Woman with new carYou may have seen television commercials touting a car insurance coverage called “new car replacement” or even “better car replacement,” a one-up coverage offered by Liberty Mutual.

Better car replacement is an option you can add to your Liberty Mutual policy for an extra premium. And while it sounds like a pretty good deal, it has strict limitations.

That means you won’t be able to buy a Mercedes to replace your totaled Hyundai. So what is better car replacement, and how does it compare to new car replacement? Read on to find out.

Key Highlights
  • The “Better Car Replacement” option is available from Liberty Mutual and goes above and beyond what most auto insurance companies already offer as standard coverage if your car is declared a total loss. 
  • With “Better Car Replacement,” Liberty Mutual will write you a check for a vehicle that is a year newer and has at least 15,000 fewer miles instead of one for a vehicle of comparable value. 
  • The terms of “Better Car Replacement” include the following: Liberty Mutual must deem your car a total loss for you to receive the replacement wheels. 
  • Other insurance companies offer new car replacement, a similar coverage that ensures depreciation doesn’t impact you if your new car is a total loss.

What is better car replacement?

“Better Car Replacement” works like this: Instead of writing you a check for a similarly valued car, Liberty Mutual says it will write a check for one a year newer and with at least 15,000 fewer miles. The replacement would have to be in the same class and basic model type as the totaled one.

The company offers an example on its website: “So if you have a 2019 vehicle with 35,000 miles on it and are involved in a total-loss accident, Liberty Mutual will give you the money for a 2020 model with 20,000 miles on it.”

“Better Car Replacement” does have conditions, including:

  • Liberty Mutual has to declare your car a total loss.
  • The original claim must come under collision or comprehensive coverage, which you must have on the policy.
  • You still have to pay the deductible under whichever policy option applies.
  • You can’t get it for leased vehicles or motorcycles.
  • It’s not offered in North Carolina.

It’s also not free. There is an additional premium that will differ by person based on driving record, age, make of car, where you live and other factors.

Glenn Greenberg, a Liberty Mutual spokesman, suggests talking to an agent or getting quotes online to determine how much the option would raise your premiums.

What is new car replacement?

Liberty Mutual, like many other insurance companies, also offers new car replacement, a standard feature on every policy it writes, in states where it’s available.

The company says that if your covered car is totaled in your first year as a customer, you can file a claim and get a check for a brand-new car, not just the depreciated value. You’ll still have to pay the policy deductible. New car replacement is only available for vehicles that:

  • Are not previously owned.
  • Are less than one year old.
  • Have fewer than 15,000 miles
  • Are not leased.

Liberty Mutual isn’t the only insurer with new car replacement. Several carriers offer it, but with slight variations, yet another reason to compare car insurance companies. Some won’t pay for a new car if the original was more than six months old while others have more flexible terms.

Among the companies that offer new car replacement are Allstate, Travelers and Erie Insurance. If you’re interested in the coverage, get the details and exclusions from your insurer before you buy.

California Car Insurance Rates by ZIP Code

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State Minimum: Required liability coverage to drive legally in your state; some states mandate additional coverage, such as personal injury protection, uninsured motorist, underinsured motorist. Liability Only 50/100/50: $50,000 per person/$100,000 maximum per accident for bodily injury; $50,000 for property damage. Liability pays for injuries/damage you cause others. Full Coverage 100/300/100: $100,000 per person/$300,000 maximum per accident for bodily injury; $100,000 for property damage; comprehensive and collision coverage with $500 deductible. Liability pays for injuries/damage you cause others. Comprehensive and collision pay for damage to your car.
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Steps to take if your car is totaled

All of us hope we never have a total loss claim. But if you do, here are steps during the car insurance appraisal to ensure you get the best settlement.

  1. Determine the value of the vehicle prior to the accident. Research independent pricing guides such as NADAguides.com, Kelly Blue Book and Edmunds.com. Study how they value your car by factoring in the model, its year, mileage and general condition. Be as specific as possible and refer to supporting documentation.
  2. Evaluate any accessories installed by you or the dealer. Great audio system? Put that on the list. Same with other features, like upgraded wheels. Include them and, again, gather the receipts.
  3. What about incidentals? Those would be taxes, registration, title and any other fees. Your car insurance is supposed to cover those so make sure they’re part of the settlement.
  4. Check to see if that rental car you needed after the crash is part of your coverage; make sure you get reimbursed if it is.

What should you do if you’re not happy with the settlement?

If the insurer’s offer leaves you cold, start looking for satisfaction by comparing the appraiser’s analysis with your own, referring to those documents you’ve gathered. If still displeased, present your case to the insurer and ask for a larger, fairer payout.

Insurance Information Institute spokesman Michael Barry says that some insurers may have a complaint division that can help forge a compromise. But if yours doesn’t budge, Barry notes that each state has an insurance department regulating all forms of coverage, including vehicle.

Go to your state’s website to see if the department shows you how to challenge a settlement. Barry says most states have consumer advocates that can give you information and advice on filing a complaint.

Still unhappy? Then Barry says an arbitrator may help resolve the dispute. Your insurer may suggest one as part of the process or you can consider getting one on your own at American Arbitration Association.