What else do I need to know about auto insurance?
New Car Replacement/New Car Pledge
Many insurance companies offer the option to purchase these additional coverages that add an additional amount to the value of your vehicle in a total loss, which can help with replacing your vehicle with a newer vehicle. Also, you are often issued this amount as a payment so you can ultimately choose how you want to use those funds, including for other non-replacement related things. Here is an example:
Your 2024 Hyundai Palisade Limited is totaled and the value of the vehicle is determined to be $34,100 after your deductible is applied and any depreciation, and other applicable costs. Then you also have a new car replacement coverage which adds 10% to the value of your vehicle ($3,410) bringing your total payment up to:
$37,510You find a great replacement vehicle for $35,750
You still keep the remaining $1,760!
Actual Cash Value (ACV) vs. Stated Value vs. Guaranteed Value
Do you understand how to calculate the ACV value of your vehicle? Kelley Blue Book (KBB) is a great place to start, but market value of your vehicle can be determined by many other factors that may or may not be considered through KBB, such as:
Current demand
Replacement Cost
Depreciation
Age & Mileage
Condition at time of the loss
History (ownership, other claims and prior accidents)
In a general claim scenario your claim value will be determined by starting with the current value of your vehicle, subtracting depreciation and deductible, then either adding or subtracting other factors such as any permanently attached equipment or subtracting other relevant costs, to get your net value. Can I negotiate this net value? Yes! Having a quality relationship with your insurance agent can help, too. Your insurance agent can help negotiate with the adjuster on the net value of your vehicle, often times getting you a higher payment than initially offered.
What is the difference between ACV vs Stated Value vs Agreed Value though?
Actual Cash Value: Net value of your vehicle after considering the above items (current demand, depreciation, etc.)
Stated Value: Stated value in the amount YOU assign to your vehicle, and if the carrier agrees then the net result will be, in the event of a claim, especially a total loss, you will either receive the lesser of either the stated value, or the ACV. This can usually be a benefit if you are trying to use your vehicle for work purposes and want to insure the vehicle for less than ACV in exchange for a discount on the cost of insurance. The risk here is that you might get less than you want or need in the event of a total loss.
Agreed Value: This is a guaranteed amount you will get paid out, less deductible, in the event of a total loss. This is usually beneficial for investors who want to ensure they capture their projected appreciation of the vehicle. For example, the ACV on your vehicle in general might be $80,000 but you might be able to get an Agreed value on your insurance policy for $90,000. This coverage is often associated with mileage restrictions and other limiting factors that could result in a denied claim if an insurance company determines you have not been acting in accordance with your agreements though. Granted, an insurance company could reserve the right to deny a claim under any of the above conditions.
Original Equipment Manufacturer (OEM) guaranteed parts
If you want to avoid aftermarket parts, especially where they might be visually different or perform differently from the OEM, we recommend adding OEM coverage, if available, to your auto policy. For a small cost this will guarantee the repair facility use genuine OEM parts to repair your vehicle in the event of a covered claim.
Rideshare coverage
If you are planning to use your vehicle for work driving for Uber, Lyft, or some other ridesharing company you might be required to add this coverage to your auto policy. This covers you in the event of a work-related accident or incident while you are performing this type of work.
Commercial vs Personal Auto Insurance
In general, a personal auto insurance policy does NOT cover you for using your vehicle for work purposes. This means from the time you are considered working, until the time you are considered not working, you are not covered for using your vehicle unless you have commercial coverage. Do you need to use your vehicle for both work and personal? Let us know and we can help!
Uninsured Motorist PD without collision
This coverage only applies to your vehicle in the event of damage caused by an uninsured/underinsured motorist, you might be required to identify the uninsured/underinsured motorist, and you might only be able to purchase this coverage if you do not carry collision coverage on your vehicle. In general, we would recommend instead carrying UM coverage in order to ensure that you have protection in place regardless of whether you are personally injured, or your vehicle is damaged, and likely both will occur.