You must have come across this insurance coverage while searching for the best car insurance or on your insurance company’s coverage list. In cases where you get involved in a car accident and lose your car in the process, new car replacement insurance covers the cost of a brand-new car. This car insurance coverage gives a policyholder the money to purchase a new car of the same make and model as the old car.
New car replacement insurance coverage is offered instead of the total depreciated value of your car. If after purchasing a new car you get involved in an accident. Your depreciated car value may not be enough to cover your car loss or even pay back your car loan. But with this coverage, you can easily cover your car cost as well as loan repayment. In cases where you do not have this insurance coverage or your car insurance company does not offer it. You will have to pay for your car replacement out of pocket.
How Does It Work?
This insurance offers financial protection for new car owners by covering the actual payments of the car replacement if ever it is stolen or damaged beyond repairs. This financial protection often lasts between one and two years of car ownership, depending on the insurance company. Car insurance companies often have different mileage limits. For instance, if you have this coverage and your new car is involved in an accident causing it to be damaged beyond repairs. This car insurance coverage will give you the actual amount it costs for the replacement of your car. In cases where you don’t have this insurance, you will be paid based on your car’s depreciated value.
Should I Get New Car Replacement Insurance?
It is a good idea for anyone who recently purchased a new car. And intends to get protection over the complete value of their car to purchase this car insurance. This insurance is offered to cars that are of a certain number of model years old. Every car insurance company has its mileage limits every policyholder is to meet. Drivers who are bothered about the depreciation of their car and want to make sure their car value stays intact should consider getting new car replacement insurance.
Do All Car Insurance Offer New Car Replacement Insurance?
Not every car insurer offers new car replacement insurance coverage. While this is so, most car insurance companies offer this coverage as additional coverage to different insurance policies. Some car insurance companies that offer this insurance include Farmers and Allstate. Aside from them, other car insurance companies, such as the following, offer this coverage either as actual coverage or as additional coverage.
- Auto-Owners.
- American Family.
- Horace Mann.
- Liberty Mutual.
- NJM car insurance.
You can purchase new car insurance coverage from any of these car insurance companies.
New Car Replacement Insurance Benefits
There are different benefits offered by this car insurance coverage. Aside from offering financial protection and peace of mind to car owners being its benefits, its main benefit is that it pays off the actual cost of a new car with the same make and model as the old car. Another benefit of this insurance is that it lessens the possible depreciation of the new car of a policyholder. With this car insurance coverage, drivers get the confidence that their cars are protected against any unexpected issues.
Do I need to have full insurance coverage to purchase new car replacement insurance?
Meanwhile, most car insurance companies offer new car replacement insurance as an additional coverage to an insurance policy. These policies are generally comprehensive and provide collision insurance coverage. These insurance coverages are generally referred to as full coverage. Also, they offer coverage for repairs of cars damaged due to vandalism, accidents, theft, and other covered events. Purchasing new car insurance as an additional coverage is generally to cover new cars if they are stolen or damaged beyond repairs.
Does New Car Replacement Insurance Have Deductibles?
Generally, all insurance claims, including new car replacement insurance, require deductibles for policyholders to meet before their policy coverage begins. This deductible is a certain amount of out-of-pocket payment a policyholder agrees to pay for an insurance claim before their coverage begins. However, how much deductible you are to pay for this insurance depends solely on the car insurance company, as the prices vary from each other. You need to check with your insurer to know how much insurance you are to pay on deductibles for this insurance.