Automotive

Take the dealer replacement insurance?

  • Last Updated:
  • May 26th, 2015 6:57 pm
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[OP]
Newbie
Jul 25, 2008
36 posts
10 upvotes
Montreal

Take the dealer replacement insurance?

Dealer is offering 8 year replacement value insurance.
Total cost about 3000$ or 375/year on a 2015 sonata ultimate.

They made a very convincing case for buying this insurance separately... It's expensive but with my own insurer I would probably have to drop the replacement value after 3-4 years (increase about 10% premium per year).

What would you do?
10 replies
Deal Expert
Mar 25, 2005
21292 posts
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dandevilfish wrote:
May 26th, 2015 12:34 pm
Dealer is offering 8 year replacement value insurance.
Total cost about 3000$ or 375/year on a 2015 sonata ultimate.

They made a very convincing case for buying this insurance separately... It's expensive but with my own insurer I would probably have to drop the replacement value after 3-4 years (increase about 10% premium per year).

What would you do?
Do you pay $3330 for insurance?
[OP]
Newbie
Jul 25, 2008
36 posts
10 upvotes
Montreal
Kasakato wrote:
May 26th, 2015 12:40 pm
Do you pay $3330 for insurance?
Not sure I follow... this is an add-on to standard auto insurance without replacement value
Deal Expert
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Jul 30, 2007
24490 posts
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Toronto
what does the fine print says ?

If this is offered on a Ferrari, I say "hell, yes and sign me up, regardless on what the fine print says" :D
Deal Expert
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Jan 27, 2004
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T.O. Lotto Captain
The way i see it is... If you get into an accident the value of your car would drop $3300. But in this case youre paying the $3300 up front.
If you keep the car for more than 5 years. Eg. Youre a drive it to the ground type, any accidents will have little impact on re-sale value the older the car gets. Unless its a catastrophic accident that nearly totals the car.

Keep the $3300 in a savings account or investment and you'll most likely be ahead... Unless you know you are a terrible driver and expect to get into accidents every year.
Deal Expert
Mar 25, 2005
21292 posts
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dandevilfish wrote:
May 26th, 2015 12:47 pm
Not sure I follow... this is an add-on to standard auto insurance without replacement value
Unless 10% of the policy is $375, it's cheaper to take regular replacement insurance. Although the last few years (mostly 6-8) may not be available under a normal policy.
Sr. Member
Jan 13, 2005
821 posts
70 upvotes
Montreal
dandevilfish wrote:
May 26th, 2015 12:34 pm
Dealer is offering 8 year replacement value insurance.
Total cost about 3000$ or 375/year on a 2015 sonata ultimate.

They made a very convincing case for buying this insurance separately... It's expensive but with my own insurer I would probably have to drop the replacement value after 3-4 years (increase about 10% premium per year).

What would you do?
Short version: Not at dealer

Buy it with your insurer, they do offer the same product, but cheaper than at your autodealer (the difference goes to the seller as comission) (and if you need it, you don't have to buy the same car at the same place, nice flexibility. You don't even have to buy a car if you don't need a car anymore (say you cripple yourself after the accident)).

Now if you compare it with Rider 43E (that's reg insurance + the rider)

If you change your car, the rider can be canceled or replaced. The replacement is GONE!
If you want it for under 2 years, the rider is cheaper, if for a longer time the replacement is cheaper.

One exception: If you RENT your car, I would get the replacement insurance over the rider (from my insurer, not car dealer of course).
If you take the rider, your car owner (you rent right ?), would screw you by keeping more of the value of the police payment.

If you have a replacement insurance, you get the money, you pay only the residual value.
Deal Fanatic
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Aug 11, 2008
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Ontario
most companies offer this coverage, OPCF 43, up to 4 or 5 years, and the premium is approx 50-100 per year with no increase in that premium over those years...
dandevilfish wrote:
May 26th, 2015 12:34 pm
Dealer is offering 8 year replacement value insurance.
Total cost about 3000$ or 375/year on a 2015 sonata ultimate.

They made a very convincing case for buying this insurance separately... It's expensive but with my own insurer I would probably have to drop the replacement value after 3-4 years (increase about 10% premium per year).

What would you do?
RIBO LICENCED INSURANCE BROKER, over 30 years experience
[OP]
Newbie
Jul 25, 2008
36 posts
10 upvotes
Montreal
Kasakato wrote:
May 26th, 2015 12:58 pm
Unless 10% of the policy is $375, it's cheaper to take regular replacement insurance. Although the last few years (mostly 6-8) may not be available under a normal policy.
It's not that simple. A claim or two and the premiums can skyrocket. With the other product the premiums remain the same regardless and the price is built into the financing at 0%.

Also as the car advances in age, the premium without replacement value can be negotiated lower whereas with replacement value it will do nothing but climb.

The major selling point for me is this example:
Your car is 4 years old worth about 17-18k and you have a collision with 18k damage. An insurer would prefer to pay 18k to rebuild your car than pay 35k to replace it, even if on paper the car is a writeoff.

I agree it can probably bought cheaper from a broker versus the dealer
Deal Expert
Mar 25, 2005
21292 posts
2122 upvotes
dandevilfish wrote:
May 26th, 2015 6:39 pm
It's not that simple. A claim or two and the premiums can skyrocket. With the other product the premiums remain the same regardless and the price is built into the financing at 0%.

Also as the car advances in age, the premium without replacement value can be negotiated lower whereas with replacement value it will do nothing but climb.

The major selling point for me is this example:
Your car is 4 years old worth about 17-18k and you have a collision with 18k damage. An insurer would prefer to pay 18k to rebuild your car than pay 35k to replace it, even if on paper the car is a writeoff.

I agree it can probably bought cheaper from a broker versus the dealer
Sure that's true but with the dealer it's all prepaid. If you have an accident at day 1, your 8 year premium is gone. With traditional insurance it's essentially pay as you go, by the year. Bottom line is both policies have their upside, but as with insurance it's nearly impossible to definitively determine the best route until a loss occurs.
[OP]
Newbie
Jul 25, 2008
36 posts
10 upvotes
Montreal
Kasakato wrote:
May 26th, 2015 6:45 pm
Sure that's true but with the dealer it's all prepaid. If you have an accident at day 1, your 8 year premium is gone. With traditional insurance it's essentially pay as you go, by the year. Bottom line is both policies have their upside, but as with insurance it's nearly impossible to definitively determine the best route until a loss occurs.
Yes, agreed.
There is a risk either way.
I think in the end it's a matter of your personality and risk tolerance.

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