I bet you have seen the Liberty Mutual commercials featuring new car replacement. Oh, we all have our own variation. The problem is, we’re not all selling it like we should.
I bring this up because yesterday afternoon, twenty minutes after my office closed I was hung up on by a guy who was never offered the that very coverage when he added his vehicle last year. After twenty minutes of trying to reason with an underwriter, it all went bust.
Wouldn’t it have been so much better just to offer it up front? Sure, he might have declined, but at least we tried, right? What’s so great about the coverage anyway?
New Car, Better Car or Car Replacement coverage
Bottom line, no depreciation. Whether the company is paying a percentage more or setting a time limit to the coverage – the end goal is no depreciation. In other words, the endorsement would give the insured replacement cost coverage for the insured vehicle in the event of a total loss.
Liberty Mutual has trademarked their coverage and it is part of their policy – not an added endorsement. That is what makes it so hard to beat.
The issues other carriers have with this coverage include: (1) it may exclude perils like fire, theft and flood (2) the insured has to carry comprehensive and collision and (3) there may be a limit of 30 days to 1 year after purchase to add the coverage.
Further, if they have an outstanding loan that may present a problem. Similar to home insurance, the carrier has a responsibility to the finance company first – and then the insured. Even though they have that new car coverage, if there is a loan, they still may not see any monies.
Loan; Lease; Gap coverage
If I am selling the above coverage – I am most certainly offering this alongside. I want the insured covered for the difference between actual cash value and replacement cost. Understand some carriers will limit this to just 20% or 25% and they’ll pop some ‘liability’ terminology in there to confuse everyone.
The good side, (1) generally all perils are covered, (2) still need comprehensive and collision, and (3) they don’t need to see a copy of the loan agreements.
Yes, they can buy it from the car dealership. But remind the insured they are not going to get paperwork explaining coverage or have someone to talk to about coverage if something happens. Nothing against car dealerships, but they sell cars, not insurance.
Trying to sell this coverage while on the phone with an insured who is being pressured by a dealer to ‘move along’ is not easy. However, the additional cost of the coverage is definitely worth it. From now until April, most of us are going to be overwhelmed with car adds and replacements. Best to brush up and offer the coverage.