September 16, 2021 5:05 pm

Commercial Auto Insurance – Assessing Value After an Accident

An accident occurs. Your business’s vehicle has significant damage. The insurance company says it is too expensive to repair. They want to total the car. What does that mean for you, as the business owner who relies on that vehicle for transportation?

Commercial auto insurance can be difficult to manage in situations like this. It is important to know what to expect before heading into a situation like this. Here’s what you can expect.

What Happens After an Accident?

When you need to file a claim through your commercial auto insurance policy, several things may occur.

First, your insurance carrier needs to document what occurred and who is responsible. This ultimately determines if they provide coverage for your losses. The amount of coverage paid out depends on the type of policy you have. Here’s a look at the most common types.

Stated Value

Many commercial auto insurance policies use something called stated value. This is an amount that you, as the vehicle owner, and the insurance company agree upon when selecting your policy. It is the amount of value you say the vehicle is worth.

Sometimes, companies will have a lower stated value. They claim the car is worth less than it is. In this case, an accident can mean you do not get enough compensation to cover the value of the car. Be sure to carefully appraise the vehicle before agreeing on stated value coverage.

Replacement Value

It is less common with commercial vehicles, but it is possible to purchase an auto insurance policy with a replacement value provision. This would mean the insurance company pays you the amount it would cost to replace the vehicle you have with a new one of similar value.

This type of policy can raise your premium costs significantly, but that may be worthwhile in some situations especially if you have a customized vehicle for your company.

Actual Value

The third option is actual value, or the value of the vehicle when the incident occurred. In most situations, actual value is less expensive, but it does not give you enough to purchase a new vehicle like the one you have. It will only provide you with the depreciated value of your vehicle at the time of the accident.

Which coverage option do you have? Talk to your business insurance agent. Discuss the type of coverage you have on each vehicle. And, update it as the value of the vehicle changes.

In most situations, commercial auto insurance policies can provide ample financial protection for you. For that to happen, be sure an accurate value is always present.

Also Read: What Happens if My Car Gets Totaled in an Accident? A look at the same situation on the personal side.

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