The coverage provides coverage for a new model year car replacement if your new or newer car is totaled in an accident. Most car insurance companies offer you new-car replacement insurance within a year of purchasing a new car and if the car is in its first 15,000 miles. With new-car replacement insurance, your insurance company will pay you for the current value of an equivalent new vehicle. This is different from gap insurance in that gap insurance only covered the difference between the value of your car at the time of the accident (without damage) and the amount of your loan. This coverage is only available for new or newer cars, depending on the car insurance company and if your state permits this kind of coverage.
You may also be required to have collision and comprehensive coverage while you have new-car replacement insurance. Insurance companies generally offer such coverage for a limited period of time – generally within the first two years of ownership of your new car. If you are interested in this coverage, be sure to understand how long you have this coverage and what happens to your coverage at the end of that period. Some insurance companies will convert your new-car replacement coverage into gap insurance at the end of their new-car replacement policies
You may also be required to have collision and comprehensive coverage while you have new-car replacement insurance. Insurance companies generally offer such coverage for a limited period of time – generally within the first two years of ownership of your new car. If you are interested in this coverage, be sure to understand how long you have this coverage and what happens to your coverage at the end of that period. Some insurance companies will convert your new-car replacement coverage into gap insurance at the end of their new-car replacement policies
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