Updated: May 19, 2020
So you have decided to purchase a new vehicle, it is an exciting day! The smell of the new interior, the beautiful lines of the new model, the fact that you will have a vehicle you can depend on! These are all sensory factors that captivate us when considering a new vehicle. Next, we must decide on how we plan to obtain the vehicle we have picked out; purchase or lease? Both choices have upsides and downsides, each dependant upon your financial position, overall needs and other factors. If you decide to lease, you may not be aware of the lease policy vebiage within the lease agreement that could affect your insurance policy. We strongly recommend that you ask your dealer salesperson what the manufacturer requirements are regarding the use of crash parts, specifically, aftermarket parts in the event of a body repair. Many manufacturers now state that you are responsible for Genuine OEM parts being installed on your lease vehicle. They state this due to the fact that they must try to sell the vehicle again once you turn in your lease, and to do so as a certified pre-owned vehicle, it must have original, OEM parts installed.
So far, these requirements are quite simple and not too much to ask of you as the purchaser, right? After all, who expects to be involved in a collision? The rub here is that your current insurance company's policy may, in fact, state that they have the option to pay for repairs to your vehicle utilizing alternative parts, such as aftermarket, reconditioned or used (junkyard salvage) parts. By doing so, this would void your agreement terms with the leasing company, eventually leading to you having to buy the vehicle outright due to voiding the terms of the agreement. What options do you have now? Your insurer is telling you they will "Only Pay" for the cheaper parts based on your policy and your leasing firm states that you have to use "Only Genuine Parts". It's a catch 22 and you are now faced with some decisions that may cost you a lot of money out-of-pocket. Yes, you can opt to pay the shop for the difference between what the insurer will pay and what the actual costs are, however, this can get quite costly on today's vehicles.
Before you sign on the dotted line, take some preventative measures!
Ask your salesperson at the dealership what the requirements of the lease state in terms of replacement parts usage. Keep in mind that what you are told and what is really on the agreement may be totally different. It is your responsibility to make sure that you read the agreement to ensure you know what you are signing for.
Talk to your insurance agent. Determine what your policy states in terms of alternative part usage. Does the insurer offer an additional policy rider with provisions for new, OEM parts? If not, you may need to explore other options in terms of insurance policies and providers.
Rule of thumb: The cheaper the policy, the less liklihood for the insurer to provide complete coverage as your lease requires. Lower priced insurers typically will not be willing to pay for proper repairs as required by the manufacturers. They try to pay for as little as possible and the one that suffers in the end is you.
A collision repair shop will not know whether or not your vehicle is leased or purchased when you bring it in for repairs. You must explain these details to them. Another notable fact: a collision repair center does not have any agreement with the insurer of what happens to your vehicle or how it is repaired. The agreement for the repair soley exists between the shop and the vehicle owner, therefore, you will have to make the decision of how to proceed regarding repairs and who will pay for these additional costs. The vehicle owner bears the responsibility of seeking the reimbursement from the insurer for out-of-pocket costs that exceed the deductible and/or any applicable depreciation on certain wearable parts.
We have included an OEM Position Statement from FCA/Chrysler/RAM Trucks in this link. If you have questions about what a manufacturer may require before you make a purchase or lease decision, please contact us. We will be glad to assist you in locating the position statement from the manufacturer to determine those requirements!