Consumer supplied parts - What are the insurance implications?
In the Independent Garage Association’s recent , the problematic issue of customer-supplied parts was highlighted due to increasing requests by customers seeking to save money by supplying their own, often sourced online.
There are valid reasons why some garages may wish to accept and fit these parts – for example, knowing the source and being satisfied as to quality or looking to assist a trusted customer who needs to save money. However, the benefits need to be weighed-up against the risks and the potential unintended consequences.
One the biggest issues surrounding customer-supplied parts is what happens when it all goes wrong. The law states that if the part is to be found faulty, then it is the liability of the customer who supplied it; however if the part has been fitted incorrectly, then it is the fault of the garage. However, establishing that liability can be difficult in practice.
On top of the legal issues, there are insurance implications to consider too. Whilst insurance policies cover damage caused by negligence, i.e. the incorrect fitting of a part which may lead to, or cause, resultant damage; some insurers apply an exclusion relating to second-hand parts. This means that the cover could be compromised if it turns out that second-hand parts were being used, even if unknowingly, as this could be deemed a material fact which should have been disclosed to insurers prior to inception of the policy. That’s why it’s important to review your policy to ensure you’re not leaving yourself open to risk.
Another reason in favour of avoiding customer-supplied parts, and only using your trusted suppliers, is subrogation. If your insurer has to pay out under your policy due to “Defective Workmanship”, it will adversely impact your claims history and ultimately your premium. However, if it is deemed a parts issue and they were provided by a reputable supplier, insurers have a chance of subrogating against the parts supplier. This means they can reclaim any amounts paid out for a claim relating to the supplier’s faulty part, which can then be credited to your claims history and minimise the impact on future premiums.
There are other reasons why garages should tread carefully with customer-supplied parts:
- Traceability – having not bought the part yourself, it’s hard to trace the origins of the parts. So you won’t truly know if the parts are new, second hand or re-conditioned
- Quality – likewise, by not knowing definitively where the parts have come from, it’s hard to check that they meet the required safety standards
- Reputational damage – if it goes wrong, the garage will inevitably get the blame for ‘faulty’ workmanship, even if it is a parts issue. You may lose that customer and others if they share their frustration via word of mouth or on social media, for example
- Peace of mind – controlling the supply of parts yourself gives you piece of mind that the parts provided are typically covered by a warranty should they be faulty
If you’d like more advice on consumer supplied parts, you can revisit July’s article or call the IGA Member Helpline or 0845 305 4230.
If your insurance is up for renewal, remember that the IGA offers exclusive deals and products for members. Call the member helpline for more information.