should be used if they result in the “lowest overall repair cost.” However, insurers interpret this phrase narrowly, considering only immediate part cost rather than the true economic impact of their decisions.

A proper interpretation must include:

•  Rental and delay costs when AM parts cause supply chain disruptions.

•  Supplement/rework costs when AM parts arrive defective, requiring additional labor.

•  Vehicle devaluation due to non-OEM components, which impacts resale and insurance value.

•  Long-term liability risks – because a poorly repaired car today could lead to lawsuits tomorrow.

Insurers fail to see past the immediate cost savings, but reality tells a different story:

•  Delays cost more.

•  Re-repairs cost more.

•  Lawsuits cost more.

•  Unsafe repairs put consumers at risk.

The goal of 211 CMR 133 is to ensure safe and fair vehicle repairs – not to let insurers cut corners at the expense of safety, quality and accountability. If insurers continue misapplying these regulations, it is up to repairers, consumers and the legal system to hold them accountable.

What Consumers and Repair Shops Can Do

For Vehicle Owners

When an insurer mandates the use of AM parts in your repair, you do not have to accept it without question. The law requires that replacement parts be LKQ to the original components – but as we have seen, many AM parts do not meet this standard.

Here’s what you can do as a vehicle owner:

•  Know your rights – Massachusetts regulations allow for the use of OEM parts if they result in the lowest overall repair cost. If an AM part will cause delays, require additional labor or diminish the resale value of your vehicle, demand an OEM replacement.

•  Document everything – If an insurer insists on an AM part, ask them to provide written documentation that the part is truly LKQ. If the part is incorrect, defective or delayed, keep records of all communications and costs – this could be useful in diminished value claims or future legal action.

•  Challenge vehicle devaluation – If AM parts are used, your vehicle will likely be worth less on resale. If another driver was at fault for your accident, you may be entitled to diminished value compensation. If you are making a claim under your own policy, you should demand an adjustment to reflect the loss in vehicle value.

•  Consult an attorney if needed – If an insurer refuses to acknowledge the long-term costs of AM parts, legal action  may be necessary. A well-documented claim can challenge improper insurer practices and force them to adhere to the true meaning of LKQ and the lowest overall repair cost standard.

For Repair Shops

Repair shops find themselves caught in the middle of insurer-mandated AM parts policies and the need to ensure safe, high-quality repairs. To protect both your business and your customers, consider the following strategies:

•  Push back against bad AM parts – If an AM part does not fit properly, requires modifications or does not match OEM specifications, document the issue immediately. Do not allow an insurer to pressure you into using a part that is not truly LKQ.

•  Demand insurer accountability – Insurers should be responsible for additional costs caused by defective AM parts. If an AM part causes delays, extra labor or requires reordering, insist that the insurer cover all associated costs. 

•  Use ADALB rulings to your advantage – The ADALB has ruled that if an AM part is unavailable (even if solely because the supplier will not sell to your shop), the part cannot be required under Massachusetts regulations. If an AM supplier refuses to sell to your shop (due to prior returns of defective parts), use this ruling to justify OEM replacement.

•  Educate customers about their rights – Many consumers do not realize that insurers cannot force them to accept  AM parts. Shops that educate customers about OEM part advantages and legal protections build trust and reinforce the importance of safe, high-quality repairs.

Conclusion

Massachusetts law is clear: repairs must be performed using LKQ parts, and the lowest overall repair cost must take all factors into account. However, insurers have consistently interpreted these regulations to their own financial advantage, prioritizing short-term savings over long-term safety, quality and vehicle value.

The fundamental problem is that AM parts are rarely true LKQ replacements. Even a part difference of a few ounces in weight can alter how a vehicle performs in a collision. Yet insurers routinely demand AM parts without any regard for crash safety, resale value or long-term liability risks. They also ignore the hidden costs of AM part use – delays, rental expenses, rework costs and additional labor – all of which negate any claimed savings.

Meanwhile, repair shops and vehicle owners bear the burden. Shops are forced to navigate insurer pressure, supplier blacklisting and accountability loopholes, while consumers are left with devalued vehicles and potential safety hazards.

If insurers are allowed to continue this short-sighted cost-cutting, the consequences will only grow worse. Vehicle owners, repair shops and industry advocates must push back – by demanding accountability, challenging improper part specifications and ensuring that the real meaning of LKQ and “lowest overall repair cost” is upheld. If insurers refuse to see beyond their immediate cost savings, then it is up to the legal system and industry professionals to hold them accountable.

Want more? Check out the April 2025 issue of New England Automotive Report!