If you're about to spring for a new vehicle, you may be wondering about the various warranties and coverage offered through the dealership and your insurance company.
Specifically, you may be hearing about "New Vehicle Replacement Coverage" - and wondering whether that's something you should ask your agent about.
While we always recommend talking to you agent about any insurance-related questions you have, here's a brief look at New Vehicle Replacement Coverage:
What it is
In the event of an accident, New Vehicle Replacement Coverage is a policy that provides you with the money for a brand new car, not just the depreciated value of your old car. Terms and conditions vary by company and policy, and can range from 1 year to 5, some with mileage caps/restrictions.
How it works
You pay for this coverage for your policy, and your insurance company will give you a check for the full dollar amount you owe on your car if you are involved in an accident in which your vehicle is deemed a total loss.
Who needs it
If you just bought a new car, and make a car payment/owe a substantial amount on your vehicle, you may want to consider New Vehicle Replacement Coverage. You also might want to consider Gap Insurance instead - ask your agent about the pros and cons!
Safeco offers a New Vehicle Replacement Coverage policy, which is laid out in the following infographic:
Of course, we always recommend discussing your concerns and individual situation with your agent.
Sources: Safeco, Auto Tips: New Vehicle Replacement Coverage | AutoInsurance.org, How does new car replacement coverage work?
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