Terminology and Definitions
OEM (Original Equipment Manufacturer) - Parts that are manufactured and sold by the maker of your vehicle. These parts are covered by the manufacturer’s warranty. Most OEM warranties are for 12 months or 12 thousand miles whichever occurs first.
LKQ (Like Kind and Quality) or Recycled - This is also known as a recycled part. These parts are taken from the undamaged portion of a vehicle that has been deemed a total loss. These parts are warranted by the LKQ vendor and usually the Insurance company will warranty them as well. These parts are useful as cost saving measures; and sometimes make for a better repair. As an example, an LKQ door assembly will come with glass, window mechanism, door handle, etc; or an LKQ front end assembly will come with sheet metal, headlights, bumper, turn signals, etc.
A/M (Aftermarket) or QRP (Quality Replacement Parts) Parts - that are manufactured by a company other than the maker of your vehicle. These parts are warranted by the manufacturer of the part. As an example, when you have an oil change or have shocks put on your vehicle, you probably don’t buy them from the dealer. The oil filter is a Fram and the shock may be a Monroe. They are made for your vehicle and perform fine. These types of parts are usually much more inexpensive than OEM parts. These parts are useful when the original parts are no longer available or the price of original parts makes the repair cost prohibitive. These are especially useful for older vehicles. Some insurance companies allow you to request OEM only. Check with your insurer for details.
TOTAL LOSS - This term is used to describe a vehicle that is not economically feasible to repair. Any vehicle can be repaired with enough time and money; but if the repairs will come close to or exceed the fair market value of the vehicle, it is usually referred to as a total loss. Each insurance company calculates this based upon their own formulas. Your insurance company can explain how they make this determination.
FAIR MARKET VALUE - This term refers to the amount a vehicle similarly equipped and in the same condition would typically sell for on the open market. Many factors are taken into account to reach this value; such as geographic location, equipment packages, mileage, general condition of the vehicle before the loss, engine size, recent sales of similar vehicles, etc. This is determined exclusively by the insurance company and not the repair facility. Each insurance company has different formulas to reach a fair market value. Your insurance company can explain how they calculate fair market value.
DEDUCTIBLE - The portion of the repairs that the customer is responsible for. Usually $250, $500, or $1000. The amount is selected by the customer when the insurance policy is purchased. Higher deductibles are often chosen in exchange for lower premiums. The insurance company will issue repair payments minus any deductible. The deductible is paid to the repair facility by the customer when the repaired vehicle is picked up.
APPEARANCE ALLOWANCE - An appearance allowance is an amount subtracted from the deductible in exchange for concessions from the vehicle owner. For example; The owner may agree to accept a minor scratch on the wheel or a door trim panel in exchange for a $50.00 appearance allowance. If the owner had a $500 deductible, they would only owe $450.00. Appearance allowances are only offered on strictly cosmetic issues. The amount of the appearance allowance is dependent on the value of the affected part. Not all insurance companies offer this option.
BETTERMENT (sometimes called depreciation) - This refers to a repair which results in increased value. For example, a shock absorber has a 100,000 mile life expectancy. If a shock has to be replaced due to an accident, and your vehicle has 50,000 miles on it, you have used ½ of the shock absorber’s life span. The insurance company will pay for 50% of the part and labor. You are responsible for the balance of the part price. Usually this is only applied to tires, shocks, struts, batteries, wheel bearings, and the like. However, in some situations this can also be applied to refinishing; such as if your paint was already faded or peeling on the damaged part before the accident. The decision on if and how much betterment to charge is solely up to the insurance company.
RENTAL REIMBURSEMENT - A type of rental vehicle coverage in which the rental bill is reimbursed to you after the repairs are complete and the bill is submitted to the insurance company. Your insurance company can tell you if you have rental vehicle coverage on your policy and if it is direct billed or reimbursed.
DIRECTION OF PAYMENT - A form which authorizes the insurance company to pay the repair shop directly for the repairs to your vehicle. This will usually include a limited power of attorney which authorizes the repair facility to deposit any insurance check for your repairs and apply the amount to your repair bill.
AUTHORIZATION - A form which authorizes the repair facility to perform repairs on your vehicle. This will also include permission to drive the vehicle for testing purposes. This form MUST be signed before repairs can begin.
SUPPLEMENT - This term is used to refer to additional parts and/or labor required to complete repairs to your vehicle discovered after the original estimate. Usually this occurs when your vehicle is disassembled and hidden damage is found. It can also refer to anything that deviates from the original estimate such as parts price differences. This is a common occurrence in the collision repair industry as it is practically impossible to see all the damage on a vehicle before it is disassembled. The repair facility usually handles this directly with the insurance company.
HIDDEN DAMAGE (also see SUPPLEMENT) - Damage discovered after the vehicle is disassembled.