A standard auto policy-known as actual cash value- will typically pay to repair or replace your car minus depreciation. But increasingly, “new car” and “better car” replacement options and gap insurance are available. Are they worth it?
New Car Replacement allows you to pay extra premium to receive enough money to buy a new car similar to the car that was totaled.
Better Car Replacement allows you to pay extra premium to receive enough money to purchase a car newer or better than the car that was totaled.
Gap Insurance allows you to pay extra premium to ensure the payoff of the balance of a loan if the loss settlement amount is less than the remaining loan.
Each of these options requires an additional purchase of insurance or a specific policy that includes these products built in to the premium. Research the value of your vehicle before an accident with tools like, Kelly Blue Book, Edmunds, or NADA Guides and discuss the cost and benefits of these coverage options with your agent.