New car replacement insurance covers the cost to replace your brand-new car if a crash occurs. To qualify for this type of policy, you typically must also have comprehensive and collision insurance on a brand-new vehicle. Under the terms and conditions of your policy, your insurance company will cover a brand-new version of the same make and model if you total the car within the first one to three years after purchase. Typically, the policyholder pays only the deductible. Explore new car replacement insurance if you’re thinking about buying a 2021 vehicle.

Available New Car Replacement PoliciesAccording to The Zebra, these insurance companies offer the option of new car replacement coverage:

Liberty Mutual will cover the cost of a new vehicle if you total your car within one model year before driving 15,000 miles. The company also offers a “Better Car Replacement” program for customers who drive older vehicles.Travelers Insurance will cover the cost of your new vehicle if you total it within five years. This policy applies only to accidents, not to floods, theft, or fire. The firm also has a “Premier Car Replacement” program that combines new car replacement and gap coverage (see below), along with glass deductible coverage for more affordable window and windshield claims.The Hartford covers new car replacement if you total your car within 15,000 miles or 15 months. However, you must be a member of AARP to purchase coverage through this firm.Farmers Insurance provides new car replacement if you have a policy with the company from the time you purchase a brand-new vehicle. This coverage applies within the first two years and 24,000 miles of new vehicle purchase. Allstate customers can qualify for new vehicle replacement within the first two model years of a brand-new car. American Family provides new car replacement for brand-new cars only, up to 110% of the original MSRP of the totaled vehicle.Ameriprise provides new car replacement for vehicles owned less than 12 months.Erie offers this type of coverage until your vehicle reaches age 2. For older vehicles, the insurance company will replace your vehicle with a model that’s two years newer if you have this policy.MetLife’s coverage will pay for a new vehicle if you total your car before it reaches 15,000 miles driven or one year old.Nationwide provides new car replacement until your vehicle reaches age three.Shelter provides all auto insurance customers with new car replacement for the first 15,000 miles or 12 months of owning a new vehicle.Safeco offers new car replacement when a vehicle is less than a year old.Plymouth Rock offers this type of policy for the first 24 months of new car ownership. You can also upgrade with enhanced options.Penn National offers new car replacement unless a vehicle suffers fire damage or theft.North Dakota Farm Bureau provides new car replacement until the vehicle reaches age 2 or has at least 24,001 miles.Hanover provides new car coverage for the first 12 months or 15,000 miles of new vehicle ownership.Farm Bureau, also called Iowa Group, offers up to four years of replacement coverage for a brand-new vehicle and up to five years for drivers who live in certain states.Concord provides free new car replacement coverage for 12 months. Customers can also purchase an additional 12 months of coverage.Acuity covers new car coverage for the first four years of ownership. The company also offers this coverage for motorcycles.Though it varies depending on the insurer, notes that you can usually purchase this coverage within the first 12 months of owning the vehicle. Usually, you must be the car’s first owner to qualify for new car replacement insurance.

Cost of New Car ReplacementAccording to Nerd Wallet, insurance companies charge dramatically varying rates for this type of policy, which is optional. The cost will vary based on your driving history and the make and model of the vehicle.

Choosing New Car ReplacementCars lose value, or depreciate, as you accumulate more miles. The newer and more expensive your car, the faster it will depreciate after you drive it off the lot. That means if you total your car within the first few months after purchase, your insurance company will only pay its actual cash value which will probably not cover the cost of a comparable new vehicle. Some companies even sweeten the pot by offering new car replacement coverage that pays for the latest model year of the same vehicle rather than the model you owned.

According to Value Penguin, you may want to opt for new car replacement based on the cost of this policy from your insurance company, whether you could afford to replace your new car if necessary without coverage, how fast you expect your car to lose value, and the likelihood of totaling the vehicle within the first few years. also recommends reviewing your financial situation when deciding what type of car insurance coverage you need. Minimum coverage costs less per month than full coverage with new car replacement, but you increase the risk of expensive out-of-pocket costs if you damage your new vehicle.

The Role of Gap CoverageFor maximum protection for a brand-new vehicle, you may also want to purchase gap coverage if you have financed your car. According to, this type of policy pays off the loan on your car if you total it and owe more than the actual cash value.

However, if you only have gap coverage without new car replacement, you will still have to pay for the cost of a new vehicle. Having both policies protects you from this unexpected expense.

Compare the peace of mind you would feel through having new car replacement coverage with the monthly cost of that coverage. Considering that trade-off can help you decide whether this type of policy is right for you.

Check this out if you need additional information, resources, or guidance on car insurance.


New-Car Replacement Insurance Explained

Everything you need to know about new car replacement insurance

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