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New Car Replacement Insurance

Add new car replacement protection to your full coverage insurance today

Illustration of a blue car on top of sheet of paper with an auto insurance policy

What Is New Car Replacement Insurance?

New car replacement insurance pays for the cost of a brand-new replacement car (same make and model), minus your deductible, in the event that your car is a total loss. New car replacement insurance is specifically for owners of new cars and is intended to protect you financially if your new car is stolen or totaled. You can add optional car insurance to your full coverage insurance.

New car replacement coverage is typically only available under the umbrella of full coverage auto insurance, which includes your state’s minimum required liability, plus comprehensive coverage and collision insurance. New car replacement coverage has a deductible, just like full coverage.

Because cars start depreciating the moment they are driven off the lot, this type of insurance will help you recoup your investment by paying you for a new vehicle, rather than the depreciated value of your car.

How Much Does New Car Replacement Coverage Cost?

Most drivers can expect new car replacement coverage to increase the cost of their policy by about 5%.

Whether that is too much or not is up to drivers to determine for themselves. That extra 5% means you can sleep each night knowing your car has the protection it deserves. That’s peace of mind that you can’t really put a price tag on!

What is the Difference Between Full Coverage Car Insurance and New Car Replacement Insurance?

Full coverage car insurance will pay for the depreciated, actual amount your vehicle is worth at the time it is stolen or totaled in an accident. New car replacement insurance will pay you the amount of a brand new car of same make and model.

Most cars depreciate quickly after leaving the lot – and that’s even more true for expensive sports cars. If your car is totaled or stolen soon after you buy it, you’ll be out several thousand dollars with full coverage car insurance (the difference between what you paid for the car and what the car is now worth). With new car replacement, your insurance company will pay for a brand new car of same or similar make and model.

You can see what your car is worth compared to its purchase price at NADA guides.

Is New Auto Replacement Insurance the Same as Guaranteed Auto Protection (GAP) Insurance?

No and you typically cannot purchase GAP insurance and new car replacement insurance together. GAP insurance pays off the difference between what you owe on your car loan and how much your car is worth. New car replacement insurance pays you the amount your car is worth new.

Keep in mind that new car replacement has an expiration date. Once your new car replacement expires, you can look into purchasing GAP insurance.

Should I Purchase New Car Replacement Insurance?

If your car is brand new, it’s worth considering new car replacement insurance. Here’s why. Let’s say you bought your car for $40,000. As you drive it over the next few months, it’s worth drops about 10%. Suddenly, your new car is totaled in a car accident. Under your full coverage policy, your insurance company wants to give you $36,000 (current value), meaning you are out several thousand dollars and you won’t have enough money to completely replace your car.

With new car replacement, your insurance company will give you the full value money for a brand new car of the same make and model.

What are the Rules for New Auto Replacement Insurance?

New car replacement insurance has guidelines and eligibility requirements you must meet to qualify for this protection. As we mentioned earlier, one of these is an expiration date. As it states in the name, this protection is for new cars. Different insurance carriers define “new” in different ways, so you may be able to keep your new car replacement for one to five years depending on the carrier. Some use mileage instead, so, for example, your carrier may insure you for 15,000 miles. Other items include:

  • In most cases, new car replacement insurance is only available if you also have collision and comprehensive insurance.
  • New car replacement is typically only available for purchase for a certain amount of time after your purchase your new car, depending on your carrier this could be on average around six months.
  • Not all insurance companies offer new car replacement insurance.
  • In most cases, new car replacement insurance is only available for the original purchaser of a new car.

Check Out New Car Replacement Insurance Today!

Now you know what new car replacement insurance is and how it can protect your investment. Freeway Insurance is here to provide drivers just like you with the automobile insurance coverage you need. We can quickly and easily provide you with an online insurance quote. Or feel free to give us a call at 800-777-5620. Finally, you can also visit us at an office near you.

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