After setting a destination and start navigation and my journey, if a new incident occurs and slows/blocks the route, is Google Navigation able to update the route and find a faster alternative automatically before I get near?
As far as I know and based on my testings with the same concern, I came to the conclusion that it doesn't update the route based on traffic or any other reasons.
I even took an alternative route that I knew it was faster in rush hour conditions and the navigator was still trying to reroute me back to its original route, considering that faster due to speed limits.
Google doesn't do this automatically, but you can ask it to do it.
In traffic view, there is a button in the lower right hand corner (looks like 2 diverging arrows (one dashed) both leading to a destination pin).
In turn by turn view, press Menu then Routes and Alternatives, and the same alternate routes button will show up second from the right.
However, Google Navigation will often not show you a route that avoids the traffic. When that happens, start driving an alternate route and Google Navigation will eventually get the point, although you may have to listen to a lot of "turn around" alerts before it does.
According to this post on the official Google blog, Navigation should have this feature but like slybloty said I have never noticed any evidence of this happening
In the new Google Maps app we finally have this feature. From this post on the official Google blog:
Enhanced navigation: In addition to current traffic conditions, we’ve added two new features to help you navigate around traffic. You can now see reports of problems on the road that you can tap to see incident details. While on the road, Google Maps will also alert you if a better route becomes available and reroute you to your destination faster. This feature is available only on Android and is coming soon to iOS.
Once you are in the "navigation" mode, you will see a status bar on the bottom that gives you an estimate of time remaining to your destination. The text of the time remaining changes color based on the traffic situation. The colors correspond to the former colored traffic light dot. If the words are red, that means there is some serious traffic on your route. Yellow indicates areas of slowed traffic. Green indicates that there are no anticipated delays.