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Is Vehicle Replacement Insurance Worth It In Manitoba?

September 27, 2021
Updated: November 8, 2022


If you’ve recently gotten a new vehicle you know just how exhilarating it can be– however it can also be a bit nerve-racking. Getting a new vehicle is a huge financial cost and one that we want to protect. This makes many new vehicle owners wonder if vehicle replacement insurance is worth it.

Vehicle Replacement Insurance exists to save you from the potentially significant financial loss that would occur if your automobile was written off. It allows you to rest easy knowing that if your vehicle were totaled, your insurance company would pay you enough money to purchase a new vehicle of the same make and model. Instead of you getting a fraction of what your vehicle is worth, leaving you carless while still being stuck paying loans to the bank. Yikes!

This is why we always recommend covering and protecting your assets. The truth is, an accident can happen at any time. The last thing you need to be stressed about when you’re in an accident is vehicle payments.

In this blog, we dive into all the nitty gritty details of vehicle replacement insurance (also referred to as car replacement insurance) so that you can feel confident in deciding if this replacement insurance is right for you.

Ready to jump right into getting a quote? Let’s do it– get a quote today!

What Is Vehicle Replacement Insurance?

Vehicle Replacement Insurance is a type of supplemental insurance for new and used vehicles. With this coverage in place, if your vehicle is totaled, you can rest easy knowing your insurance company will pay you enough money to get another vehicle of the same make and model. Instead of cutting you a cheque for the value of your actual vehicle, which, at that point, will have depreciated significantly! 

At Winnipeg Insurance Brokers Ltd., we offer two types of vehicle replacement insurance: New Car Protection from Manitoba Public Insurance, which covers your vehicle for up to two years for depreciation, and Vehicle Replacement Insurance from Optiom Inc. The focus of this article will be on the products provided by Optiom Inc.

Optiom’s insurance protects the investment you’ve put into your vehicle by paying you the difference between the market value of your vehicle at the time of a loss and the Manufacturer Suggested Retail Price (MSRP) of a brand new, equivalent replacement vehicle. And, if you have to pay a deductible on your claim after your vehicle is written off, it may also reimburse you for that! (Up to a certain dollar amount.)

Do I Need Vehicle Replacement Insurance If I Bought A Brand New Vehicle?

Vehicle replacement insurance is not required, but it is recommended, especially if you bought a new vehicle.

Did you know that within a year of having a vehicle, its value will likely depreciate by up to 20%! Factor in a fender bender, damage, or vandalism, and all of a sudden, the car you bought at a brand-new price point is worth a lot less. Even though vehicle replacement insurance is never required, it is the only way to protect the value of your new vehicle.

Is Vehicle Replacement Insurance Standard or Mandatory?

No, Vehicle Replacement Insurance is not standard or mandatory. It’s simply a top up option you can choose to add your primary insurance policy. (Your primary insurance policy is the one you secure, through Manitoba Public Insurance, which makes it possible for you to repair your vehicle and make it drivable again following an accident.)

How Does Vehicle Replacement Insurance Work?

Vehicle Replacement Insurance works in two ways:

  1. It removes any financial burden on you if your insurance settlement pays you less than the amount you owe to your financial institution on your car loan.
  2. It fills the gap between the MSRP or black book value of your vehicle and the actual cash value of your original vehicle at the time when it’s written off.

What’s The Difference Between Collision Insurance, Gap Insurance, And Vehicle Replacement Insurance?

Collision Insurance

Collision Insurance covers the cost of repairing your damaged or broken vehicle, to make it drivable again after an accident. You would use this insurance when your vehicle is damaged, but not totaled.

Gap Insurance

Gap Insurance covers the gap between your primary insurer’s pay out and the loan amount you owe. For example, if you paid $20,000 for your vehicle, but it was damaged beyond repair in an accident two years later, your insurer might only give you $10,000 due to depreciation. If you still had $16,000 left to pay on your vehicle loan, without Gap Insurance, you would be out that extra $6,000.

Vehicle Replacement Insurance

Vehicle Replacement Insurance covers the financial gap a totaled vehicle leaves behind in the way that Gap Insurance does. But, it also makes sure that, if your vehicle is beyond repair and written off, you receive enough money to buy a brand new version of that same vehicle.

How Much Does Vehicle Replacement Insurance Cost?

Vehicle Replacement Insurance costs approximately 1% of your purchase value. So, if you paid $20,000 for your vehicle, you could expect this insurance to cost you less than $25/month. This is a very fair price when you consider the Vehicle Replacement Insurance protects your total investment on your vehicle!

Who Can Get Vehicle Replacement Insurance?

Every Manitoban who owns a new or used vehicle up to 10 years old qualifies for Vehicle Replacement Insurance! So as long as you have full collision and comprehensive primary auto insurance in place, you can secure this coverage for your new vehicle—regardless of whether you’re new to Canada, new to driving, or you have a poor driving abstract.

Does It Matter If My Vehicle Is New Or Older?

No, it doesn’t matter if you have a new or an older vehicle, as long it is less than 10 years old. But, the age of your vehicle does change your protection a bit.

  • New Vehicles: Protection is valid for up to 7 years.
  • Used Vehicles: Protection is valid up to 5 years, depending on the model year.

How Can I Find Out If My Vehicle Qualifies?

Typically, if your vehicle is less than 10 years old, you will qualify! To make sure or get started, speak with our Insurance Consultants! They will be more than happy to review everything with you.

So, Is Vehicle Replacement Insurance Worth It?

Yes, 100%! With Vehicle Replacement Insurance, you’re paying just a little extra each month in order to ensure that, if your vehicle is stolen or damaged beyond repair, you won’t lose money paying off your remaining vehicle loan or buying a whole new vehicle. Even if the value of your original vehicle has depreciated.

How To Secure Your Own Vehicle Replacement Insurance

Vehicle replacement insurance is always a good idea. It helps you protect one of the most expensive (and useful!) assets you’ll purchase. Accidents can happen at any time and to anyone!

You’ve worked hard to afford your vehicle. It’s important you protect your investment so that, in the event of an accident, you can replace the cost of the vehicle and not need additional out-of-pocket funds.

If you agree that Vehicle Replacement Insurance sounds like a fantastic idea, or you’re just interested in learning more, get in touch with us! We’ll give you a commitment-free quote and, if you so choose, help you secure your coverage.

What are you waiting for?