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August 2019

What Is New Car Replacement Insurance, And How Does It Work?

car replacement warranty

Obvi is now offering New Car Replacement Insurance in addition to extended warranty and GAP insurance. In this blog, we explain what Vehicle Replacement Cost Insurance is and why it can be worth it.

What is New Car Replacement Insurance?

In the event of an accident, comprehensive / collision insurance will cover the current value of your vehicle. This means that if you bought a new vehicle and several years later you had an accident, your vehicle would be worth a lot less than what you originally paid for it due to depreciation. This comes as a surprise to many drivers, who pay insurance premiums year after year while the insurance company limits the claim amount as much as possible. Replacement cost insurance will cover you for the depreciated loss, meaning you get a brand no car and don’t have to be out of pocket.

New Car Replacement Insurance example

You purchased your vehicle used 3 years ago for $32,000. After 3 years of use, at an average depreciation rate of 10% per year, its current value is now $23,000. You really liked your car and have your eye on the brand-new model, which now costs $40,000. What will your insurance policy contribute?

If you only have collision / comprehensive insurance, your primary insurance settlement will be for the current value of your vehicle: $23,000.

If you purchased a New Vehicle Replacement Insurance policy, you would receive the additional $17,000 towards a new vehicle on top of the $23,000 so that you could purchase the new $40,000 vehicle using both settlements.

Why do I need this type of coverage?

We love new vehicles, but the reality is that they depreciate the second we drive off the dealership’s lot. What’s even worse is that this plays to the advantage of your insurance company, which now gets to pay less if there is a claim.

With New Car Replacement Cost Insurance you can get the true benefit of buying collision / comprehensive insurance by not having to pay the full loss of depreciation.

Other benefits available

Beyond simply covering the difference of depreciation, a New Car Replacement Cost Insurance policy in BC and Alberta with Obvi can also include a number of other different perks:

OEM Parts : Your existing collision/comprehensive insurance policy will pay to repair your vehicle after a partial loss with the cheapest available parts. These could be recycled parts from a scrap yard or aftermarket parts of lesser quality. OEM Parts pays the difference between the cost to repair with those parts and the cost to repair with brand-new parts from the vehicle manufacturer. Coverage until model year 5, $2,500 coverage per year, maximum $10,000 coverage per policy.

Partial-Loss Deductible Reimbursement: If you are charged a partial-loss deductible during the policy term, the policy will reimburse your deductible up to $500. Unlimited use throughout the policy term.

Rental Vehicle Reimbursement: If loss of use coverage is exhausted under your primary insurance policy due to a delay in repairs or replacement of the vehicle, the policy will reimburse the additional cost of a rental vehicle up to $50 per day to a maximum of $2,500 per year.

Lost or Stolen Key Fob Protection: If you lose your key fob during the policy term, we will pay to replace it. Coverage is one time use per policy, up to $500.

Obvi’s other products

Obvi also sells extended warranty and GAP insurance online to customers in Western Canada. Contact us or visit our website at obvi.ca to find out more and get an instant quote.

Interesting Canadian Car Related Facts

interestingcarfacts

Interesting Canadian Car Related Facts

Love cars? So do we. Here are some interesting facts related to vehicles in Canada just for you.

Stolen vehicles

CBC news reported in December 2018 that car theft is up in Canada by 6% with some provinces effected more than others. And interestingly, the most stolen car is the Ford F-350 with 8 different versions in the top 10 stolen cars.  

In 2017, 85,000 vehicles were reported as stolen in Canada. Stolen Canadian vehicles end up being smuggled into countries such as Hong Kong, Thailand, Vietnam, China, Belgium, Germany, and Italy.

Accidents

It is estimated that there are 160,000 car accidents every year in Canada.  Over $1 million worth of vehicle damage is caused by moose related car accidents each year.

canadian car factsSnow removal

A large portion of city budgets goes towards snow removal each year, but one Canadian city spends more than the others. Montreal has half the population of Toronto but ends up spending double (about $155 million) on snow removal each year.

Left or right?

Driving in Canada was mixed in the provinces with being left or right sided until 1947 when Newfoundland made the final switch to the right-hand side. The differences occurred because of having both the British (left) and French (right) influences. The right-hand side was seen as preferable because driving is on the right in the US and therefore the border changes would have become an issue if Canada continued to drive on the left.

Most popular vehicles

The best-selling vehicles in Canada in 2018 were the Ford F-series, Ram 1500 and Honda Civic. The Canadian vehicle market is leaning increasingly more towards SUVs and pick-up trucks, and small vehicles such as the Fiat 500 and Smart Car will soon be disappearing.

interesting facts carsVehicle production

In 2016, 1.3 million vehicles were produced in Canada. Canada contributes 13% of all vehicles produced in North America and is the 10th leading vehicle producer in the world.

Winter tires

Quebec is the only province where it is legally mandatory to have winter tires between December 15th to March 15th. It isn’t legally mandatory across the entirety of British Columbia, but there are some places particularly in mountainous areas where winter tires are also required.

Although Canada is one of the coldest countries in the world, it is surprising that winter tires are not required by law. In Germany, the rules regarding winter tires have recently been tightened and Germans know that they should ideally have winter tires on from October to Easter. If they are caught without them and there is snow or ice, or if they are involved in an accident, they have to pay a special fine.

Want to find out more about purchasing extended warranty or gap insurance online in Western Canada? Get an instant quote