Optiom Prime: Turbocharging Your Auto Insurance
Imagine this: you buy a brand-new vehicle for $40,000 and take it home. You and your family use this vehicle daily for over four years, and then it gets in an accident. To your dismay, your vehicle is totalled. Luckily, you have auto insurance coverage that will reimburse you. Right?
Not exactly. Yes, your auto insurance carrier may write you a small cheque for the vehicle that was written-off, but only as much as it was worth (the depreciated value) at the time of the accident.
That’s where Optiom Prime comes in. Optiom Prime will reimburse you for what you paid, unlike your average auto insurance policy. Here’s how it works.
What is Optiom Prime?
If you bought your vehicle new, Optiom Prime will reimburse your written-off vehicle for the difference between your primary insurance carrier’s market value payout and the amount the vehicle was worth when you purchased it for up to seven years after the fact. If you bought your vehicle used, Optiom Prime will reimburse you for up to five years after purchased. This includes any HST tacked on.
Is it worth the money to buy it? If you believe that you currently owe more money on a vehicle than your auto policy would pay out in the event of a claim, Optiom is worth the buy. Optiom is a little like guaranteed auto protection. It reimburses a vehicle owner if the auto insurance payout is less than the outstanding lease/loan amount. This is especially important for those people who have put no money down for their vehicle and opted for a long payoff period.
In a way, Optiom is similar to gap insurance.
Why You Should Purchase Gap Insurance
Gap insurance in Canada is also sometimes referred to as guaranteed auto protection. It reimburses a vehicle owner if the auto insurance payout is less than the outstanding lease/loan amount. Gap insurance is especially important for those people who have put no money down for their vehicle and opted for a long payoff period.
What does gap insurance cover? How does gap insurance work? It might be easier explained with an example.
Imagine this scenario: you own a vehicle that has been completely wrecked and written off as a total loss. You are then owed the full value of that current vehicle. As is the case with any average vehicle, this car is now worth 20% less than what it was worth a year ago when you purchased it. If your collision insurance pays out $18,000 but you owe a total loan of $20,000, you’re in the hole for that remaining shortfall of $2,000.
If you had gap insurance, your gap payout would be that $2,000 shortfall. This means you won’t be left on the hook if your vehicle was written off in a wreck or collision.
Gap insurance is great, but it provides coverage only for the difference between the loan amount and actual cash value or “ACV” of your vehicle in the event of a loss. With Optiom, you purchase an insured limit that is similar to the purchase price of your vehicle. Even years later, you can still receive your purchase price back should you suffer a loss.
Market Value Vs Optiom Prime Payout
Put simply, take your $40,000 vehicle. This was the market value at the time it was purchased. Over time, that value changes – regardless of how much you paid initially. At the time of loss, your vehicle has about $18,000 of market value. Optiom Prime, however, will value your vehicle at the original purchase price of $40,000 and would offset the loss by paying you the $22,000 remaining.
Because cars lose value overtime. You and your family likely treasure your vehicle, and you’ve used it plenty over the years. It’s seen a lot of soccer practices, trips to and from work and school, roadtrips, and so on. Unfortunately, as all things do, your vehicle will age and wear and with newer models on the market, it just won’t be worth the same as it was when you bought it.
Due to this, many auto insurance policyholders find themselves “underwater.” When their vehicle is written off in an accident, they won’t receive a settlement in line with the vehicle’s current financed value. Instead, they will only get the current market value – which can end up costing the policy holder additional cash out of pocket in the event of a loss.
Optiom Prime coverage premiums are locked-in when you purchase a policy, and there is a guarantee for no re-qualifications (for your vehicle) or increases as long as you maintain your insurance. You will continue to be eligible for coverage for up to 7 years for newly purchased vehicles and up to 5 years for used ones.
Your primary auto insurance carrier will pay the market value of your car as part of the mandatory comprehensive and collision coverage you would need to carry. Optiom Prime is an additional policy, although not mandatory, it will pay the difference to ensure you get the amount you paid if your vehicle is written off in an accident.
