Originally Posted by
Arjon
We had a purchase work out nicely against the odds. When we bought our car new in mid-2020, we took out replacement insurance coverage for the first time. At well over $400 a year, it wasn't cheap, but it gave us some peace of mind even though we knew the insurance company expected, on average, to make a solid profit.
Well, not this time. Recently, our car was in a collision (no injuries whatsoever, thankfully). Fortuitously, this happened less than 2 months before the 5-year limit for the coverage to apply. So this week, we will pick up our replacement vehicle, the 2025 version of the same model, fully paid for by the insurance even though the price is now nearly 70% more than we paid 5 years ago. The payout worked out to roughly 3x what we would have received without this coverage.
To be clear, I'm not recommending replacement coverage. It's an individual decision. Buying it favors the insurer, and to benefit, our car had to be in a collision serious enough to write it off.