Transport Topics recently published an article which confirmed what many of us in the industry have been suspecting for while now: used equipment values are on the rise (Used Trucks Become Scarce; Prices and Mileage Increase, Transport Topics Online). According to one quoted source, while motor carriers are continuing to seek low mileage vehicles, the availability of equipment has them purchasing equipment with 600,000 to 700,000 miles at prices that are up 15% from just a year ago. Another industry insider indicated that equipment prices are averaging $3,000 – $5,000 higher than last year.
The impact of increased values is multifaceted. On one hand, it’s great for individuals looking to sell their low mileage equipment, but it poses a purchasing challenge for individuals seeking to purchase the same. It also impacts individuals who have no plans to buy or sell equipment. Increased values can have an unfortunate impact on an individual whose equipment is insured on a stated value or scheduled vehicle physical damage policy.
Take for example a recent claim we encountered. Our client’s equipment was insured against physical damage losses on a stated value policy. In essence, the insurance company would pay either the stated value of the equipment or the Actual Cash Value at the time of loss, whichever is less. While our client’s stated equipment values where adequate a year ago, in today’s market they were significantly lower than the equipment’s current Actual Cash Value, the amount he would have to pay to purchasing a replacement piece of equipment with similar year, make and mileage. You can imagine his disappointment and frustration when he found himself having to pay (in addition to his deductible) an extra $5,000 to purchase equipment similar to what he had before the loss.
How can you prevent this from happening to you? Be sure to regularly check the value of your equipment in the marketplace. To learn more about valuing your equipment and the potential impact on premium, see our President’s Blog article addressing this topic from June, 2011 here. Websites such as www.truckpaper.com allow you to search by year, make, model, mileage and features to obtain a good baseline of current prices. If you find your current values are too low, call your insurance agent to have values increased. Still have questions about determining the actual cash value (ACV) of equipment for insurance? Feel free to call our office today at (800) 596-TRUCK (8782). At the Navigator Truck Insurance Agency we work hard to be accessible, helpful and result oriented.