If you're purchasing a new luxury car, you'll want to consider carrying new car replacement coverage as part of your car insurance policy. New car replacement coverage will pay to replace your car with a new one of the same make and model if it's totaled in an accident. Without it, you'll only receive the fair market value of your car, which is likely substantially less than the cost of a new luxury vehicle. To learn three reasons why you should carry new car replacement coverage when you own a luxury car, read on.
1. Luxury Vehicles Depreciate Quickly
Luxury vehicles depreciate faster than other types of vehicles. Your new car will start to rapidly lose value as soon as you begin driving it. If you're in an accident and your new car is totaled shortly after you purchase it, you can lose quite a bit of money unless you're carrying new car replacement coverage.
Without new car replacement coverage, your auto insurance carrier will only pay you what the vehicle is worth after it's totaled. With a luxury car, the difference between what your car is worth and what you paid to drive it off the lot is usually sizable. Carrying new car replacement coverage will allow you to purchase a new car of the exact same make and model. You don't have to worry about your car depreciating and losing value.
2. Purchasing a New Luxury Vehicle Helps Keep Repair and Maintenance Costs Low
If you don't have new car replacement coverage, you'll most likely have to purchase an older model to replace your car if you're in an accident. Unfortunately, this can be an issue if you purchase another luxury vehicle. Luxury cars can be expensive to maintain, and you may need to have them serviced at a specialized auto shop that is familiar with working on luxury cars. Like all cars, luxury cars will encounter mechanical issues more frequently as they get older.
If you're forced to purchase an older luxury vehicle because you weren't carrying new car replacement coverage, you may end up spending more than you intended on keeping your car in good condition. When you can replace your car with a new model, you're less likely to immediately encounter high repair costs.
3. New Car Replacement Coverage Allows You to Avoid High Out-of-Pocket Costs for Replacing Your Car
New car replacement coverage allows you to avoid high out-of-pocket costs if your vehicle is totaled. If your car is totaled and you want to purchase a new car, you'll be responsible for paying the difference between what your old car was worth and the price of a new vehicle unless you're carrying this coverage. When you're purchasing a luxury car, this can be a very large amount of money. New car replacement coverage will stop you from needing to pay a substantial amount of money out of your own pocket when you're buying a new car after your current one is totaled.
Overall, new car replacement coverage is an inexpensive addition to your car insurance policy that helps protect you from the fact that luxury vehicles depreciate quickly. You'll have an easier time replacing your car with a new one if yours is totaled in an accident. If you own a luxury vehicle and aren't carrying this form of coverage, talk to your car insurance agent about adding it or switch insurance carriers to one that offers this additional protection. For more information on why you should purchase auto insurance, contact a professional near you.