Car Damage Replacement Coverage

01/04/07
There is a new wrinkle in automobile coverage with some companies who offer personal auto coverage. If you have ever been concerned about “replacing” your new automobile or truck with a vehicle of similar size, class and body type, you can!

Until recently, your loss settlement on a “totaled” new vehicle was “actual cash value”; replacement cost less depreciation. Some insuring companies now offer “replacement cost” coverage that simply reads:

“If an auto is totaled in a covered loss the Company will pay the cost of a current model year of the same make and model, if possible, or a similar vehicle size, class and body type”.

Typically, the insuring companies who offer this coverage endorsement state that the automobile or truck must be new and not previously titled. Coverage to loss applies to a covered peril other than fire or theft, and/or your policy cannot have a lapse in coverage. Some companies may have limitations as to how long the coverage endorsement will apply and some will have no year restrictions as to how long the coverage will remain on the policy.