EQUIPMENT VALUES

Another welcomed alert from your claims professionals

According to our claims experts, a growing number of claims are turning up with an equipment’s stated value either over/under estimated compared to the current local market price.

What this means is that when you insure your truck/trailer for physical damage coverage, you are asked to provide a value for that piece of equipment (stated value). The insurance company does not determine that value, you do. However, if/when you have a need to use this coverage, this value is the maximum amount that the equipment is covered for in a total loss, but not necessarily the amount that will be paid out.

An experienced claims adjuster will take in consideration a number of factors to determine the value of a vehicle and the first on that list is what other equipment like it is selling for on the local open market. If you think your truck is worth $75,000 and list that amount as the stated value, but similar trucks are selling on the market for $62,000… you’re value is a bit high. Conversely, if your truck’s stated value is $55,000, but similar trucks are selling on the market for $62,000… you’re value is a bit low. Consider that a physical damage policy rate can be around 4% of the stated value (this rate varies). The difference between $75,000 and $62,000 is $13,000. $13,000 multiplied by a 4% rate is $520 extra (per truck) that you paid for that policy. The difference between $62,000 and $55,000 is $7,000 that will not be paid to you upon a total loss. If your value was at $62,000 your rate would have been $280 more in this instance. (Above figures are intended for illustration purposes only).
We understand that there might be some upgrades an extras that you feel make it worth more, so if you do have those upgrades maintain receipts for those items e.g., rims, new paint, specials kits and engines, etc. Regular maintenance does not increase the market value. So, before you give a stated value for your equipment, check your local markets to determine the value of the unit. The market value should be based on the zip code in which the vehicle is registered.

Your physical damage policy is normally an annual policy which means it cancels and renews on an annual basis. Your stated value should do the same. Make sure to make appropriate adjustments to the stated value each policy renewal to ensure the appropriate stated value.