There’s nothing like purchasing a brand-new car…the glistening dashboard, the never-before spilled on upholstery, that new-car smell…but just driving it off the lot depreciates the value significantly, on average 10% of the value with some models losing up to 50% nearly immediately.
But, who cares, right?
As long as you are babying your vehicle, spraying the bottled new-car smell air freshener to make it last just a little bit longer and never letting a child bring in anything resembling a crayon or sippy cup of milk, you’re still driving a brand-new car…until you’re in an accident and that depreciation starts to really matter. If your insurance only gives you a fraction of what you paid in order to replace your newly totaled vehicle, your replacement car…well, let’s just say it isn’t likely to still have that new-car smell.
Not to mention the fact that if you financed a new car you are probably upside down on your loan (meaning that you owe more than the vehicle is worth) for the first few years because of the rate of depreciation. This could mean that the insurance payout doesn’t even cover the money you still owe on the car, leaving you carless and potentially still needing pay off your loan.
Never fear! We can help you reclaim that alluring scent with a New Car Replacement Endorsement!
If you have a covered loss during your first few years of new car ownership (generally 2-5 years) this endorsement covers the cost of a new car of the same make and model, minus the applicable deductibles. This endorsement also often includes loan/lease gap coverage, which could pay the difference between what you still owe and the cash value, protecting you if your vehicle is financed or leased.
Buying a new car is an investment that might not make sense financially given the rate of depreciation but is sometimes completely worth it, especially if you plan to keep your car for a longer period of time. After 10 years, the depreciation is negligible. Plus, there is that new-car smell! But you want to make sure to take reasonable precautions to protect your investment.
Contact your Compass insurance Partners agent to get a quote for your New Car Replacement Endorsement. We’ll walk you through the pros and cons and help you get the coverage that works for you.