Which models are eligible for Limited Depreciation Coverage?

Limited Depreciation Coverage is designed to provide a level of financial protection that reduces the depreciation factor in the case of a vehicle being written off or damaged beyond repair. Typically, this type of coverage is available for newer vehicles since they retain more of their value compared to older models.

The correct option specifies that the coverage is available for vehicles that are no older than the third model year from the current year. This means that to qualify for Limited Depreciation Coverage, a vehicle must be relatively new, ensuring that the policyholder receives a payout more closely aligned with the vehicle's market value at the time of a claim.

Vehicles that are older than three model years typically have a higher level of depreciation and therefore may not qualify for this type of coverage. As a result, buyers of older vehicles would generally rely on standard coverage without the benefits of limited depreciation. This ensures that the insurance company can manage risk effectively while providing appropriate coverage options based on the age and value of the vehicle.

In this context, the other choices do not align with the eligibility requirements of Limited Depreciation Coverage—some either suggest coverage for older models or do not account for vehicle age, which would not meet the necessary criteria for such protection.