Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001 and has an undergraduate degree from Manhattan College in ...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Joel...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Sep 29, 2021

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Liberty Mutual has “taken it up a notch” when it comes to the never ending game of car insurers battling to offer the newest and best auto insurance coverage options. The introduction of “Better Car Replacement™” coverage has gotten some recent attention among insurance professionals and consumers alike.

This program is designed to mimic, and exceed standard new car replacement coverage and loan/lease gap insurance coverage offered by other car insurance companies. In short, if you get in an accident and your car is a total loss, Liberty Mutual will pay you the market value of a car that’s a little better.

When your car is totaled, it’s already stressful enough. It’s not uncommon for people to struggle to find a comparable replacement car. In some markets, the suggested market value you might find on sites like Kelley Blue Book don’t match what you actually pay. For some insured drivers, Liberty Mutual’s Better Car Replacement will offer a nice perk to get a better ride. For others, it will help balance out market premiums. Either way, this is an optional coverage that requires you have property coverage on your own car.

Liberty Mutual doesn’t specify how many model years back they’ll go. So check with your agent (your 1966 Shelby might be not be replaced with a ’67). Also, remember that standard policies like those you’d get with Liberty Mutual, don’t cover custom parts or the many unique needs of classic cars. You’d have to buy supplemental coverage on top of your collision and comprehensive coverage for custom parts. Cars with multiple custom parts or upgrades are generally insured more effectively by specialty companies who understand the replacement cost and value of custom cars.

*Keep in mind that with many insurers you cannot buy new car replacement on a vehicle that is more than two model years old, but gap insurance may be purchased for any vehicle with a loan/lease regardless of age.

Even with TTIA’s critical eye…Better Car Replacement™ is a pretty good deal. Let’s look at the details here to help you determine if this coverage is enough to make current customers stay with Liberty Mutual or convince them to switch insurance companies.

What does better car replacement with Liberty Mutual insurance look like in real life?

Perhaps you have a 2009 model Ford Mustang with 50,000 miles on the odometer.

In the event your vehicle is determined to be a total loss by your claims adjuster, you can expect to be given enough money to purchase a 2010 model Pony with no more than 35,000 miles on it.

That would result in a vehicle that’s one model year newer with 15,000 or fewer miles than the old one. Simple enough, right?

As with any insurance policy, whether auto, homeowners or commercial, the devil is in the details. You need to understand the coverage and talk to an insurance agent who can explain what you might not understand…which for some consumers is quite a bit when it comes to policy coverage.

Like the example above involving custom parts, there are many small things a standard auto policy doesn’t cover. Some companies only offer specialty policies because there is a market left open for it if you’re only looking at standard policies and perks with Liberty Mutual Insurance or other big carriers.

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How do you qualify for better car replacement with Liberty Mutual insurance?

You will almost certainly have to purchase physical damage coverage for the vehicle in question. Both comprehensive and collision coverage cover your car against damage. Liability only coverage is only meant to cover the property damage and injuries of others if you are at fault. Collision coverage covers your car if you’re involved in a collision regardless of whose fault it is. Comprehensive insurance covers other situations from hail storms to deer and other things that aren’t considered collisions. This is also referred to as “full coverage,” meaning coverage for you on top of your liability policy.

If you know you have full coverage, you should talk to your insurance agent about better car replacement. Often, it just requires the agent or  customer to check a box at checkout.

[Read more about the difference between comprehensive and collision coverage.]

Also note that the cause of loss must be covered by the policy for the coverage to take effect.

How does your deductible affect better car replacement and insurance rates?

Your deductible will still come into play here. If you have a $1,000 auto insurance deductible, using the example above, if the newer (2010) Mustang costs $20,000, you’d get $19,000 from Liberty Mutual. That’s the $20,000 less your $1,000 deductible. If your car needs repairs, you may be responsible to pay the deductible before they’ll start the work. If your car is totaled, they would just pay you the reduced amount.

Keep in mind Better Car Replacement™ DOES NOT cover leased vehicles or motorcycles. So you would not have a shot at this coverage if you fit either of those categories.

You may also not be able to get this coverage in every state, so again, contact your local Liberty Mutual Agent for details.

Make sure to get several quotes from an independent insurance agent before opting to purchase any new auto insurance policy.

While Better Car Replacement™ may be great and come in very handy for some, overpaying for auto insurance never makes sense. If the Liberty Mutual policy is not cost effective in the first place, it simply isn’t worth your time or money.