What is OEM coverage and how does it work with car insurance?

You might have heard the term original equipment manufacturer (OEM) at the mechanic when your vehicle needs a replacement part. But before you reach for your wallet, make sure you’ve looked closely at your car insurance policy to see if it covers OEM parts or specifies that you only use OEM parts for repairs, especially if you’re driving a newer vehicle.

Finding the right insurance for your needs and vehicle can be challenging. Recently, manufacturers and insurance agencies have partnered to provide insurance add-ons known as embedded insurance. This option makes adding OEM coverage more accessible when purchasing a new vehicle.

As the industry starts to embed buying auto insurance at the dealership or online, as an alternative to the traditional insurance process, make sure you know your options. Before you buy, learn more about OEM coverage, the pros and cons and what some top manufacturers offer.

Key Highlights

Many top auto manufacturers offer their own insurance policies with OEM parts coverage.
An OEM coverage endorsement can be added to your personal insurance policy.
Automakers continue to advance their insurance offerings with personalized premiums and parts and repair coverage.

Written by:

Katrina Raenell

Contributing Researcher

Katrina Raenell is a writer, editor and educator with 20 years of experience in content and communications for international organizations, nonprofits and start-ups. In her previous roles, she was a communications manager for study abroad, content project manager for higher education and finance websites, reported on arts and culture, and was a managing editor for an online health and wellness publication.

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Laura Longero

Executive Editor

Laura Longero is an insurance expert and Executive Editor at CarInsurance.com, where she specializes in helping consumers navigate the complexities of the financial and insurance industries. She has 15 years of experience educating people about finance and car insurance. Prior to joining CarInsurance.com, she worked as a reporter and editor at the USA Today Network. Her expertise provides readers with practical guidance, helping them make informed choices about their financial and insurance needs.

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Which car manufacturers offer insurance policies?

The auto industry is ever-changing — new driving and vehicle technologies and more personal data metrics — and insurance companies strive to progress quickly for improved coverage options.

Typically, OEM repairs on your vehicle are covered by car insurance if:

Your vehicle is under seven years old
Used OEM parts can be approved for repairs if new ones aren’t available or are overly expensive
You have active collision and comprehensive car insurance or comprehensive-only

When car insurers and manufacturers partner, they offer options that match the needs of modern vehicles. Insurers may review driving data compiled by manufacturers to analyze risk and coverage options.

Below, learn more about some of the top manufacturers’ OEM coverage policies and partnerships that offer traditional car insurance policies as well.

Ford

Ford Insure is an auto insurance offering through Nationwide Mutual Insurance Company that provides smart driver and low-mileage discounts to drivers based on their connected vehicle data and driving behaviors. It’s available for 2020 vehicles or newer.

In the event of an accident, Ford Insure offers its members access to the Ford Certified Collision Network and access to OEM parts.

GM

OnStar Insurance, operated by General Motors, offers auto insurance options for its car makes — Chevrolet, Buick, GMC and Cadillac. It also will provide car insurance coverage for household members with non-GM brand vehicles. OnStar provides discounts and OEM parts coverage for repairs. And you don’t have to be on a paid OnStar plan to be eligible for OnStar Insurance.

Hyundai and Kia

After videos demonstrating how to steal push-button Hyundais and Kias trended online, car owners saw an uptick in vehicle thefts nationwide. When some car insurers stopped providing coverage for these models, Hyundai partnered with AAA to offer auto insurance policies to Kia/Hyundai owners. Additionally, Hyundai offers an OEM software upgrade and a steering wheel lock to deter theft.

Kia also offers vehicle protection plans, providing additional service and repair options for vehicle owners. Some OEM coverage includes brake pads, batteries, headlamps, belts, hoses and electrical system components.

Mercedes-Benz

Mercedes-Benz Insurance offers its vehicle owners driving discounts and vehicle protection plans through a car insurance partnership with Liberty Mutual. In addition, warranty insurance is available for wheels and tires, dents, windshields, parts, and interior and exterior repairs.

Tesla

Continuing to push into new frontiers, Tesla now offers its own auto insurance option for vehicle owners. Using real-time driving data to determine a safety score and premiums, drivers can see their monthly rate change based on their driving performance. It also covers OEM repair costs and safety upgrades.

Toyota

Through Insure Connect, operated by Toyota Insurance Management Solutions (TIMS), eligible vehicle owners can purchase usage-based insurance (UBI). By sharing their driving data, drivers can tailor their auto insurance policy to their needs and potentially save on premiums. Drivers in Alaska, California, Hawaii and New York are ineligible and not all Toyota models are eligible.

TIMS represents partnerships with National General Insurance, Nationwide Insurance, Progressive, Travelers and Safeco Insurance. This insurance option also provides OEM parts coverage for Toyota repairs.

Volkswagen

Through VWFS Protection Services, Inc., drivers can purchase a Vehicle Service Protection plan that provides OEM coverage for repair or replacement parts. Based on the selected plan, Volkswagen vehicles’ electronic systems, engines, transmissions, suspensions and more are covered, minus the driver’s insurance deductible. These plans work concurrently with manufacturer warranties but are not auto insurance policies.

Final thoughts: OEM insurance policies

It’s easy to presume aftermarket parts can be as good as OEM ones. However, some aftermarket parts are faulty or refurbished from salvage. While there may be instances where you’re inclined to go with an aftermarket repair — especially if you’re driving an older vehicle — it may be worth the extra OEM cost to ensure your vehicle’s longevity on the road.

Remember, most car insurance policies won’t cover OEM parts, so it may be worth price-shopping an OEM endorsement on your current policy. You may want to discuss this with your dealership if you’re unsure of your vehicle’s repair and replacement options.

Resources & Methodology

Sources

American Family Insurance. “What is OEM coverage and why is it important?” Accessed August 2023.
Autoblog. “Hyundai partners with AAA to offer insurance coverage for oft-stolen cars.” Accessed August 2023.
Arity. “Arity and Ford team up to give drivers more control over what they pay for insurance.” Accessed August 2023.
Baily & Greer. “Should I get an OEM endorsement for my car insurance?” Accessed August 2023.
BusinessWire. “In the Car is revolutionizing the auto insurance landscape by introducing embedded insurance.” Accessed August 2023.
Ford. “Ford Insure.” Accessed August 2023.
Kia. “Vehicle protection plans.” Accessed August 2023.
Insurance Information Institute. “FAQs about direct repair programs and generic auto parts.” Accessed August 2023.
Mercedes-Benz. “Protection for your investment.” Accessed August 2023.
Milliman. “Car manufacturers are challenging auto insurers: Who will win the tech race?” Accessed August 2023.
OnStar Insurance. “Auto insurance driven by you.” Accessed August 2023.
Stellantis Financial Group. “Motor Insurance.” Accessed August 2023.
Tesla. “Tesla insurance.” Accessed August 2023.
Toyota. “Insure Connect.” Accessed August 2023.
Volkswagen. “Vehicle Service Protection.” Accessed August 2023.
Ford. “Collision Repair Process.” Accessed August 2023.
Hyundai. ” Anti-Theft Software Upgrade.” Accessed August 2023.

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