Everything you need to know to adequately insure your used car

Does auto insurance cost less for used vehicles? Are there any specific coverages for second-hand vehicles? Here are answers to some of the questions you may have regarding this topic, brought to you by La Capitale’s blog.

Are second-hand vehicles cheaper to insure?

Auto insurance rates can vary based on many factors. Some examples include the model of the vehicle, the equipment or accessories, where the owner resides, driver profiles and the selected coverages and deductibles.

If you make an apples-to-apples comparison, it should cost less to insure a used car.

Should you get the same coverage for used and new vehicles?

In Quebec, all vehicles must minimally include civil liability coverage, whether the vehicle is new or used. The same additional coverages can usually be added to better protect the new or used vehicle from potential property damage. However, optional coverages that protect against depreciation vary:

  • The Replacement Value coverage (endorsement Nos. 43A and 43E – Change to Loss Payment) is only available for new vehicles.
  • The Purchase Price Option (endorsement No. 43D) and Increased Settlement (endorsement No. 43F) are only available for used vehicles.

What is depreciation?

Depreciation is the difference between the purchase price and resale price of a vehicle. This difference varies according to the model, mileage, maintenance and features of the vehicle. A vehicle loses approximately 50% of its value during the first three years after it leaves the assembly line. The value continues to decrease over time. In other words, all vehicles depreciate, but the loss in value is greater for a new car than a used car.

How can auto insurance help you to protect the money you invested to purchase your used car?

There are two optional coverages on the market.

  • ThePurchase Price Option coverage is the used-car version of the Replacement Value coverage. La Capitale is the only insurer to offer this coverage, which allows you to protect the amount you invested to purchase your used vehicle. In the event of a total loss of the vehicle, this coverage allows your indemnity to correspond to the purchase cost of the insured vehicle. Without the coverage, the indemnity corresponds to the depreciated value (resale value) of the vehicle on the day of the accident.
  • The Increased Settlement for used vehicles coverage is also offered by certain insurers, including La Capitale. In the event of a total loss of the vehicle, this coverage would allow you to be reimbursed based on the vehicle’s depreciated value on the day of the accident, plus a bonus of 5% per year elapsed since its purchase. In other words, the indemnity will compensate you for the depreciated value, but not for the purchase price.

Don’t hesitate to ask your insurance representative for more explanations, to make sure you take advantage of coverages that are best suited to your needs!

Take advantage of the partnership with La Capitale!

If you’re a DuProprio buyer or seller, ask La Capitale General Insurance for a quote. You’ll receive an additional 5% discount, and you could save up to $425 by bundling your home, auto and leisure vehicle insurance.

Comments are closed.