Everything you need to know to adequately insure your used car

Auto insurance coverage for new and used cars are similar, with a few marked differences.

Under the Quebec Automobile Insurance Act, all vehicle owners must take out, at minimum, civil liability coverage. This coverage is therefore included with all basic auto insurance plans, regardless of the state of the vehicle at the time of purchase.

The optional coverages available that can be added to cover other property damage caused to your vehicle is similar for new and used cars, with a few marked exceptions.

These exceptions involve coverages included in Q.E.F. No. 43 – Change to Loss Payment Endorsement, which protect you from the loss of value of your vehicle caused by depreciation.

• The coverage provided by Q.E.F. Nos. 43A and 43E, known as “Replacement Value”, is offered for new vehicles only.
• Q.E.F No. 43D, on the other hand, is offered for used vehicles only.

What does depreciation mean?

Depreciation occurs due to a decrease in the value of a vehicle on the market. More specifically, depreciation is the difference between a vehicle's purchase price and its resale price.

Depreciation varies based on several factors, including the features of each vehicle: model, transmission, fuel consumption, new or old model, mileage, maintenance, etc.

A new car typically loses most of its value during the first few years after it leaves the assembly line. The depreciation is generally less significant over the years.

Therefore, buying a used car means you won’t lose a large chunk of your investment on a new vehicle. But even if the value decreases more gradually, your used vehicle’s value also depreciates.

Q.E.F 43D can help you protect the money you invested in your used vehicle by covering you against its depreciation.

In the event of a total loss, it allows you to be compensated based on the price you paid for your newly purchased used car.

To get a better understanding of how this coverage works, let’s imagine that you were involved in an accident which resulted in a total loss. You purchased the car for $12,000 two years ago. Its market value at the time of the accident is valued at $6,000.

If you didn’t add endorsement 43D, you would be compensated based on the vehicle’s market value at the time of the accident, i.e. $6,000. With endorsement 43D, you would get compensation calculated based on the price that you paid for your car, i.e. $12,000.

Don’t hesitate to ask your insurance broker for advice to help you better understand the coverages that are offered on the market and provide you with used vehicle coverage that is tailored to your needs.

Your insurance broker is there to help you prevent losses. Feel free to contact him or her!