4 Car Insurance Companies Offering New Car Replacement Coverage

While there are many advantages to buying a new car instead of an older model, one big drawback is the fact that they depreciate quickly. In fact, within the first year, a vehicle’s value may decrease 15 to 20 percent and another 15 percent in the second year. Every year after that, a car may depreciate in value 10 percent. Because claims for damage are based on how much the repairs cost, if your car can be completely written off, the payment you receive is solely based on how much your car is worth at the time of the accident.

New car replacement coverage replaces your old, damaged car with a brand new model or provides you with the cash equivalent of the vehicle. The coverage protects you from losing out on money, since sometimes the payment you receive for a complete write-off can be a lot less than you expect. The cost of this optional replacement coverage varies depending on the model, make and year of your car, though typically it is purchased for a car that is three years old or less from the model date.


MetLife Insurance offers full replacement coverage with every policy that you purchase. There is no additional cost since the coverage comes standard, and your car will not depreciate in value for either the first 15,000[1] you drive it or within the first year, whichever one occurs first. There is also replacement coverage for shocks, tires and batteries for the entire length of your policy.


AARP Auto Insurance Program offers members a new car replacement option with their policies. If your car is totaled and no longer drivable within 15,000[2] after its purchase date or 15 months, whichever comes first, the insurance company will replace the vehicle with a similar car of the same make and model equipped with the same features without considering depreciation.


If you are in an accident that renders your car beyond repair within the first three model years of the vehicle, Allstate[3] will provide you with a brand new car instead of giving you money for the depreciated value of your previous one.

Liberty Mutual

Liberty Mutual allows customers the option to purchase replacement coverage that would not only replace your current car with a vehicle of the same make, model and year, but you are able to receive a car that is one model year newer and with 15,000[4] fewer miles on it than your current vehicle.

For example, if you have a 2005 vehicle with 25,000 miles on it, you will receive money for a 2006 model with 10,000 miles on it. The only stipulations are that the car must be a complete loss and you will have to pay the deductible. This type of coverage is not available in all states and it is not for motorcycles or leased cars.

Not only do drivers lose their vehicles when involved in a total-loss accident, but they also lose all of the money they put into the car for added safety features and the down payment. By choosing to add new car replacement to your policy, you can be sure you will receive the same or an even better vehicle.


[1] http://www.metlife.com/individual/insurance/auto-insurance/index.html#basics

[2] http://aarp.thehartford.com/Auto-Insurance/

[3] http://www.allstate.com/auto-insurance/auto-insurance-features.aspx

[4] http://auto-insurance.libertymutual.com/auto-insurance-coverage/understanding-auto-coverages/better-car-replacement

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