New Car Replacement Insurance
New car replacement insurance helps you replace your totaled vehicle with a brand-new version of the same make and model—rather than paying only its depreciated value. This optional coverage is ideal for new or recently purchased vehicles and is often available for cars under a certain age or mileage limit.
What Is New Car Replacement Coverage?
Standard car insurance pays out the actual cash value (ACV) of your vehicle after a total loss—meaning its depreciated market value. New car replacement coverage goes further by covering the cost of a brand-new replacement vehicle, even if the new model costs more than the ACV payout.
What Does It Cover?
New car replacement insurance typically applies when:
- Your car is declared a total loss due to an accident or theft
- The incident is covered under your collision or comprehensive coverage
- Your vehicle qualifies under the insurer’s new-car guidelines
Eligibility Requirements
Most insurers have requirements such as:
- The car must be less than 1–3 years old
- The car must have under a specific mileage limit (e.g., under 15,000 miles)
- You must be the original owner (in most cases)
- The car must be insured with full coverage
New Car Replacement vs. Gap Insurance
Gap insurance covers the difference between your car’s value and what you owe on your loan or lease. New car replacement gives you the funds to buy an entirely new version of your totaled vehicle.
In many cases, drivers may carry both gap insurance and new car replacement for maximum protection on new vehicles.
Is New Car Replacement Worth It?
This coverage is a smart add-on if you:
- Drive a brand-new car
- Want to avoid taking a financial hit from depreciation
- Wouldn’t be able to afford a new replacement out-of-pocket
How to Get It
Not all insurers offer this coverage. Check with your provider to see if it’s available and what eligibility terms apply. It’s typically available as an endorsement to your full coverage policy.
Frequently Asked Questions
Is new car replacement insurance the same as gap insurance?
No. Gap insurance pays the difference between your car’s current value and what you owe on your loan. New car replacement insurance gives you the money to buy a brand-new version of your totaled vehicle.
How long is new car replacement coverage available?
Most insurers offer it for up to 1–3 years after purchase, typically only for the original owner and with mileage limits.
Do I need full coverage to qualify?
Yes, you usually need both collision and comprehensive coverage to be eligible for new car replacement insurance.
Is it worth adding to my policy?
If your vehicle is new and you want to avoid the cost of depreciation after a total loss, it can be a smart and affordable add-on.