$18,000 replacement cost?

I saw that ad on craigslist maybe 2 months ago when I was looking for a car, and it has been on eBay for a few weeks. He’s getting divorced and says he can’t put the wife up for sale, but maybe she’s less expensive or easier to sell than the car, and then he could keep the MG.

My insurance company (State Farm) required me to use their appraiser for a replacement value when I first bought it, $18,500, so mine is insured for that.  Guess this guy on ebay really took it to heart as the selling value too.

Montie: I carry State Farm on our house, my wife’s Taurus and my old Ford Ranger, but our agent (we’ve been with him since 1978) said they wouldn’t write coverage on a kit car. Tried to convince him that the Lafer isn’t a kit, but couldn’t. Ended up going with Hagerty, but don’t really know what I’d get if the Lafer were stolen or totaled.

Haggerty has stated value insurance. If the car is totaled you get a check for the full value you have it insured for. Full coverage liability and comprensive, under and uninsured motorist as well same as any other vehicle. Even roadside assistance and towing is included. I have 3 cars wth them. You tell them a reasonable value you want the car insurred for and you get a quote. As long as the car isn’t your primary or secondary mode of transportation they really don’t care how many miles you put on it. The best part is they are very reasonable on their premium’s.

Amazing – their quote for a $7000 stated value and 50 mile towing is just about the same as Geico covering me for liability only!
As soon as I get my car back from the engine rebuild to be finished today, I’m going to make the switch.
Thanks for that one.

Caveat  Emptor!

Makes you wonder if the seller is intentionally misrepresenting or just an idiot!

I’m channeling Bill Engvall, “It’s a sign….”

Bill,

I wonder why your agent couldn’t insure yours.  I wonder if there is different state regulations within State Farm.   My agent even came out took pictures of the car for their files.   I took it back up last month so he could document the engine with pictures. 

Insurance 101

To really understand what you are buying, you need to understand the difference between the value used to determine the price of your insurance and the actual coverage set forth in the policy.

Regardless of the terms used by the insurer?you MUST read the actual policy itself to determine how the company will settle a loss if your car is damaged.

Either term, ?Stated Value? or ?Agreed Value? may be used, and MIS-USED, to mean similar or very different things.

Let?s look at the price side first.

For a mass production vehicles, insurers know what the cost basis of the car is, and it is easy for them to rate it.

For our cars, there is no generally available reference. So the client and the insurer must ?agree? to a value.

The term “Stated Value” usually (but not always) refers to the value to be used to determine the price of your insurance. But I have also seen insurers use the ?Agreed Value? term to mean the same thing.

The bottom line is this point is meaningless in the pricing context. If you are happy with the premium?great! It does not matter what the insurer calls it.

BUT??let?s now look at what you bought. The Coverage in the Policy.

You may see the same terms used again in the policy. And you know what? It still does not matter!

You have to read the contract. ALL of it! Read the coverage language. And more importantly, read the Loss Settlement language.

In your normal policy?.if a vehicle is damaged and it is an insured loss, the settlement is always, ALWAYS on an “actual cash value” basis. This is referred to as ?ACV?. This means the insurer will pay the LESSER of:

• cost to repair the vehicle or
• the ACTUAL CASH VALUE of the vehicle at the time of the loss.

ACV means the DEPRECIATED value! The three year old car that you paid $30,000 for when it was new is no longer worth $30,000 and the insurer won’t pay you that amount!

You guys that have your kit car insured on your regular auto insurance, State Farm, Geico, whomever, I can almost guarantee you your policy is written as an ACV policy. If your TD replica is damaged or totaled, the insurer will rely on the above language to pay a depreciated amount, and it will be LESS than the ?Stated Amount? or the ?Agreed Value? used to price your policy.

Antiques, classic cars, collector cars normally do NOT depreciate. In fact they may increase in value. Specialty insurers know this. And they write insurance for you with COVERAGE that is based on an Agreed Value.

The Loss Settlement provisions will read something like this:

In the event of a loss, we (the insurer) will pay you the lesser of:

• The cost to repair the vehicle, or
• The Agreed Value stated in the policy declarations

You will NOT see the term ?actual cash value? or ?ACV? referenced in the policy. That is, the insurer will NOT depreciate  the value of your  TD. If they agreed to insure it for $10,000, and  the car is totalled, they will pay you $10,000.

I hope this is clear. But please ask questions and I will try to explain further.

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