If you currently have lease or loan obligations and your vehicle is a total loss, Optiom Prime will contribute to that too. Like other endorsements, Optiom Prime is an additional purchase that supplements your existing insurance. You may also add optional coverage (for an additional premium) for new and used vehicles.
Optiom vs Gap Insurance
Option Prime and gap insurance sound very similar on paper, but Optiom is far superior in terms of what it can cover. For example, gap insurance can provide coverage if your mini van has a loan that is greater than its value due to depreciation as a result of high mileage and interior damage done by your kids. Optiom Prime ensures you get your purchase price in the event of a loss, and not just the difference between the loan amount and ACV of your mini van.
Is gap insurance worth it?
It depends. If you owe more than what your vehicle is worth at any point, gap insurance is likely worth your money. This is especially true if you have put down anything less than 20% and having gap insurance for the first few years that you own your car is probably a good idea. In the event that your car is ruined, you will not have to pay out-of-pocket for the difference between your actual cash value and how much you owe to your lender.
Optiom goes above and beyond as it ensures the purchase price – not just the difference between the actual cash value of your mini van and your standing loan amount. While gap insurance can certainly help, Optiom helps you acquire a far more reasonable payout.
How much does gap insurance cost in Ontario?
Typically, gap insurance comes relatively inexpensive and is purchased when you buy your new vehicle from the dealership. Your costs will vary according to the typical factors such as purchase price of the vehicle and expected usage of the vehicle.
Optiom Prime, on the other hand, may cost between $25 and $35 per month and covers the purchase price of your vehicle, not just the remaining difference between the depreciated value of your vehicle and your current loan.
Should I buy gap insurance from a dealer?
Some dealers may offer the chance to purchase gap insurance when you buy or lease a new vehicle, but it might pay to assess whether the price is worth it next to what an insurance company may ask for traditionally. Moreover, an insurance broker will know your circumstances and your needs. In the end, it’s your decision, but don’t leap to buy if you have not already checked out all your options.
Optiom Prime is special, and Excalibur Insurance is one of very few insurance brokers in Ontario that offers this protection if your vehicle is written off in a collision or accident. You can request a quote with Excalibur and start protecting your family budget today.
Partial Loss Deductible Reimbursement Benefit
If you need to pay out for a deductible on your primary auto insurance, Optiom Prime can reimburse you if there is a loss where your vehicle is repairable. Optiom Prime can pay up to $500 of your deductible if your vehicle can be repaired following an insured loss.
Rental Vehicle Reimbursement Benefit
If you have rental vehicle coverage provided by your primary auto insurance provider which ends before your vehicle can be replaced or repaired, Optiom Prime can reimburse you for the continual rental vehicle costs until the repairs/replacement is complete.
Key Fob Reimbursement Benefit
Optiom Prime can reimburse you the cost to replace your vehicle’s key fob if you lost it. This includes up to $500 if vehicle’s keys are stolen or lost.
Diminished Vehicle Value Benefit
If you are involved in a no-fault accident, your Optiom Prime will pay a fixed amount if the necessary repairs exceed over 25% of the declared value of the vehicle (when the accident took place.) The vehicle’s value at the inception of your policy will determine the fixed payout amount (ex: if the vehicle value is between $5,000-$10,000, the guaranteed payout will be $1,000, and so on.)
The Bottom Line
Sometimes your basic auto insurance just isn’t enough. Ontario requires that drivers purchase a base minimum of liability per provincial requirements but that still leaves many vehicle owners underinsured when their cars and trucks suffer from depreciation over the years. If a no-fault accident was to take place where your vehicle was written-off, what would you do? Gap insurance is great, but Optiom Prime can protect your family’s prized investment when you need it most.
Depreciation can decrease your vehicle’s value up to 20% in the first year and 15% per year following. That can be a huge financial impact without having the right coverage. Optiom can mend the gap and give you and your family the peace of mind you deserve.
Optiom Prime is underwritten by underwriters at Lloyd’s and administered by Optiom Prime Inc.