Feb 02, 2024Protecting Your Property: The Importance of Insuring to Value and Building Ordinance or Law Coverages
Learn about protecting your property and the importance of insuring to value and building ordinance or law coverages.
Understand how your vehicle’s increased value affects your insurance. Learn more from the experts at Morris & Garritano.
With the enduring product and supply chain shortages, auto parts are increasingly harder to obtain, causing prices and service expenses to rise. JD Power reports current used vehicle values to be an average of 37% higher now than during this same time last year. Heavy equipment vehicles such as earthmovers and vocational trucks are also seeing a rise in value, as indicated in a recent report from Ritchie Bros. showing year-over-year value increases ranging from 8-31% in varying types and conditions of used trucks and movers.
Your auto insurance policy is intended to protect the value of your vehicle in the event of an accident or total loss. In most cases, your vehicle is valued at Actual Cash Value (ACV), which is the price a seller would be able to obtain for the vehicle upon selling it.
However, some insurance companies may elect to apply a Stated Value endorsement to the policy. In the event of an auto accident resulting in a total loss of the vehicle, this endorsement caps the maximum loss payment to the amount stated on the endorsement schedule. If the stated value is less than ACV, only the stated amount is paid. This means in the event of a total loss, you may be compensated less than the actual value of your car.
For this reason, the stated value of your vehicle is important to get right. Too high, and you’ll be paying more than warranted for your premium. Too low, and you may not be adequately compensated in the event of a total loss to your vehicle.
With the value of used vehicles on the rise, it’s recommended that you check the method of vehicle valuation on your policy. If you have vehicles subject to Stated Value, it’s important to recalculate the ACV of each affected vehicle and update the stated values in your policy. Keeping your policy up to date will ensure your vehicle’s value is protected and you receive adequate compensation if your vehicle is totaled.
There are several ways you can calculate the value of your vehicle. Use any of these tools and resources below:
Keep in mind that most of the online calculators are only going to provide an estimated value for the standard models of the vehicle in question. You will need to also consider the condition, mileage, special equipment, upgrades, engine, or major component rebuilds when determining your vehicle’s total value. Other value estimating options can include finding comparable vehicles for sale online and comparing prices or contacting a local dealer for new vehicle pricing and then applying a depreciation formula to that amount.
If you find you need to update your vehicle’s stated value, let your insurance provider know and get your policy adjusted! Protect the value of your assets and ensure proper compensation in the event of an accident.
If you determine the value of your stated value vehicle or equipment needs to be adjusted, please reach out to your M&G team to request the policy be amended.