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REPLACEMENT INSURANCE OR REPLACEMENT COST ENDORSEMENT

QPF No. 5 replacement insurance, commonly known, wrongly, as replacement cost insurance, protects you against depreciation of the value of your vehicle in the event of theft or accident. You must have an auto insurance policy to purchase replacement insurance. In the event of a total loss or theft, it covers the replacement of your vehicle by a new vehicle from the current year. In the event of partial loss, it covers the replacement of damaged parts by parts from the manufacturer. That means it protects you against the depreciation of your new vehicle, which normally loses up to 25% of its value in the first year, and this coverage lasts for up to 7 years. To learn more about the differences between replacement insurance and the replacement cost endorsement, visit this page.

Replacement Insurance - Online Quote.

Replacement insurance for a used car

QPF No. 5 replacement insurance can also offer you protection against depreciation for your used vehicle. If you bought your used vehicle from an individual or a dealership, or even if you bought a new vehicle more than 120 days before, you can purchase replacement insurance. You must have an auto insurance policy beforehand. In the case of a total loss or theft, the replacement insurance policy will then cover an indexed value of the insured vehicle, which may vary depending on the QPF No. 5 policy. In that way, it protects you against the depreciation of your used vehicle for a period of up to 7 years.

The advantages of buying your replacement insurance policy from an insurance broker rather than a dealer

It is possible to buy replacement insurance from a dealership, but you should know that you risk paying much more than from an insurance broker. On average, it’s $675 more, according to an AMF report published in 2014. With an insurance broker, you will also benefit from greater flexibility in the event of a claim. Several contracts sold by dealers require you to repurchase your vehicle from the same dealership, even if it means paying top dollar if no promotion is offered at that time on the model of your choice. The contracts offered by J. Gérard Fortin allow you to choose the dealer and the brand. That gives you plenty of room to negotiate and even change brands.

Before purchasing an replacement insurance policy from your dealership, call your expert broker at J. Gérard Fortin or fill out a request for an online quote. You could save big while enjoying protection that better meets your needs.

Replacement Insurance - Online Quote.

QUESTIONS TO ASK YOUR DEALER

Information to obtain in writing from the dealership in order to compare their quote with your broker's:

How long is my replacement insurance for?

What is the duration of my car financing?

What is the monthly premium (including the 9% tax on auto insurance)?

At the end of my car financing contract, how much will the replacement insurance cost me?

The dealer must provide the customer with a "Distribution Guide", which describes the clauses of the replacement insurance it offers, since the dealer is not a certified insurance representative.

WHY TAKE OUT REPLACEMENT INSURANCE THROUGH A BROKER?

Why take out replacement insurance with my broker and not with the dealer?

* With option 2 (claim settlement), you have the freedom to select the vehicle of your choice (purchase, lease, new or used) at the dealership of your choice, based on the established replacement value.
A broker offers the most competitive replacement insurance premium on the market.
Your broker will be the only party you need to contact in the event of a loss.
A broker is a licensed insurance professional.

POINTS TO REMEMBER REGARDING THE AMF WARNING

Points to remember regarding the warnings in the "Distribution Guide" for dealers (page 1):

* Point #4: If you have a debt on a vehicle you trade in or on a vehicle that is written off, it is not covered by the replacement insurance for your new vehicle. A dealer may make this promise to cover your debt in order to convince you to sign with them. This practice is illegal.
* Point #5: The financing of your vehicle is independent of your QPF No. 5. The dealership cannot force you to take out replacement insurance on the pretext that your car financing depends on it.
* Point #7: The dealership must inform you of the remuneration they receive for the sale of the replacement insurance when it is more than 30% of its cost. Ask the sales manager for more information!
* These are three of the ten points that led the Autorité des marchés financiers to issue fines totaling $117,500 to nine car dealerships in Quebec on February ;16, 2015.

WHY REPLACEMENT INSURANCE (QPF NO. 5) IS MORE ADVANTAGEOUS THAN REPLACEMENT COST INSURANCE (QEF NO. 43)?

Guaranteed contract

Replacement insurance is guaranteed for the duration of the term, regardless of the frequency of partial loss claims. Replacement cost insurance cannot be guaranteed by the insurer. At any renewal, if there is a change in the risk represented by the insured, the insurer reserves the right to maintain or not to renew the replacement cost insurance.

