The by-pass valve is always installed in the oil system with full-flow filter (installed in series in the system). Usually it is built in the filter itself, however there are constructions where this valve is placed in the engine body. Regardless of the place where it is installed, its only function is to clear the oil flow when the flow resistance is too high and there is a risk of insufficient lubrication of working parts. It is considered though that lubricating and cooling with contaminated oil is less damaging than the lack of lubrication which may lead even to the engine stopping. There are basically two reasons why oil flow resistance in the filter opens the by-pass valve. The first one is high density which happens in winter at low temperature. While starting the car after a long stop (i.e going to work in the morning), cold and thick oil gets to the filtration partition and runs through it in a difficult way. The pressure increase makes the by-pass valve open. The second reason for the by-pass valve opening is the filter medium wear. When the filter is excessively contaminated, its filter medium is clogged with pollutants. In this case the by-pass valve might be open all the time. To avoid such situations, it is required to change filters and oil in accordance with the car manufacturer's recommendations.
By-pass valve in the spin-on filter