What Is A Waiver of Depreciation?
Buying a brand new ride is an exciting but stressful experience. Several tasks need to be taken care of before you hit the road. One of the most crucial things drivers need to do is find the right car insurance.
If you’ve recently purchased a brand new vehicle or are planning on buying one in the near future, you may be asking yourself, “what happens if my new car is stolen or is deemed a total loss after an accident?”.
This is where the waiver of depreciation add-on (an optional form of additional coverage) comes into play.
START A QUOTEContinue reading to learn what a depreciation waiver is and why it benefits drivers, along with a handful of helpful car insurance tips.
What is a waiver of depreciation and how does it work?
Waiver of depreciation (also referred to as a limited waiver of depreciation by certain companies) is an optional car insurance add-on that financially protects drivers with new vehicles after they’ve been stolen or involved in an accident that results in a total loss.
That’s a bit of a mouthful, so let’s break it down a bit:
If you don’t have a removing depreciation deduction and your car is stolen or deemed a total loss, you will receive the depreciated replacement value of your vehicle, not the total replacement value (more on that shortly).
On the other hand, if you have a waiver of depreciation and your car is stolen or deemed a total loss, the replacement value for your vehicle will not be influenced by its depreciation rate.
Why are depreciation waivers beneficial for drivers in Canada?
As mentioned above, depreciation waivers allow drivers to receive the total replacement value for their vehicle. This is highly beneficial due to the fact that new cars depreciate extremely quickly.
You’ve likely heard the rumour that a new vehicle can lose as much as half of its value once driven off the dealership lot. Although this isn’t exactly the case, it has some merit. Most new vehicles lose upwards of 10% of their value within their first year of ownership and continue to lose value as time goes on.
So, what exactly does this mean for drivers? In short, if your new car is stolen or deemed a total loss, the replacement value of your vehicle could be upwards of 10% less than what you initially paid for your car. So, if you want to purchase the same model, you will have to pay for some of it out of your own pocket.
With this in mind, it’s easy to see why this add-on is invaluable for drivers with new vehicles — depreciation waivers can help you save upwards of 10% on a replacement vehicle after a vehicle theft or total loss takes place.
How long do depreciation waivers cover new vehicles?
Car insurance providers that offer waivers of depreciation have set time frames for this add-on. The set time frame varies from provider to provider, so there’s no cut-and-dry answer to this question. But, we can say that many car insurance providers that offer depreciation waivers generally cover new vehicles from theft and total losses for 24 to 36 months.
If you have a waiver of depreciation but are unsure of how long you’re protected, don’t hesitate to reach out to your car insurance provider or Surex insurance advisor.
Are there conditions to depreciation waivers that drivers should be aware of?
Yes, drivers should take the time to review the specific conditions that their insurance provider has listed for their depreciation waivers.
The conditions vary from provider to provider, but it’s not uncommon for car insurance companies to list the following conditions to depreciation waiver add-ons:
- Ownership history — The policyholder must be the original owner of the insured vehicle
- Date of theft or total loss — The vehicle theft or total loss must occur within the set time frame
- Previous damage — Depreciation waivers do not cover unrepaired damage that was inflicted during an unrelated incident
- Misc. replacement parts — Depreciation waivers generally don’t cover miscellaneous parts like tires and car batteries
- Negative equity on the loan — If you are a given a discount (friend and family, employee, etc.) your insurance company may only offer what you paid on the bill of sale.
What are other helpful car insurance add-ons for drivers in Canada?
There are several car insurance add-ons that Canadian drivers can utilize, some of which include:
- Accident/claim forgiveness
- Minor conviction protection
- Loss of use coverage
- Legal liability for damage to non-owned vehicles
- Disappearing deductible
- Ride-sharing
- Conviction protector
- Coverage for transportation replacement
- Collision protection
Each car insurance company in Canada is different in many ways, including the types and variety of add-ons that they offer. Not all car insurance companies provide every type of car insurance add-on. Be sure to reach out to your Surex insurance provider to learn which of our partners offer the add-on you’re interested in.
Save up to 25% on car insurance with Surex
Finding affordable car insurance that offers the perfect level of coverage isn’t easy…unless you’ve teamed up with a Surex insurance advisor.
At Surex, we work hard to ensure that we provide Canadian drivers with the best car insurance quotes. Whether you’re thinking about including a car insurance add-on in your policy or would like to shop around for a new insurance provider, we’ve got you covered from start to finish.
Within ten minutes, we can provide you with numerous car insurance quotes from some of the top carriers in the country.
Contact one of our expert insurance advisors today to learn how you can save up to 25% when you bundle your car insurance with your home, tenant or condo coverage.
What have you learned about the waiver of depreciation add-on?
Before reading this article, you were asking yourself questions like, “what is a waiver of depreciation?”.
Now, you have a firm grasp of how this unique add-on works and why it’s beneficial for drivers. As a reminder, depreciation waivers allow drivers to receive the entire replacement value of their new vehicle after it’s stolen or deemed a total loss in an accident. Under similar circumstances, drivers without a depreciation waiver would receive the depreciated replacement value of the vehicle.
Investing in a depreciation waiver can save drivers upwards of 10% after a vehicle theft or total loss occurs, making it a worthwhile investment for drivers who don’t want to cover any replacement expenses out of pocket.
