Category

Vehicle Replacement Insurance

What Should You Consider When Buying Car Replacement Insurance?

Automobile replacement insurance is a unique product. Vehicles depreciate over time, and few drivers can afford to buy a brand new automobile after suffering a write-off. The value of replacement insurance in the event of a total loss is undeniable.

New car replacement insurance isn’t free, however, and there are options about what kind of coverage to purchase. For many automobile owners, the goal is finding the best value for the price.

To help potential customers better understand this topic and avoid paying too much for your coverage, let’s take a look at your options available for car replacement from Obvi.

Annual policy from Obvi

This option allows you the flexibility of obtaining coverage year over year. You purchase one year of coverage at a time, and then at the end of the year you can choose to renew for another year or to let the coverage lapse.

The downside to this option, however, is that if you keep your coverage for 3, 4, 5, 6 or 7 years, the total that you will end up paying will be much higher than if you would have purchased a multiyear policy from the beginning. The upside: if you have a claim in Year 2, you would have paid much less for the policy by going year-to-year, and you get to pay monthly.

Multiyear policy from Obvi

These are easily the policies that offer the best value. By agreeing to a multiyear policy right at the start, you get a significant discount for the total cost of your premium. If you know right away that you want multiple years of coverage for your vehicle, this option is a no-brainer.

Replacement insurance from your existing auto insurer

More and more insurers are offering a replacement cost rider with your collision and comprehensive coverage. While adding this kind of coverage onto your existing primary insurance seems convenient, it comes at a high cost.

How? Premiums are set very low in the first year, to entice people to buy, but they increase significantly year over year. The cost of your policy for Year 5 will be a lot higher than the cost of your policy for Year 1.

So, why should someone buy a multiyear policy from an independent company instead of their existing insurance? Let’s have a look at what can happen if you don’t:

  1. Coverage is only eligible from existing insurer when vehicle is new, so if you switch insurance providers in Year 3 you could lose the replacement endorsement
  2. The premium charged for Year 3/4/5/6/7 is significantly higher than Year 1 or 2, and you have no way of knowing what it will look like
  3. What if your auto insurer non-renews your auto insurance or you find a better deal? A 3-year old vehicle might not be eligible for replacement when it is no longer new
  4. What if your auto insurance becomes increasingly expensive while you carry collision and replacement with the same carrier?

Visit Obvi’s page for New Car Replacement Insurance to learn more or request a quote.

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. 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 online to customers in Western Canada. Contact us or visit our website at obvi.ca to find out more and get an instant quote.