Ah yes. Its been a while since I took mine apart and this is how mine is also. When the lip seals went bad on mine it'd leak fluid, even with the o ring on the bearing.The one we assembled for Stormy81s car has lip seals behind the bearing with an o-ring. I believe when we asked Moser, they said the lip seal was not necessary, because their axle utilized a sealed ball bearing with an o-ring seal around the o.d. We installed the seals for extra insurance.