When you buy a new car, one of the first things you need to do is purchase insurance. But what kind of insurance should you get?
One option is the new car replacement insurance. In this post, we’ll explain everything you need to know about new car replacement insurance, including how it works and whether it’s right for you.
WHAT IS NEW CAR REPLACEMENT INSURANCE?
New car replacement insurance is a type of coverage that pays to replace your new vehicle if it’s totaled in an accident. If you have this coverage and your car is totaled, your insurer will reimburse you for the cost of a new car, up to the policy limit.
For example, let’s say you buy a new car that’s worth $30,000, and you purchase a new car replacement policy with a $25,000 limit. If you total your car in an accident, your insurer will pay your claim with $25,000.
Are There Requirements To Get New Car Replacement Insurance?
If your car is totaled in an accident, you may be eligible for new car replacement coverage from your insurance company. This coverage can help offset the cost of a new car and may even provide extra money for upgrades.
However, new car replacement coverage eligibility requirements depend on the insurance company. Some companies require that your car be less than a certain age or have less than a certain number of miles. Others may only offer this coverage if you have certain types of coverage, such as collision or comprehensive.
Unsure about your coverage? Contact your insurance agent or company to find out if you’re eligible for new car replacement coverage.
HOW MUCH DOES NEW CAR REPLACEMENT INSURANCE COST?
The cost of new car replacement insurance varies depending on several factors, including the make and model of your car, your driving history, and the state in which you live.
However, on average, new car replacement insurance costs between $50 and $100 annually. However, if you don’t have a loan or lease agreement on your car, replacing your vehicle may not be as important. Here, it’d be better to forego new care replacement insurance in favor of other types of coverage that better fit your needs.
SHOULD YOU GET NEW REPLACEMENT INSURANCE?
When you buy a new car, you want to do everything in your power to protect your investment. That’s why many people opt for new car replacement insurance.
But is it worth the extra cost? Here’s what you need to know.
Is New Car Insurance Worth It?
Whether new car replacement insurance is worth the cost depends on a few factors, including:
- The value of your car
- Your deductible
- The length of your loan
- Your state’s minimum insurance requirements
- Your personal finances
For example, let’s say you bought a brand new car that you’ve financed with a 60-month loan. In this situation, getting new car replacement insurance may be worth it because, after an accident, it would likely take longer than 12 months to pay off your loan. (That means you’d be stuck paying for a car you can’t drive!)
However, if you own your car outright or have a shorter loan term, the extra cost of new car replacement insurance may not be worth it since you wouldn’t be making payments on a totaled car for very long.
Whether new car replacement insurance is worth the cost depends on several factors. Consider the value of your car, your deductible, and the length of your loan before deciding. You should also research your state’s minimum insurance requirements and assess your finances to see if this coverage makes sense.
NEW CAR REPLACEMENT INSURANCE VS. GAP INSURANCE VS. BETTER CAR INSURANCE
Gap insurance protects you if you owe more money on your car loan than the vehicle is worth — if you are “upside down” on your loan. If you damage your car in an accident, gap insurance will pay off the rest of your loan so that you don’t have to come out of pocket. Gap insurance is especially important if you’re financing a newer vehicle because newer cars depreciate more quickly than older cars.
Better car insurance is a catch-all term for any coverage that goes above and beyond the standard liability coverage required by most states. This can include things like collision coverage, comprehensive coverage, uninsured/underinsured motorist coverage, and more. Better car insurance provides financial protection if your car is damaged or stolen.
There’s no one-size-fits-all answer for deciding between new car replacement insurance and gap insurance or better car insurance. Ultimately, the type of coverage that’s right for you will depend on factors like the age and value of your vehicle, how much money you still owe on your loan, and what kind of coverage you’re looking for. Once you’ve considered these factors, you’ll be in a better position to decide which type of insurance is right for you.
Let's face it: new cars can be quite expensive, and you never want to worry about replacing yours, should something happen. With new car replacement insurance, in the event of a total loss, you're protected and able to get your new vehicle replaced with a new one of a similar make and model. In short, having new car replacement insurance is like having the ultimate safety net.
If you need help finding the best car insurance coverage for the best price, start by speaking to a SimplyIOA agent at 833.872.4467 or get an auto insurance quote online now.
