Are you thinking about buying or leasing a new or used vehicle? Before taking out car insurance, we recommend that you first find out about the different types of coverage available. There are many options that may suit your needs, so how do you choose the right one? The most important thing is to carefully assess your needs!
Pour vous aider à y voir plus clair, Assurances Multi-Risques a souhaité vous parler dans cet article, d’une option disponible lors de l’achat ou de la location d’un véhicule, et il s’agit de l’assurance de remplacement. Qu’est-ce que c’est? Qui peut vendre cette assurance ? Quelles sont les différences entre l’assurance de remplacement et la valeur à neuf? Pour tout savoir, lisez bien ce qui suit!
Replacement insurance: what is it?
Replacement insurance is an insurance policy that enhances your basic auto insurance. It protects you against the depreciation of your vehicle.
Explanation: Your auto insurance covers the actual value of your vehicle on the day of the accident, taking depreciation into account. In the event of a claim, you would therefore receive the value of your vehicle on the day of the accident, not the amount you paid when you purchased it.
For example, if you pay $40,000 for a new car, but after a few years it is only worth $20,000, in the event of an accident your insurer will reimburse you a maximum of $20,000 for your vehicle.
With this additional protection, in the event of a disaster, you could:
Option 1: replace your vehicle with a car of equivalent value from the same dealer;
OR
Option 2 : receive a financial compensation payment to purchase a vehicle of equivalent value from the dealer of your choice.
PLEASE NOTE: When purchasing your replacement insurance policy, you will be asked to choose between these two options. If you purchase through a dealership, make sure you choose option 2, which gives you more flexibility.
What are the differences between replacement insurance and replacement value?
Ce sont deux produits très similaires, mais qui comportent certaines distinctions. Par exemple, seuls un courtier d’assurance ou un assureur peut vous offrir l’avenant valeur à neuf. Une assurance de remplacement quant à elle, peut également être vendue par un concessionnaire automobile.
- The replacement value endorsement is linked to your auto insurance policy. Its price is therefore fixed for the term of the policy, renewable each year under the insurer’s terms and conditions. Please note that your claims history may affect the replacement value price and, in some cases, may even affect your eligibility.
- The price of replacement insurance is set once, at the time of purchase, and lasts for an average of 3 to 7 years.
Where should you take out replacement insurance?
You can purchase replacement insurance directly from an insurer, an insurance broker (who will shop around for you to ensure you get the best policy at the best price), or a dealership.
GOOD TO KNOW: According to a recent study by the Autorité des marchés financiers (AMF), the rate of return for dealerships is around 62%, compared to traditional insurance sales networks, which are more in the range of 12% to 15%. On average, a customer pays nearly $846 more for replacement insurance from a dealership than they would if they purchased it from a broker. That gives you pause, doesn’t it?
In fact, it is not uncommon for dealerships to pressure you into purchasing this protection from them. But be aware of the following:
You don’t have to say yes!
Instead, take the time to think it over, shop around with different insurers, or call your broker, who will be able to advise you properly.
You can change your mind!
Within 10 days of purchasing your insurance policy, you have the right to change your mind. To cancel your policy, you must notify the insurer by registered mail using the Notice of Cancellation provided in the explanatory document given to you by the dealer.
If you cancel within the specified period, you will not have to pay any fees or penalties. You will be reimbursed for any premiums already paid. If you have included the cost of insurance in your car loan, please note that the reimbursement may be used to reduce the amount of your loan. In this case, it is highly likely that your monthly payments will not decrease. Instead, the number of payments would decrease, thereby shortening the repayment period.
The insurer may grant a period longer than 10 days, but not shorter! Check everything in the documents provided by the dealership employee.
Bring your contract with you!
As soon as they offer you insurance, the car dealership employee must give you an information sheet explaining your rights. You should read it thoroughly on the spot, sign it, and take a copy home with you.
The employee must also provide you with a comprehensive explanatory document describing the coverage offered, exclusions, and how to file a claim. These two documents are intended to help you make an informed decision. (AMF)
Before calling your broker or insurance agent
Make sure you have all the necessary information at hand: the make, model, year, number of doors, and serial number of the vehicle you wish to insure. Your broker or insurance agent who takes your call will need this information to ensure accurate pricing and facilitate settlement in the event of a claim.
Also consider the number of kilometers you plan to drive to work, or the mileage you usually drive or plan to drive annually. You will also be asked for the year you obtained your driver’s license, your recent violations, and a list of your past claims.
Qui conduira le véhicule et à quelle fréquence? Avez-vous eu des accidents dans le passé? Assurances Multi-Risques vous conseille de dire la vérité au sujet de ces informations pour vous éviter des problèmes d’assurance. Vos besoins ou vos informations ont changé en cours d’année (aggravation de risques)? Vous êtes également tenu d’en informer votre courtier ou votre assureur!
Finally, if you don’t know which coverage to choose for your auto insurance or are unsure of your needs, call your insurance broker—they will be able to advise you!
To help you understand the differences between replacement cost insurance (FAQ #43) and replacement value insurance (FAQ #5), please refer to the table provided by CAA Quebec. To view it,
click here.