What Is New Car Replacement Coverage? | Allstate Insurance


Buying a new car is a major purchase — and
an exciting one. Congratulations! Don’t forget to think about your insurance
needs. The coverage you had on your previous vehicle
may not be sufficient for your new car. New car replacement coverage is one type of
optional coverage you may want to consider. You may choose to purchase this in addition
to the coverage you are required to buy. Most lenders typically require comprehensive
and collision coverage. These coverages help pay to replace a totaled
car, but they factor in depreciation. Due to depreciation, your new car loses value
as soon as you drive it off the lot. Say you bought a new car for $25,000. Shortly after, your car was totaled in a covered
collision. Your collision coverage would pay up to the
car’s depreciated value — for example, $20,000. That wouldn’t be enough money to buy the
same brand-new car that costs $25,000. But, if you had new car replacement coverage,
you would be able to replace your totaled car with a new one of the same or similar
make, model and equipment. If you own a brand-new car, consider adding
this optional coverage to your car insurance policy. Check with your insurer to see if your vehicle
qualifies.

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