A new car replacement insurance is a coverage that pays costs for buying brand new vehicle if your existing car gets totaled in an accident. The make and model of the replaced vehicle will be the same as that of your totaled car. Normally, insurers provide this type of insurance cover as an add-on feature if your current policy has comprehensive and collision coverage features.
However, companies may have certain conditions for providing coverage for replacing totalled cars with new ones. A free consultation with a competent local agent or broker service could let you know the qualifying criteria. FreeCarInsuranceQuote.ca can assist you in fixing free consultation with a certified and experienced agent within a span of just minutes online!
The market worth of new cars can reduce to half within four years. And when a new car is written off because of an accident or collision, insurer will only reimburse money for depreciated amount.
On the other hand, if you look for brand new car to get totalled car replaced, the market price will be much higher as new car values continuously increase by around 2.5% year over year. This means there will be a big gap between depreciated car value and the new car value. The difference will be effectively accounted for by a replacement auto insurance cover.
There could be two situations wherein the need for replacing car on insurance policy might be felt as mentioned below.
It is needless to say that car values depreciate fast and probability of their meeting with an accident is real. Totalling of your still new car can cause collateral damage and unnecessary strain on your finances.
To avoid such type of situation, a car replacement policy can help you in getting the totaled vehicle replaced without paying any money from your pocket. Usually, such kind of coverage may be available for cars that are one or two years old. But to provide coverage, some insurers may require drivers to have comprehensive and collision coverage on their new auto insurance policies.