What is New Car Replacement Insurance?
New Car Replacement Insurance safeguards against the rapid depreciation that occurs with new vehicles and can be a valuable addition to your insurance coverage. This type of insurance steps in where traditional comprehensive or collision insurance falls short. Let’s delve into why it’s worth considering.
Traditional comprehensive or collision insurance typically covers your vehicle’s current value at the time of an accident. However, many drivers fail to realize that this value is often significantly lower than the original purchase price due to depreciation over time. This can be a shock, especially for those who diligently pay insurance premiums year after year, only to find that their coverage doesn’t fully compensate for the loss in value.
Here’s where New Car Replacement Insurance comes into play. Instead of receiving a settlement based on your vehicle’s depreciated value, this type of coverage ensures that you’re reimbursed for the cost of a brand-new vehicle of similar make and model. This means you can replace your totalled or stolen vehicle with a new one without having to dip into your pockets.
How Does New Car Replacement Insurance Work?
Let’s illustrate this with an example:
Suppose you purchased your vehicle three years ago for $32,000. After three years and an average depreciation rate of 10% per year, its current value has fallen to $23,000. Your vehicle was stolen and has been deemed a write-off. You really liked your car and have your eye on the new model as a replacement, now costing $40,000. What will your insurance policy contribute?
With your primary insurance, you would receive a settlement based on the depreciated value of $23,000. But with New Car Replacement Insurance, you would receive an additional $17,000 on top of that, allowing you to purchase the new $40,000 vehicle using both settlements.
Why Do I Need This Coverage?
So, why opt for this type of coverage? The answer lies in the harsh reality of vehicle depreciation. New vehicles lose value as soon as they leave the dealership lot, and this depreciation often works in favour of insurance companies, allowing them to pay out less in the event of a claim. With New Car Replacement Insurance, you can bridge this gap and ensure you’re not left financially vulnerable in an accident or theft. It’s a way to maximize the benefits of your comprehensive or collision insurance coverage and protect your investment in a new vehicle.
Other coverage benefits
Beyond simply covering the difference of depreciation, a New Car Replacement Cost Insurance policy in British Columbia or Alberta with Obvi can also include several other different perks:
OEM Parts: Your existing primary 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 scrap yard or aftermarket parts and the repair cost with brand-new OEM parts from the vehicle manufacturer. Coverage is available until model year 5, $2,500 per year, maximum $10,000 per policy.
Partial-Loss Deductible Reimbursement: If you have to pay a partial-loss deductible during the policy term for things like glass or a minor collision, the policy will reimburse your deductible up to $500. You have unlimited use throughout the policy term.
Rental Vehicle Reimbursement: If loss of use rental 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, the policy will pay to replace it. Coverage is one-time use per policy, up to $500.
Obvi is offering New Car Replacement Insurance to drivers in British Columbia and Alberta in addition to our extended warranty policies.
Extended Warranty
Obvi also sells extended warranty online to customers in Western Canada. Find out more and get an instant quote.