When buying insurance, most people ask for "full coverage"
without knowing what they're asking for. What's the problem?
There is no such thing as "full coverage". While understanding
your coverage is important for everyone, it is vitally important
if you're driving a Mercedes, BMW, Bentley, Rolls-Royce,
Porsche, Viper, Ferrari, Lamborghini, Lotus, or Aston Martin.
If you're driving an expensive, exotic or high-performance car,
you will want to make sure that after an accident you receive
OEM parts, OEM paint, the ability to repair your vehicle at the
auto body shop of your choice, and the amount of money needed
for the repair.
Repairing an expensive car with non-OEM parts and/or improper
workmanship will result in substantial diminished value. With
expensive cars, even a proper repair will result in diminished
value. What is diminished value? It is the lowered market value
of a vehicle subsequent to repair. For instance, a Porsche or
Ferrari will be worth less after an accident, even after it has
been properly repaired. For research on diminished value, see
http://www.hurt911.org/accident/car-accident-car-value.html
You do not want to get into an argument with your insurance
company as to whether or not your vehicle can be repaired or
should be totaled. Often, insurance companies will want to
repair your car, when you think it should be totaled. If the
insurance company agrees to total your car, most insurance
policies only provide "actual cash value" insurance coverage
which would only give you with a payment based on the current
replacement cost of your vehicle, less depreciation (the
decrease in the value of your car due to use, deterioration and
the passage of time).
In the event that an exotic or high-priced car is totaled, the
best replacement coverage is "agreed value" or "stated value".
The only insurance companies I have found to offer agreed value
insurance are Chubb and MetLife.
Chubb's web site states: "You and Chubb can agree on a value and
lock it in for a full year. That's the exact amount you'll
receive if your car is stolen or totaled in a covered loss.
Never mind the "book" value. We even waive the deductible. No
haggling, no depreciation, no deductible, no problem."
MetLife's web site states: Equivalent New Automobile Replacement
for Total Loss is offered for vehicles within the first year of
purchase or the first 15,000 miles, whichever comes first.
What's the difference between Chubb's "Agreed Value Option" and
MetLife's "Equivalent New Automobile Replacement" coverage? For
high-value cars, Chubb is definitely the better choice. Chubb
offers its agreed value coverage every year and readjusts the
agreed value upon policy renewal. From what I have seen, the
adjusted agreed value even years and over 100,000 miles later is
substantially higher than actual value. Additionally, on a
different topic, Chubb also offers up to $1 million of
underinsured coverage, which is also vitally important. Make
sure you ask your Chubb agent for the maximum underinsured
coverage.
For average value new cars, MetLife is a good choice. MetLife
does not offer its Equivalent New Automobile Replacement
coverage after the first year or first 15,000 miles. For drivers
of most new cars, this is still a good value because it is not
uncommon for someone to total their new car soon after
purchasing it. Usually, just driving a car out of the showroom
can result in as much as $10,000 depreciation.
About the author:
Philip L. Franckel, Esq. founded HURT911®
Accident Lawyer Directory,
publishes
articles on Lawyer
Advertising and does
lawyer advertising
for injury attorneys.
