The Hidden Value of Physical Damage Coverage

Occasionally in speaking with a prospective client I am told that they do not carry physical damage on their equipment.  When I ask “Why?” the answer I usually get is that the equipment is paid for, so it saves the company money not to insure it.

 

I disagree and let me tell you why.  When you remove the physical damage coverage for a piece of equipment, you are also removing the insurance against the hidden costs of an accident.  True you may pay less in your annual insurance premiums, but in the event of an accident, the financial implications are much bigger than you might expect.

 

Here is an example of how not carrying physical damage insurance can negatively impact the company’s bottom line.

 

1.)    Towing Bills: Most physical damage policies include a provision to pay for all or part of the towing expense to move the damaged equipment to the nearest repair facility or salvage yard in the event of an accident.  Towing is a huge expense, averaging between $5,000 and $10,000.  I have even seen tow bills as high as $35,000!

2.)    Debris Removal Expenses:  Most physical damage policies include a provision to pay up to a specified amount to clean up debris due to a covered loss.  Again debris removal can be a costly expense; one that is difficult to quantify before the loss occurs.

3.)    Replacing Equipment:  If the uninsured tractor or trailer is totaled in a loss there is nothing to help set you up with your replacement piece of equipment.  If your equipment is worth $5,000 and you have a $1,000 deductible, in the event of a total loss you can still expect to get $4,000 back to put toward the down payment on your next tractor or trailer.  A $5,000 limit will have an estimated premium of about $350 per year. 

4.)    Temporary Replacements: If you choose to purchase rental reimbursement or downtime coverage with your physical damage policy (and some policies include this coverage automatically) you are providing yourself a little extra to help offset the costs to rent a replacement tractor while yours is in the shop being repaired.  If a suitable replacement is not available the downtime can provide you with a little supplemental income while you are laid up. 

 

As you can see Physical Damage coverage is much broader than just insuring the vehicle itself.  By purchasing Physical Damage coverage you are insuring yourself against the additional hidden costs associated with an accident.   

 

Are you ready to add physical damage insurance to your policy?  Do you have questions about your existing physical damage policy or wish to get a quote?  Call us today at (800) 596-TRUCK (8782.)  All of us at the Navigator Truck Insurance Agency work hard at being accessible, helpful and result oriented. 

 

Until next month,

 

Jeffery A. Moss, ARM

President

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