What Is SEF 43 and How Does It Remove Depreciation?
In a Nutshell: SEF 43 — the "Removal of Depreciation Deduction" endorsement — ensures that when your vehicle is repaired after a claim, your insurer uses brand-new Original Equipment Manufacturer (OEM) parts without deducting for depreciation on the old parts. This means if a 3-year-old part is damaged, you get a new one — not a used or refurbished one at a depreciated cost.
How Depreciation Affects Your Claims (Without SEF 43)
Without SEF 43, your insurer can account for depreciation on parts:
| Part | Replacement Cost (New) | Age of Vehicle | Without SEF 43 Payout | With SEF 43 Payout |
|---|---|---|---|---|
| OEM Tail Light Assembly | $1,200 | 3 years | $800 (depreciated) | $1,200 (new) |
| OEM Bumper Cover | $2,500 | 2 years | $1,800 (depreciated) | $2,500 (new) |
| OEM Headlight Unit | $1,800 | 4 years | $900 (depreciated) | $1,800 (new) |
| OEM Windshield | $1,500 | 3 years | $1,000 (depreciated) | $1,500 (new) |
| OEM Paint Job (panel) | $800 | 2 years | $550 (depreciated) | $800 (new) |
Without SEF 43: You could be paying $200–$700 out of pocket for each damaged part because the insurer applies depreciation, even though the shop charges new-part prices.
What SEF 43 Specifically Covers
| Coverage Item | Without SEF 43 | With SEF 43 |
|---|---|---|
| Parts replacement | Depreciated value paid; you pay the difference | Full cost of new OEM parts covered |
| OEM vs. aftermarket parts | Insurer may use aftermarket/reconditioned | OEM parts guaranteed (usually) |
| Repair vs. replace | Depreciation applied to replaced items | Full cost of new replacement covered |
| Paint and materials | May be depreciated | Full cost covered |
| Betterment deduction | Insurer reduces payout because "old part was worn" | No betterment deduction |
Which Vehicles Benefit Most from SEF 43?
| Vehicle Type | Benefit of SEF 43 |
|---|---|
| Brand new vehicle (0–2 years) | ✅ Highest benefit — all parts are essentially new; repairs should use new parts |
| Leased vehicle | ✅ Highly recommended — lease agreements often require new OEM parts |
| Financed vehicle | ✅ Recommended — protects your investment |
| Luxury or premium vehicle | ✅ Recommended — OEM parts are much more expensive |
| 3–5 year old vehicle | ⚠️ Moderate benefit — still worth it if you plan to keep the car |
| 6+ year old vehicle | Lower benefit — consider cost vs. car's value |
| Beater/older vehicle | ❌ Rarely worth it |
How Much Does SEF 43 Cost?
| Vehicle Value (New MSRP) | Typical Annual Premium for SEF 43 |
|---|---|
| Under $30,000 | $25 – $40 |
| $30,000 – $50,000 | $35 – $55 |
| $50,000 – $75,000 | $50 – $80 |
| $75,000+ | $70 – $120 |
Relative to your total premium: SEF 43 typically adds less than 2–5% to your overall annual premium.
SEF 43 vs. SEF 19
These two are often confused but serve different purposes:
| Factor | SEF 43 (Removal of Depreciation Deduction) | SEF 19 (Agreed Value) |
|---|---|---|
| When it applies | During repairs after a claim | When vehicle is written off or stolen |
| What it affects | Cost of parts used in repairs | Total payout for total loss |
| Eliminates depreciation on | Individual parts | Entire vehicle value |
| Likely needed | First 3–4 years of vehicle life | First 3–5 years, or for specialty vehicles |
| Cost | $25 – $80/year | $50 – $200/year |
Many drivers benefit from having BOTH endorsements.
SEF 43 on Leased Vehicles
If you lease a car, SEF 43 is especially important:
- Lease contracts typically require that repairs use new OEM parts only
- Without SEF 43, your insurer may want to use used or aftermarket parts — violating your lease terms
- You could be on the hook for the difference between what insurance pays and what the lease requires
Common Questions
"Does SEF 43 cover betterment?"
Yes — "betterment" is the insurance term for depreciation deduction. SEF 43 specifically waives betterment deductions on parts replaced during repairs.
"Does SEF 43 cover aftermarket parts?"
Generally no — SEF 43 ensures replacement with new OEM parts (or equivalent). If you specifically want OEM parts on an older car, confirm with your insurer.
"How long should I keep SEF 43?"
For most vehicles, 3–4 years is sufficient. After that, the car is depreciated enough that new vs. used parts make less financial difference.
Key Takeaways
- SEF 43 ensures new OEM parts are used in repairs without depreciation deduction
- Most valuable for new, leased, and financed vehicles — keeps your car in like-new condition after claims
- Costs only $25–$80/year — very affordable peace of mind
- Different from SEF 19 (which covers total loss agreed value) — both are valuable
- Without it, you may pay $200–$700+ out of pocket on a single claim due to on parts depreciation
- Typically worth keeping for the first 3–4 years of ownership
- Ask for SEF 43 specifically when your vehicle is new or leased
Last updated: July 2026
Disclaimer: This article provides general information about SEF 43 coverage in Canada. Availability, terms, and costs vary by insurer and province. Always review your policy documents and consult with a licensed insurance professional for advice specific to your situation.