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Driving An Expensive Or High-Performance Car? Make Sure Your Car Has Adequate
Insurance
By: Philip L. Franckel, Esq.
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.
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