Is New Car Replacement Insurance Coverage Worthwhile?

One way car insurers try and get your business is by coming up with new features or coverages.  They can sound really good but may come with conditions that aren’t obvious from a 30 or 60 second television advertisement. One of these coverages I’ve been seeing a lot of commercials for lately is “new car replacement”. It’s called by different names by different insurers, but the pitch is that if your car is totaled instead of paying you the value of your car when it was totaled, the insurer will pay for a new car.

I went to Liberty Mutual’s website to try and get more detail about their “New Car Replacement” coverage. To get a “new car” the one that you totaled had to be:

• bought brand new from a dealer
• be less than a year old
• have less than 15,000 miles on it.

Ask yourself how many times you or anyone you know has totaled a car that met all these conditions. I’ve specialized in handling cases for folks who were injured in car wrecks for over 20 years, and I have seen very, very few times this new car replacement coverage would have applied.

Don’t be convinced to buy insurance based on a 30 or 60 second television commercial. If you see something that sounds too good to be true, remember it probably is. Take a few minutes and research what you are actually getting so you can know if it’s a good value for you.  If you are interested in finding out some more about different types of insurance, take a look at our blog posts about gap insurance, UM (uninsured and underinsured motorist) insurance, and liability insurance.