How Does New Car Replacement Insurance Work?
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In the event that your car is stolen or damaged in an accident, it’s in your best interest to have a comprehensive car insurance policy add-on that will help you cover the full cost of repairs or replacement. Though insurance coverage typically varies based on your selected plan, provider, and price, opting to purchase new car replacement insurance is always a smart move because it will ensure that any damages done to your vehicle are fully covered in an emergency.
If you’re looking to fortify your financial freedom and security as a car owner, it’s a good idea to learn more about new car replacement insurance, identify when you can purchase this type of coverage, and assess whether or not it’s right for you.
What is new car replacement insurance?
New car replacement insurance will reimburse you for the entire cost of an identical brand new car (once you meet your deductible) if it is totaled in an accident. Many alternative car insurance options only provide you with an amount equivalent to the depreciated value of the vehicle, which can pose significant issues when considering how quickly new cars lose their monetary value.
According to CarFax, a car can lose more than 10% of its value within a month of being purchased. The depreciation value increases to 20% in just 12 months. Five years after purchase, a once-new car can be worth less than 40% of its original purchase price. You might consider purchasing new car replacement insurance to ensure you and your family get the best coverage in the event of an emergency in your new vehicle.
When can you purchase new car replacement insurance?
As the name implies, new car replacement is only available for recently purchased vehicles. Specific rules and guidelines vary by provider, but here are a few general rules the most popular insurance companies typically abide by:
Physical coverage: Most insurance providers require you have physical insurance coverage on the vehicle before purchasing this insurance add-on. You have the option of choosing between collision insurance and/or comprehensive insurance to satisfy this requirement, so be sure to select the option that better suits your needs.
Age and/or mileage requirements: A car must meet certain criteria to be placed on a new car replacement insurance plan. Though the timeframe varies, insurance providers typically provide customers with anywhere from six months to one year to purchase the insurance coverage.
Securing new car replacement coverage
If you’re interested in purchasing a new car replacement insurance add-on, you must first consider your provider options and compare their costs of coverage. The following insurance companies include some form of a new car replacement add-on in their offerings (click here for a more comprehensive list):