By Randall Brink
It all started with one word… and an online discussion of RV insurance.
The debate revolved around what happens if you experience a total loss of your RV. There was much discussion of “book value,” “actual cash value” and “agreed value.” Most people were of the mind that these terms were the same. They’re not. So I can imagine that many parties to the exchange did as I did and ran straight to their insurance files to read their policy.
It was then that I discovered a glaring one-word error in my motorcoach policy: “Agreed” vs. “Actual.”
That one word meant that, instead of getting a reasonable value for my coach in the event of a total loss, I would, instead, be paid a fraction of that based on the so-called “book” value.
RV dealers typically use the NADA Guide to determine the value of a used RV. The NADA Guide is published by the National Association of Automobile Dealers, which means that the automotive industry manufacturers and dealers organization produces the guidebook that determines what your RV is worth. The guide is heavily biased to the low, low side. Insurance companies also use this publication to determine what an owner is paid in the event of a loss. That’s if your insurance policy says “Actual” value.
If, on the other hand, the policy is based upon “Agreed” value, then you and your underwriter will agree upon a reasonable value for your coach, and that is the value for which you are insured.
The irony in my case was that I had discussed this issue with my insurance agent. In fact, it was the primary reason that I switched insurance companies to one that would provide an Agreed Value policy, but the policy was written incorrectly. I am glad I caught the error, and urge everyone to scrutinize your insurance policy as well.
Just checked my policy with Progressive on our TT. It says “purchase price minus deductible ” We bought it new in 2021
I once worked for a great guy that always said —- All Waranties / Guaranties —ARE NOT worth the paper they are written on……
Progressive told me that even though our policy states “Agreed Value” we still have to have plenty of documentation showing it’s worth that much. They suggested getting it appraised, probably by more than just one reputable company.
Progressive is the WORST company to have insurance with. They will fight you for every penny they have to give you.
What about replacement cost? I didn’t see that mentioned in the above article? Not very comprehensive article!
Agreed! Wouldn’t have a policy without the “replacement cost” feature.
My travel trailer was totaled. They offered 18k for book value and treated several thousand dollars in upgrades as “repairs” worth $0. Some were upgrades added by the dealer before we picked it up when new. Fortunately, I had a replacement value rider.
They paid 32K to buy me a new RV even though I offered to settle for 22K cash. The problem is that I was still out the upgrades. Two Fantastic Fans, ceramic toilet, replacement locks, upgraded tires, upgraded bed, upgraded couch, shelving, cabinet locks, wall protection around stove and sinks, etc.
Insurance is written for the insurance company to make a profit, not to pay claims.
When purchasing a new expensive RV, especially a large Class A DP, there are options when it comes to insurance coverage. I can not make judgments for anyone else only that the one rule of thumb is buy the most insurance you can afford. However, I will explain what we did. Our present Class A DP was ordered in September 2014 and delivered in late 2014 as a 2015 Model. We selected an insurance policy with well above the minimum coverage as times have changed and legal court battles have become outrageous. We also selected a provision, that God forbid, in the case of our coach being deemed a total loss, in the first 5 years it is replaced with a one year newer coach. If a total loss beyond the first 5 years, we get our full purchase price back. Those provisions are in writing and there are no negotiations. Yes that type of insurance is more expensive, but it is what we selected and what we could afford. We shopped around and found what we wanted and we know we are fully covered.
We had a similar policy from Progressive. We had a serious accident (no personal injury) which resulted in replacing the front cap, the door and rebuilding the generator for beginners. I expected them to declare the coach totaled, but they would have been out the agreed value so they spent high 5 figures to rebuild. That was 5 years ago and there have been a couple of minimal problems relating to the Denso heating cooling system which have been repaired. I am in a much better position than if I had a ACV policy where they might have totaled the coach and left me with inadequate fund to replace. The coach is now almost 9 years old and I have changed to ACV to save serious premium dollars, also raised the deductible to the maximum. Insure what you cannot (or chose not to) afford is my insurance training.
No, the policy was not written “wrong”; it was written to the insurance company’s advantage and hoped you did not catch it. Read everything word for word that you sign.
And they will offer you the “cheaper” policy for the sale.
Agent is at fault if the policy was not written to buyer’s requirements. If you can document the error the agent (or his E & O coverage) will pay the difference.
This article is misleading and the author should of talked to a professional insurance agent before writing. NADA Guides that are used for valuation are only one source of data used based upon purchase price, make and model.
I have full replacement value in my policy, where does that fall?
Replacement cost provides you with a payment equal to that which would be required to replace the item.
Actual cash value is the depreciated value of an item of property at the time of the loss.
“Replacement” is good!
I still don’t understand. What value do you use to establish the “agreed” price. I checked the NADA value on my coach and it’s worth more than I paid for it two years ago. Need some examples.
I agree, lol.
That article kind of left me hanging.
My agreed value was the original price we paid, without sales tax. But that insurance company only uses it for the first year so I’m looking for another company that will give more years of Agreed or Replacement value.