Do I need a depreciation waiver for car insurance?

So, you’ve just bought a swanky new car. It’s time to revel in that flawless exterior finish, immaculate interior and, of course, that unforgettable new car smell. But before you get too carried away by the experience, there is something that all new car owners should consider: a depreciation waiver for your car insurance policy.

The second you leave the dealership, the value of your car will begin to depreciate, meaning that it starts to lose its value. It happens quickly, with some experts suggesting its value decreases 10% in the first month. This is important, because if your car is stolen or involved in a serious accident, the insurance adjuster will use the depreciated value to settle the claim, meaning you’d have to eat the difference between what you paid and the amount your vehicle is worth at the time of the loss.


What is a depreciation waiver in car insurance?

A depreciation waiver places a value on your car that stays in place for a set amount of time, most often for 1-3 years after the purchase. If your car is lost or irreparably damaged during this period, your claim will be settled in one of three ways. You will receive whichever is lower:

    1. The amount you paid for the vehicle.
    2. The manufacturer’s list price for the vehicle, with similar options and equipment on the original date of purchase.
    3. The cost to replace the vehicle with a new one, with similar options and equipment.

These amounts include all applicable taxes.



The bottom line is that with a depreciation waiver on your car insurance you will either be paid the amount you spent, or you’ll be able to buy a new vehicle very similar to the one you lost in terms of make, model and quality.


Can anyone buy a waiver of depreciation?

The depreciation waiver is only offered to the first owner of the vehicle. This means that anyone purchasing a used vehicle, regardless of its condition or value, is not eligible. If the vehicle changed ownership through a sale or even as a gift, then the second owner probably wouldn’t be eligible.

If you have joint ownership of your car then it would be wise to speak with your insurance broker (or us) to make sure that the co-owner doesn’t void eligibility for waiver.

Also, it is usually only offered on newer vehicles, with many companies only selling the waiver for vehicles under three years old.


What else should I know?

There are a few things more you should know before buying the coverage. The first is that you are still required to pay the deductible listed on your certificate of insurance. The second is that there are a few things that aren’t included in the payment, such as:

  1. Tires.
  2. Batteries.
  3. Any upgrades or after-market parts.

If you’re adding insurance to a new car then it’s probably worth protecting the money you put into it with a depreciation waiver car insurance coverage. You want to enjoy your new ride, after all. But for any cars older than 3 years, it’s a non-issue.


See what waiver depreciation costs for your car in a 3-minute quote.

Seriously, what else can you do in 3 minutes?

Boil half an egg?

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