How insurers define “new” car varies. If you are thinking of getting extra insurance for a new vehicle, you’d have to be the first owner of the car. Also, some policies may require your car not be older than two or three model years.
It is important to note that new car coverage will expire when your car is deemed ineligible. Besides that, it only applies to the new car for which you bought the coverage for and not all the vehicles listed on your policy.
Isn’t Standard Auto Insurance Enough?
Some types of coverage, such as collision and comprehensive, may cover repair costs minus the deductible up to the limits of your policy. If your car gets totaled, however, your insurer will only pay for the market value of your car at the time of loss.
That’s where the problem is. The value of new vehicles may depreciate by as much as 20% during the first year. But standard policies only cover its market value. Thus it is less than the purchase price. This means that if your car gets totaled in a covered loss, the reimbursement check of your policy may not be enough to buy another new car. If you bought your car using an auto loan, you still have to pay the remaining balance whether or not you can still use the car.
Additional Coverages for a New Car
The following types of additional coverage will offer you financial protection and help you get on the road again if your car is totaled or has major damages.
GAP Coverage
Guaranteed Asset Protection (GAP) coverage will cover the difference between the remaining balance of your loan and the market value of your car.
New Car Replacement Coverage
The new car replacement coverage helps cover the costs of replacing a new car that’s totaled. This coverage will either replace the totaled car with a new one of the same model and equipment, or a certain amount of money.
Repair Provision Coverage
Regardless of its market value, some policies may cover the repair costs if there are any partial losses to your new car. Aside from that, it covers repair costs to a damaged car on a replacement value basis without regard to depreciation. However, coverage limits may apply.
Brand new cars are a lot of fun, but replacing one comes with financial risks. So if you have a new car, you should consider getting the additional coverages mentioned above. Don’t hesitate to ask your agents about them.
At Wellcovered insurance, we want you to have the financial protection you need for your new car. Regardless of how unique your needs are, we’ll get you covered. Call us at (386) 218-4951 or visit us at our office today. You may also get a quote by clicking here.
