This optional coverage protects your investment in a new car if an accident
results in repair costs exceeding the actual cash value of your car.
Why should I add this coverage to my auto policy?
New cars today are expensive. They also depreciate rapidly. After an accident,
traditional auto policies pay based on a car’s actual cash value, which is the
original purchase price minus depreciation, or the book value of the car at the
time of the accident.
But this coverage option works differently. Losses are paid without considering
depreciation in the value of the car. The only exceptions involve cars that are
damaged by fire or theft, which are covered for actual cash value. Regardless,
your only cost would be your policy deductible.
You buy a new car for $18,000 and within a year, the book value dropped to
$16,000. At the same time, a new car identical to yours costs $20,000. If you
are in an accident that totals your car, traditional insurance pays you up to
the cash value, or $16,000 minus your deductible. If your car is totaled,
replacement cost auto coverage pays you for the cost of replacing the car with
a new one, or $20,000 minus your deductible.
If your car is damaged but not totaled, this coverage pays for the cost of
repairing your car.
Because cars depreciate so rapidly, new car owners often receive less from their
traditional auto policies than they need to pay off their car loans in the
event of a total loss. This optional coverage provides for repairing or
replacing your new car without adjustment for depreciation or wear and tear.
What if someone hits me?
If someone else hits you and totals your car, this optional coverage would
still protect you. The other driver’s insurance would pay you the actual cash
value of your car, and your policy would pay the difference between that and
the repair or replacement cost. This optional coverage protects you no matter
who is at fault.
What types of cars qualify for replacement cost protection?
All current model year cars with an A title (a title to original owner) or
current model year demonstrators are eligible. You have 60 days after you
purchase your car to add replacement cost coverage to your auto policy. Ask
your agent if your car qualifies.
How long does replacement cost protection last?
Once you purchase the coverage, it continues for the first four consecutive
years (five years in North Carolina) that you own your new car. If you
discontinue the coverage during that time, you cannot add it back to the
Is replacement cost auto coverage expensive?
No, the coverage is reasonably priced.
Ask your Penn National Insurance agent for a quote. And find out just how easy
it is to protect your investment in your new car.
Peace of mind. Knowing that you’re protected, that your family, your
home and your cars are properly insured, and that you can sleep easy at night.
With Penn National Insurance and your independent agent, you get outstanding
value and superior local, personal service. And if you have a claim, we’ll be
there for you. We promise to handle your claim promptly, fairly and
Peace of mind. You deserve it. Penn National Insurance and your local
independent agent provide it.