Buying a new car? Opt for replacement cost coverage!

Last updated on October 24th, 2019

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Did you know that over 450,000 new cars are sold in Québec every year?

If you’ve ever had to sell a vehicle shortly after buying it new, you know firsthand how fast it drops in value. That’s what we call depreciation. In fact, depending on the model, a new car can lose up to 50% of its value within the first three years!

That’s where replacement cost coverage comes in. With this protection, in the event of a total loss your vehicle will be replaced with a new vehicle that has the same features, regardless of how much it has depreciated at the time of the loss. Your damage insurer offers replacement cost protection as an endorsement to your auto insurance contract.

If you meet the criteria below, you could be in a better position than most to offset the rapid depreciation of your vehicle in its first years of driving:

  • You buy your vehicle
  • You lease your vehicle
  • You like to change cars regularly
  • You rack up a lot of mileage
  • The type of vehicle you want depreciates quickly

Is replacement cost coverage expensive?

The cost of replacement cost coverage is usually a percentage of your auto insurance premium. It also varies depending on certain factors, including the value, model, and, most importantly, depreciation curve of the vehicle. The premium is inexpensive the first year, and gradually grows over the years as the vehicle loses value. It is generally available for a maximum of 4 to 6 years.

What are the advantages of the replacement cost guarantee over replacement insurance offered by dealers?

  • When you take out replacement cost coverage with a damage insurance agent or broker, you have the option of cancelling the guarantee at any time.
  • By grouping your different types of insurance (damage insurance + replacement cost guarantee) in one place (your insurer), you’ll have just one premium to pay and one place to call in the event of a claim.
  • In the event of a loss, this endorsement lets you choose any dealer you want and even change the vehicle make or model altogether.
  • Every year, you can choose whether or not to renew your coverage, up to a maximum period of 6 years, depending on the situation.

Get replacement cost coverage today—your peace of mind is worth it!