Is Car Replacement Insurance Worth It?

Understanding Car Replacement Insurance In Manitoba: Is It Worth Your Investment?

Vehicle replacement insurance is like all insurance; you hope you’ll never have to use it, but if you do, you’ll be glad you have it. For many Manitobans, car replacement insurance – which protects the owners of new vehicles from depreciation – is absolutely worth the cost.

In this article, we’re going to cover what car replacement insurance is, who it can benefit, and why it’s more valuable in 2025 than it’s ever been before. Let’s dive in: 

What Is Car Replacement Insurance And How Does It Work?

Key Features Of Car Replacement Insurance

New car replacement coverage insures you for the value of your new vehicle at the time of purchase; the main feature is protection from depreciation. Here are the key features of MPI’s car replacement insurance, called New Vehicle Protection:

• Protects vehicles for their value at time of purchase; if MPI writes off your vehicle, you get the full value of the vehicle at time of purchase
• Factors in inflation through an inflation allowance to provide even more protection
• Protects brand-new and late model used vehicles (for example, if the newest models on the market are 2026, you can purchase New Vehicle Protection for 2026 and 2025 models)
• Protects vehicles for up to two years (two years for brand-new vehicles, protection until the vehicle is two years old for late model used vehicles)

Several items are not covered by New Vehicle Protection, including:

• GST
• Amounts still owed on trade-ins
• Amounts paid for warranties, insurance, or service contracts
• Rebates, cashbacks, and dealer incentives

Differences Between Autopac Coverage & Car Replacement Insurance

Autopac Basic Coverage covers a vehicle’s market value – after depreciation. This means that your auto insurance policy may not cover the full purchase value of your vehicle, so you may be unable to afford another new vehicle if yours gets written off. 

New Vehicle Protection helps ensure that you get the full value of your vehicle if it’s written off. 

Car Replacement Vs. Gap Insurance Vs. Collision Coverage: What’s The Difference?

When Gap Insurance Might Be Sufficient

Gap insurance is offered by dealerships and financing companies; it’s a type of insurance that serves to bridge the gap between what your insurer pays out and the remaining balance of your car loan. 

Here’s an example: You take out a $50,000 loan for a vehicle. You get into an accident, and the vehicle is written off – but MPI only pays out $42,000. Gap insurance would cover you for $8000 (the difference between the loan and what MPI paid out).

Gap insurance has one key advantage over New Vehicle Protection: It can cover used vehicles. It comes with one key disadvantage, however: It only covers the difference between what MPI covers and what’s left on your loan. Bought a car without a loan, or got a loan that’s less than the value that MPI pays out? Your gap insurance won’t help. 

When Car Replacement Insurance Offers Better Protection

Car replacement insurance offers better protection when you’re not taking out a loan to pay for your new vehicle, the loan you take out is for less than the value of the new vehicle, or you plan on paying off your loan aggressively.

Collision coverage only covers the market value of your vehicle; both vehicle replacement insurance and gap insurance offer additional protection.

Who Should Consider Car Replacement Insurance?

New Vehicle Owners: Benefits & Considerations

More than ever, new vehicle owners should consider getting car replacement insurance. New vehicles are more likely than ever to be written off after an accident – and write-offs are the exact scenario where vehicle replacement insurance comes in handy.

Write-offs are more common because vehicle parts are more expensive; even a single part can cost tens of thousands of dollars. Here’s why:

• More people are repairing their vehicles instead of purchasing new vehicles, increasing demand for parts and labour.
• Vehicles have become much more sophisticated, with sensors and other electronics built in; repairs and replacement parts are thus more complicated and more expensive.
• Electric vehicles are becoming more common; the high cost of battery replacement means auto insurers are more likely to write off electric vehicles.

Buying an electric vehicle? Car replacement insurance is often a good idea; the same goes for anyone buying a vehicle with a lot of sensors or other advanced features. These vehicles will often exceed the standard limit offered by Manitoba Public Insurance; if your vehicle is worth $70,000 or more, you should consider getting Excess Value Coverage in addition to your New Vehicle Protection coverage.

Pros And Cons Of Car Replacement Insurance

Situations Where It Pays Off

As discussed above, high-value, highly advanced, and electric vehicles are all good candidates for New Vehicle Protection. 

You should also consider getting car replacement insurance if your vehicle has a higher rate of depreciation than other vehicles; you can research depreciation with tools like CarEdge and Kelley Blue Book (though both are American), or by talking to your auto dealer.

People who drive a lot should also consider getting New Vehicle Protection; the more you drive, the faster your vehicle depreciates! 

When It May Not Be Necessary

Buying your car with a loan? If the cost of gap insurance is lower than the cost of New Vehicle Protection, then gap insurance might be the better choice. Don’t plan on driving your car very often? Your risk profile is lower, and you might not need vehicle replacement insurance.

How To Determine If Car Replacement Insurance Is Right For You

Speaking With An Insurance Broker

Every person’s finances are different – so are their vehicles and their driving habits. The best way to determine if new car replacement insurance is right for you is to speak to an insurance broker. They can break down what car replacement insurance covers in more detail and give you a car replacement insurance cost breakdown. 

Our insurance brokers can help you decide whether or not car replacement insurance is right for you. 

Making An Informed Decision About Car Replacement Insurance

Now that you know more about car replacement insurance coverage, what gap insurance covers, and the advantages and disadvantages of both, we hope you can make a more informed decision about whether or not to purchase car replacement insurance!