What Is Liberty Mutual New Car Replacement Insurance?

If your brand-new vehicle gets totaled, Liberty Mutual’s new car replacement insurance can help you buy a new one.
Written by Melanie Krieps Mergen
Reviewed by Bellina Gaskey
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If your brand-new car ends up totaled, having Liberty Mutual’s new car replacement coverage on your
car insurance
policy will help cover the purchase price of a comparable new vehicle.
  • Liberty Mutual new car replacement insurance is available as an optional coverage for vehicles no more than one model year old.
  • For vehicles older than that, Liberty Mutual offers Better Car Replacement coverage for totaled cars.
  • New car replacement protection typically costs about several hundred dollars, but you can shop around for quotes to find the best available deal.
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What is Liberty Mutual new car replacement insurance?

Liberty Mutual new car replacement insurance is an optional type of coverage that can help you purchase a new vehicle if your current one is totaled. 
To get new car replacement insurance from Liberty Mutual Insurance, your vehicle will need to meet some requirements. It must be:
  • Less than one year old
  • Below 15,000 miles on the odometer
  • Not leased
  • Not previously owned
You’ll also need to have both
comprehensive and collision coverage
on your car insurance policy.

Why is Liberty Mutual new car replacement insurance helpful?

New car replacement can be an extremely beneficial form of protection because car values depreciate fastest during their first several years. 
A car can depreciate by up to 11% the moment you drive away from the dealership—and after just a year, your vehicle could lose 20% to 30% of its value.
This can prove problematic, because on their own, comprehensive and collision coverage—referred to together as
full coverage
—will reimburse you after a total loss based on your vehicle’s actual cash value (ACV), minus your deductible.
If you bought your car new for $35,000, it was totaled when it was just shy of a year old, and its value depreciated by 20% up to that point, it will have lost $7,000 in value. 
That’s $7,000 less in buying power when it’s time to pick out a replacement—which would be a major disappointment after investing so much in your vehicle so recently.

How does filing a claim work with Liberty Mutual new car replacement insurance?

If you’ve added new car replacement coverage to your policy and then got into an accident, you’ll need to file a car insurance claim. If your vehicle is deemed a total loss (the definition of which will vary depending on your state’s laws), your insurance will cover the purchase price of a new vehicle.
And rather than its depreciated value, your coverage amount is based on what it will cost to buy a new vehicle of the same make and model.

What is Liberty Mutual Better Car Replacement insurance?

New car replacement can offer major savings, but your new vehicle doesn’t stop depreciating after your first year of ownership. In fact, while vehicle depreciation rates will vary from model to model, cars can generally lose about 60% of their initial value by the time they’re five years old.
Liberty Mutual’s Better Car Replacement coverage allows policyholders to get coverage for a newer vehicle after a total loss once your vehicle has aged out of its new car replacement coverage.
Better Car Replacement won’t necessarily get you a brand-new vehicle, but it will get you a vehicle that’s one model year newer and has 15,000 fewer miles than your current ride. So, if you were driving a 2018 Chevrolet Equinox with 50,000 miles, your coverage could help you replace it with a 2019 model that has 35,000 miles.
To qualify for Better Car Replacement coverage, your vehicle must be owned and not leased.

How much does Liberty Mutual new car replacement insurance cost?

New car replacement insurance generally costs several hundred dollars to add to your auto insurance policy, but this can vary depending on factors like the provider and the type of vehicle.
But what car insurance shopper isn’t looking to keep their costs as low as possible? To maximize your savings, be sure to take advantage of the car insurance discounts you’d qualify for with Liberty Mutual, like signing up for its RightTrack program or policy bundling (such as multi-car, or multi-policy with your renters or home insurance).
To find out how new car replacement coverage could affect your own car insurance rates, contact your agent or seek out a quote from your desired provider.

Is Liberty Mutual new car replacement insurance worth it?

If your brand-new vehicle was totaled during the first year that you owned it, Liberty Mutual’s new car replacement coverage could potentially save you thousands of dollars compared to the coverage you’d get from collision or comprehensive coverage alone.
Whether this protection is worth it for you will depend on your tolerance for risk, your budget, and your financial ability to buy a replacement vehicle on your own if your current car was totaled.

What other Liberty Mutual optional coverages are good for new cars?

In addition to new car replacement, here are some additional coverage types worth considering if you’re planning to purchase a new set of wheels:
  • Gap insurance
    : Short for “guaranteed auto protection,” gap insurance covers the remaining balance on your car loan or lease after a total loss.
  • Collision insurance
    : Collision coverage will pay for your vehicle’s repairs or replacement (in the event of a collision with another vehicle or object) based on its ACV (minus your deductible).
  • Comprehensive insurance
    : Comprehensive insurance works the same way collision coverage does in that it’s based on ACV, but it applies to damage from a range of events other than collisions, like severe weather, hitting an animal, theft, or vandalism.
And regardless of your vehicle’s age, Liberty Mutual’s lifetime repair guarantee, original parts replacement, roadside assistance, rental car reimbursement, accident forgiveness, and uninsured motorist coverage can all provide extra financial security and peace of mind.

Which car insurance companies offer new car replacement insurance?

Liberty Mutual auto insurance isn’t your only choice if you’re looking for enhanced protection on a brand-new vehicle. These major providers also offer new car replacement coverage:
Each of these providers will have different qualifying factors and terms for new car replacement. To find the best new car replacement coverage option for you, it’s worth seeking out car insurance quotes from multiple providers for comparison.
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FAQs

No. The payout for new car replacement insurance is intended to be used toward the purchase of a new vehicle if your current one is totaled. 
Gap insurance covers the remaining balance on your car loan or lease after it’s deemed a total loss if its actual cash value (ACV) is less than what you owe.
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