What You Need To Know About New Car or Better Car Replacement Coverage

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[Below is a transcription of the podcast]

This is Ann Margaret Perkins with Perkins law firm. Today I’m going to be talking about new car and better car replacement coverage. You probably have seen these advertised on television recently. They are relatively new coverages that have been heavily promoted for the last couple of years. Liberty Mutual has said one reason it is pushing this coverage is in an effort to get new customers. One of the two ways insurance companies generally get new customers is to offer lower premiums or a new coverage they think people might want.

The cost associated with these coverages varies significantly from company to company and depending on your own driver profile. Most estimates of how much these coverages will increase your current premiums are anywhere from 5 to 40 percent. Insurance companies each have their own specifics about this coverage, and none are exactly alike so your benefits and premiums will likely vary based on your insurer and whether you want the new car replacement or better car replacement.

Generally, some things you need to be aware of are:

• In order for this coverage to apply your car has to be totaled by the insurer and sometimes whether or not a car is totaled can be an area of disagreement between you and your insurer.
• These coverages are only paid under your collision or comprehensive coverage. So, for instance, if your vehicle is totaled by an uninsured motorist, you would not be allowed to access the new car or better car replacement coverage under your UM coverage. You would have to make that claim under your collision or comprehensive coverage. Making claims under those coverages may increase your premiums, whereas making a claim under your UM coverage is prohibited by Georgia law from increasing your premiums.
• You will also have a deductible.
• Typically these coverages do not apply to leased vehicles and they usually are not applicable to motorcycles.
• Most of these coverages will have either vehicle age or mileage limits and those can vary significantly; so, you need to check the specifics of the policy. Frequently you will see it applied only to a car that is 2 years old or less and has 24,000 miles or less on it. Most do not apply to a vehicle that you bought used. Know the specifics so you can determine if these coverages really have any benefit to you.
• You don’t just get to pick the new car value. That’s something that you will negotiate with the insurer.

As with any kind of insurance policy, the devil’s in the details. If you’re going through an agent, you need to sit down and have the agent go through the specifics of how this coverage would work for you given your driver history and your vehicle. If you’re not going through an agent, read as much as you can on how that particular company’s coverage works.

If your car is financed, there’s an option besides new car or better car replacement that you may want to look into – that is Gap Insurance. Gap Insurance pays the difference between the value of your car at the time that it’s totaled and what you may owe on the vehicle. If your concern is you don’t want to be upside down on your car note if your car is totaled, it probably pays to look into whether gap coverage will result in a better premium.

I hope that this information has been helpful to you. I’m happy to talk to you about this or any other issue associated with an automobile wreck claim. Our office number 770-728-6932. Or you can go online to injuryispersonal.com and email us from the contact form there.