Guaranteed premium

The confirmed replacement insurance premium is guaranteed for the duration of the term. The replacement cost insurance premium is not guaranteed and is subject to increases upon renewal, which may be considerable. Depending on the risk that the insured represents, replacement cost insurance can ultimately cost more than replacement insurance.

Reimbursement of the deductible

With replacement insurance, we reimburse the deductible paid by the insured for the loss: up to $250 in the event of a partial loss and up to $2,500 for a total loss.

Courtesy vehicle

Replacement insurance guarantees reimbursement of costs for a courtesy vehicle from the first day, whether or not the customer has the QEF No. 20 endorsement (provided that the loss is covered by the primary insurer). The amounts covered are up to $75 per day and $2,250 in total. * We offer replacement with a similar vehicle and the QEF No. 20 endorsement is always the primary one.

New vehicle of the current year

In the event of the total loss of your purchased or leased new vehicle, replacement insurance will establish the replacement value with a new vehicle from the current year, compensating you for the difference between the value of the new vehicle in the current year and compensation paid by the primary insurer. Replacement cost insurance guarantees you a new vehicle, but it can be from the previous year.

New original parts from the manufacturer, including windows

For a vehicle purchased new, replacement insurance guarantees the manufacturer’s new, original parts, including the windows. We will pay the difference between the value of the original new part from the manufacturer and the value of the part on the day of the loss. Replacement cost insurance cannot guarantee original new windows from the manufacturer.

Contract duration up to 84 months (7 years)

Clients can purchase replacement insurance for a maximum period of 84 months. Replacement cost insurance can be offered for 60 months (and as an accommodation, the following months to complete the annual term of insurance, so 71 months in total).

BROKER OR DEALER?

QPF No. 5 replacement insurance

The dealership will most likely offer you replacement insurance when selling you your vehicle. Should you wait and buy it from your insurance broker instead? Here is a comparison table that will help make it clear.

Broker	Dealer
Less expensive The insurance will cost you on average $675 less with your broker, according to an AMF report published in 2014.	More expensive On average $675 more, according to an AMF report.
Freedom to choose your brand and dealer The insurance offered by your dealer allows you to select the manufacturer and the dealer of your choice for your replacement vehicle. That means you can negotiate freely and choose any vehicle on the market.	Obligation to buy from the same dealer Several contracts offered at dealerships require you to buy your replacement vehicle from the same dealer, even if it means paying top dollar: you have no choice.
Insurance professional Your broker is an insurance professional whose practice is regulated by the authorities. The broker must adhere to a code of ethics and a set of standards and laws that govern the field.	Car sales professional Your dealer is a car sales professional. No one entrusts their dental care to their plumber. Why take a risk by buying your insurance from the dealership?
Claims A single insurer involved and a single claim file.	Claims If two insurers are involved, there will be two claim files. The process may take longer. The primary insurer (QPF No. 1) must first compensate the insured based on the depreciated value. Once this process is completed, the QPF No. 5 insurer will cover the difference between this depreciated value and the replacement value.
Protection of the public All damage insurance representatives are certified professionals, supervised by the ChAD and subject to the Code of ethics of damage insurance representatives, and to the Act respecting the distribution of financial products and services and its regulations. In the event of fraud, the insured can turn to the Autorité des marchés financiers’ financial services compensation fund.	Protection of the public When QPF No. 5 is sold by a car dealership, the ChAD has no jurisdiction since the product is not distributed by a certified representative. Only the relevant sections of the Act respecting the distribution of financial products and services concerning distribution without a representative apply. In addition, in the event of fraud, the insured is not eligible for the Autorité des marchés financiers’ financial services compensation fund because dealers are not governed by the Act respecting the distribution of financial products and services.

DIFFERENCES BETWEEN THE REPLACEMENT COST ENDORSEMENT AND REPLACEMENT INSURANCE FOR YOUR MOTOR VEHICLE

QEF No. 43, known as the replacement cost endorsement, and QPF No. 5, replacement insurance, both protect you against depreciation in the value of your vehicle. The table below shows you the main differences between them.

Your broker at J. Gérard Fortin et Associés is there to answer your questions and help you weigh the pros and cons. Don’t hesitate to call us at 514-729-6001 or write to us.

