Your Guide to New Car Replacement Insurance | A Plus Insurance

Your Guide to New Car Replacement Insurance

Thinking About Getting A New Car? Think About Car Replacement Coverage.

New Car Replacement Insurance
Should have got new car replacement insurance…

New Car Replacement Insurance- Why Would I Need It?

You saved, and you saved, searched high and low, and finally found the perfect new car. Then boom, three weeks after bringing your new ride home, you hit a light pole in the parking lot thinking you were in reverse but no; you were in drive and totaled your precious new car.

Even if you carry collision insurance, an auto accident that totals your new car will be expensive. Most likely the insurance check will be less than what you paid for the vehicle and if you are making payments on the vehicle, it will be less than what you owe on the loan, unfortunately leaving you with zero dollars to start the search for a new car.

Insurance carriers that sympathize with your woes have a created a way to lessen the blow when it comes to replacing a totaled vehicle that just rolled of the lot. Some insurers offer new-car replacement insurance, an additional coverage that will pay for a brand-new car exactly like the totaled vehicle after the deductible is paid.

This is different from regular collision coverage that only pays the market value of a totaled car, less the deductible. The reason that the collision insurance payout will be less than what you paid the dealer is that as we all know the vehicle starts losing value as soon as you leave the dealership.

What is the Cost of New-Car Replacement Insurance?

As with all coverages, new car replacement coverage varies by the driver, vehicle, and state, so some insurance companies are reluctant to provide any details on the average cost.

However, to give you a general idea, some big name carriers state that the extra cost for their new-car replacement coverage is about 2% of the collision insurance and 5% of the comprehensive insurance price.

For example, let’s say you paid $1000 a year for collision and $1000 for comprehensive coverage, the added cost for the new-car replacement option would be an additional cost of about a year to your auto insurance bill.  

However, remember the best way to get an accurate price is to get quotes from insurers, to begin a quote and check out rates from our carriers click here.

What’s the Difference Between New-Car Replacement and GAP Insurance?

First, gap insurance can be purchased from the financial institution that carries your new car loan and is added to your monthly payments or your auto insurance carrier may offer it.

Gap insurance is designed to cover the vehicle depreciation. Instead of paying out to buy a new car, gap insurance will pay the difference between the insurance claim check for a totaled or stolen car and the amount left on the loan.

Your collision and comprehensive coverages on your insurance policy will pay for the totaled or stolen vehicle less your deductible.

Things to Keep in Mind Before Purchasing GAP Insurance or New-Car Replacement Coverage

Things To Remember Before Buying New Car Replacement Insurance
– Be sure you fully comprehend the terms and conditions of each to decide which is more suitable for your needs and your budget.
– Different insurance carriers have different terms and depending on the insurer; gap coverage might be available for more years than new-car replacement coverage if you have a loan.
– Make sure to get different quotes from different carriers to compare the costs of gap insurance and new-car replacement coverage if you owe more than the car is worth.
– If you weigh your options and decide that you do not want to carry either gap or new-car replacement coverage, be sure that you have enough money in savings to pay off the remainder of your loan if the car is totaled and to put towards a down payment on a new car.
New Car Replacement Insurance
New Car Replacement Insurance
New Car Replacement Insurance

Frequently Asked Questions About New Car Replacement Insurance

Q1: What is New Car Replacement Insurance, and how does it work?

A1: New Car Replacement Insurance is a type of auto insurance coverage that helps replace your vehicle with a brand new one in case of a total loss. It typically covers the difference between your car’s actual cash value and the cost of a new vehicle of the same make and model.

Q2: Is New Car Replacement Insurance worth it?

A2: Whether New Car Replacement Insurance is worth it depends on your individual circumstances and preferences. If you have a brand new car or a vehicle with high value, this coverage can provide peace of mind. It’s important to consider your car’s depreciation rate and the cost of the coverage when making a decision.

Q3: Are there any requirements or limitations for New Car Replacement Insurance?

A3: New Car Replacement Insurance may have certain requirements and limitations. It often applies to vehicles that are within a specific age and mileage range, and it may have a time limit from the date of purchase. Be sure to review the terms and conditions of your policy to understand the coverage details.

Q4: Should you buy new car replacement insurance?

A4: Whether you should buy new car replacement insurance depends on your specific circumstances, the value of your vehicle, and your risk tolerance. It’s advisable to evaluate the cost of the coverage, your car’s depreciation rate, and how much it would cost to replace your vehicle in case of a total loss. Consult with [Your Insurance Brokerage Name] for personalized advice.

Read more about the factors that go into auto insurance rates here.

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Last Updated on by Lauren Mckenzie

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