It’s a common sentiment that new vehicles lose half of their value the moment they’re driven off the sales lot. Although a tad hyperbolic, the truth is this statement is not far off. According to data from a popular vehicle resale site a car can lose as much as 25% of its initial value immediately, and 60% on average within the first five years. While most people may be concerned with the resale value of a vehicle, they may not always think about the depreciation of their vehicle in the event of a claim.
Recently, an insured we’ll call Kyle was driving to work in a car he had recently purchased brand new. While stopped at a red light he was rear-ended by another motorist with enough force that his car was pushed into the vehicle in front of him. Although Kyle sustained only minor injuries, the vehicle was ruled a total loss.
At the time of settlement, Kyle’s vehicle was valued at $23,000 less than what he purchased it for, despite being only three-years-old. After receiving the settlement cheque, it was clear that not only would the amount received not be enough to cover the purchase of a new car, there would also be a remaining balance on the vehicle to the lienholder.
Kyle could have protected himself by purchasing Unica’s Waiver of Depreciation Endorsement. This endorsement waives the cost of depreciation for new vehicles if they are damaged or replaced for up to 60 months (5 years), and it was designed with high-value vehicles in mind. An extension of this endorsement to 5 years truly sets itself apart as best in class.
For more information about this endorsement and other great coverage options for your vehicle, contact your trusted Broker.
