Why to Buy a Car Now and How to Protect Your Investment

Why to Buy a Car Now and How to Protect Your Investment
Posted at 1:00 AM, Nov 14, 2018
and last updated 2018-11-19 21:31:16-05

(StatePoint) ‘Tis the season for shopping, and not just for presents to put under the tree. Many people shop for new cars this time of year, and for good reason.

Car dealerships generally save their best deals for the last months of the year, according to Kelley Blue Book. One reason is that new car models arrive at dealerships in September and October, so if last year’s models are still sitting on the showroom floor, chances are buyers can snap them up at deep discounts. Dealers also tend to lower vehicle prices at year-end to reduce inventory before the start of the new calendar year.

But before taking the plunge, it’s important to make sure that shiny new ride is fully covered from an insurance standpoint. Why? Most people are familiar with that old adage that a new car drastically depreciates the minute it’s driven off the lot. According to, it’s true. The vehicle history information database says a new car loses 10 percent of its value the minute it’s driven off the lot and another 10 percent by the end of the first year. And cars with lesser brand name appeal and fewer options can depreciate even more, some by as much as 50 percent in a single year. That means if your new ride gets totaled, your insurance payout could be much less than what you paid for the car (or what you owe on your loan, for that matter).

Fortunately, new car buyers can protect themselves from this situation with what’s generally known as new car replacement coverage. For example, at Erie Insurance, this coverage comes in the form of an add-on called New Auto Security that can be tacked onto a policy for a modest cost. If an owner has had a car for less than two years and it gets totaled, Erie Insurance would pay the cost to replace it with a car in the newest model year, minus the deductible. And, if the new car is in a crash but is not deemed a total loss, the company would pay to repair the vehicle to brand new condition, without any deduction for depreciation. While new car buyers would be smart to add this coverage before even driving the car off the lot, New Auto Security coverage isn’t restricted to when the car is purchased; it can be added later.

“This is a great time of year to get a good deal on a new car, but buyers should be aware of the risks associated with depreciation and take the necessary precautions to protect their investment,” says Jon Bloom, vice president of personal auto, Erie Insurance. “We recommend that anyone buying a new car talk with their insurance agent to make sure they would be able to replace it in the event it’s totaled, or at least be able to pay off their loan. Having the right coverage will provide peace of mind and make that new car ownership experience that much more enjoyable.”  


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