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: Oct 28, 2021

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The Truth in a Nutshell

  • New car replacement pays to get you the same make and model of car that was stolen or damaged
  • New car replacement insurance rates can be up to 20% higher than standard car insurance rates
  • GAP coverage is another option you may want to consider if you drive a new car

If you get nervous about car accidents when driving, or if you drive in an area that has a high rate of collisions, you may be interested in purchasing new car replacement coverage.

New car replacement car insurance rates are going to be higher than your average car insurance rates. But while there are many reasons why insurance companies total cars, you’ll be glad you carried new car replacement coverage if it happens for any of them.

Car insurance companies that offer new car replacement coverage are fairly common.

Because of this, you will likely be able to find the coverage easily. Allstate new car replacement coverage, for instance, is open to virtually any policyholder with a good driving record.

If you are looking for the perfect new car replacement car insurance company, be sure to enter your ZIP code above. You will be able to compare rates from top companies at once and find the one that works best for you.

What are the top car insurance companies that offer new car replacement coverage?

New car replacement is a fairly common option when it comes to car insurance companies. While many companies offer new car replacement, some of the more commonly known options include:

  • Allstate
  • American Family
  • Erie
  • Farmers
  • The Hartford
  • Liberty Mutual
  • Safeco
  • Travelers

New car replacement car insurance quotes will vary from one company to the next, so don’t commit to any of these companies until you’ve had a chance to compare rates and find the best company for you.

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What are the car insurance companies that don’t offer new car replacement insurance?

Even though new car replacement is pretty common, there are a few well-known insurance companies that do not offer new car replacement insurance coverage, including State Farm, Progressive, GEICO, and USAA.

If you drive a new car and you want to make sure you won’t lose thousands of dollars if your car is damaged, new car replacement or GAP coverage could be helpful.

The good news if you drive a not-so-new car is that you will never really need to worry about used car replacement insurance. Once your car hits a certain age, it plateaus a bit in terms of depreciation.

But whether you have a brand new car or you drive something that’s been around for a while, you will want to do a lot of comparing before you buy new car replacement car insurance.

How does new car replacement work?

Driving a new car comes with lots of advantages. Your car not only performs well, it has the latest safety features and newest technology.

But almost as soon as you drive your car off the lot, it starts to lose its value.

If you drive a new car, then new car replacement coverage might be something you want. This coverage offers to replace your car with the exact same make and model, minus the deductible.

This is a helpful option when your brand new car is totaled and your full coverage only covers up to the car’s current value, which is thousands of dollars less than what you owe.

New car replacement coverage is helpful, but it comes at a price. Most new car replacement insurance policies are up to 25% more expensive than a standard or even full-coverage policy.

Should I choose new car replacement or GAP insurance?

Comparing new car replacement insurance vs. GAP insurance can help you select the right option. While new car replacement coverage gets you the same make and model of the car you had before, GAP insurance pays the difference between the car’s current value and anything you owe.

So if your car cost $30,000 two years ago but is worth $21,000 when it is totaled, GAP insurance will cover the gap that is missing ($9,000).

Both of these coverages are smart options to consider if you are driving a nice car, a new car, or a car that would otherwise depreciate in value in a relatively short amount of time.

During your search for affordable new car replacement car insurance, try our free quote tool below to compare multiple companies at once.