REPLACEMENT INSURANCE
(QPF NO. 5)

REPLACEMENT COST INSURANCE
(QEF NO. 43 ENDORSEMENT)

Purchase

Offered by a damage insurance representative or the car dealership.
Can be purchased at any time.

Purchase

Offered only by damage insurance representatives.
Must be purchased no later than 3 months after purchasing a new vehicle.

Cost of the premium

Fixed, depending on the value of the vehicle.
If included in the monthly premium, interest applies.
Important: In 2015, the average premium was $1,832 when sold through a dealer and $1,107 when sold through an agent or broker. This large difference of $725 (or 66%) demonstrates the importance of shopping around.

(Source: Autorité des marchés financiers, 2015 Annual Report on Financial Institutions, pp. 251 and 252.)

Cost of the premium

According to the percentage of the premium.
Possible to spread it out over 12 months without interest.
The premium may increase over the years, especially after 24 months.
You can waive the endorsement at any time.

Term

Choice from 1 to 8 years.

Term

The insured decides at each renewal whether to keep the endorsement, for a maximum period of 4 to 5 years.

Vehicle type

Applies to new and used vehicles as well as ATVs, snowmobiles and high-end vehicles.
Did you know?
Vehicle equipment and accessories added by the insured over time are automatically protected at replacement value if the insured has taken out the QEF No. 43 endorsement.

Vehicle type

Applies to new vehicles; some options for used vehicles.
Did you know?
Vehicle equipment and accessories must appear in the purchase or lease contract to be protected by replacement insurance. Otherwise, they will be compensated according to their depreciated value by the QPF No. 1 insurer.

In the event of partial loss

Damaged parts replaced by new original parts, up to the amount determined in the contract, if not repairable.

In the event of partial loss

Damaged parts replaced with new original parts if the cost of repair exceeds the cost of new parts.

Deductible

No deductible payable in the event of partial loss up to a maximum of $250 per event.
No deductible for a total loss up to a maximum of $2,500.

Deductible

You will have to pay your deductible if it applies.

In the event of total loss for a new car

Replaced by a new vehicle of equal or greater value from the designated dealer, or
Payment of the indemnity and replacement through the merchant of your choice, depending on the option chosen at the time of purchase.
Note: A client who replaces the vehicle with another one of higher value will have to pay the difference.

In the event of total loss

Replaced by a new or used vehicle of equal, lower or greater value from the dealer of your choice, or
Reimbursement of the indemnity without replacement of the vehicle, depending on the client’s decision at the time of the claim.
Note: A client who replaces the vehicle with another one of higher value will have to pay the difference.

Rental car after the accident

Reimbursement of rental costs that are not compensated by the insurer of the auto insurance policy (QPF No. 1) while the vehicle is being repaired. Limitation on the amount according to the warranty or the contract.
The QPF No. 1 insurer will reimburse the rental costs if the insured has taken out QEF No. 20 or is not responsible for the accident.

Rental car after the accident

Reimbursement of costs only if the insured is not responsible for the damage or if the insured has taken out the QEF No. 20 endorsement, which gives the right to a replacement vehicle.

Claims

The process may take longer since the insurer of the auto insurance policy (QPF No. 1) must first settle the claim. Only then can the replacement insurance insurer (QPF No. 5) compensate for the difference with the replacement value.

Claims

As the replacement cost endorsement (QEF No. 43) is an option included in the auto insurance policy (QPF No. 1), the claim process is simple.

If purchased from a dealer

In the event of fraud, the insured is not eligible for the Autorité des marchés financiers’ compensation fund, since the dealer is not a certified member of the Chambre de l'assurance de dommages.
If you wish to cancel the replacement insurance (QPF No. 5), your dealer will tell you that you cannot have your money immediately because they have integrated it into your vehicle financing. You will end up paying interest for nothing.

Source: Chambre de l’assurance de dommages

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Questions? Contact a broker at 514.729.6001 or write to us.

SIX FACTORS THAT INFLUENCE YOUR PREMIUM

All of the factors below can influence your auto insurance premium. Talk to one of our agents about how you can reduce your costs.
1. Vehicle type
2. Vehicle use (personal, business or a mixture of both)
3. Where you live (neighbourhood, city) as well as where you drive
4. Driver profile (age, gender, driving experience, etc.)
5. Coverage selected
6. Your credit rating