Recently I have noticed a trend in the value of used equipment. Rather than declining, as in recent years, I have been seeing evidence that values are on the rise. This can lead to an unfortunate situation in the event of a claim when a client learns that a tractor or trailer that has been totaled must now be replaced and was underinsured. In the case of a Stated Value policy (where the value of each piece of equipment is stated on the policy) the client will not receive the Actual Cash Value (ACV) instead the policy requires the insured be paid the Actual Cash Value (ACV) of the equipment up to the stated amount on the policy, less any applicable deductible.
How can you make certain you receive the full value for your equipment? First, determine your equipment’s Actual Cash Value (ACV.) To do this you can talk to a dealer or visit websites such as www.truckpaper.com to find like makes and models with similar options and mileage. Once you have established the ACV, call your insurance agent to find out the value currently listed on your policy. If you learn that you have over or under valued any of the equipment request your policy be modified to reflect the correct values. An endorsement will be issued and you will be at ease knowing you are adequately covered.
I know some of you are thinking, “How much is this going to cost me?” I think you’ll be surprised to find that these changes, compared to the economic risk of underinsuring your equipment, are very affordable. As an example, take a $35,000 tractor that you learn is now worth $40,000. The estimated change in premium is $150 per year ($0.03 per $1.00 of value.) The additional $5,000 paid to you by the insurance company at the time of a total loss would be very much worth the additional $12.50 per month.
Were you aware that used equipment values are increasing? Can you afford to self-insure the undervalued equipment? Call our office today at (800) 596-TRUCK (8782) if you have any questions. At the Navigator Truck Insurance Agency we work hard to be accessible, helpful and result oriented.
Until next month,
Jeffery A. Moss, ARM
President