Monday, June 30, 2014

Three letters you never want to see on your auto policy: "ACV" Here’s why…

If you wreck your car, how does your insurance company determine how much it will pay for a replacement or repair? It depends on your policy and how it's worded. Remember how I always say that all insurance is NOT the same? Here's a great example of this.

Cheaper auto policies "settle" (meaning, pay for) claims using depreciation to figure the value of your vehicle, for either the repair, or to compensate you for the car's value (if it was totaled).  Every year, your auto loses a tremendous amount of value using this method.

Your huge clue to policies that settle in this manner is to look at your declarations page (that sheet you receive from your insurance company at renewal time, detailing your coverages). Look at the line items "Comprehensive" and "Collision". These are the parts of your coverage that fix or pay for your auto for various reasons (you hit an animal, or it’s stolen, vandalized, or you wreck it). If, listed next to these terms, it also says "ACV" or "Actual Cash Value" -- look out!  This is a policy that likely uses straight line depreciation to devalue your vehicle's worth, before paying you.  Typically, after ten years, a car's been fully depreciated, which, after subtracting your deductible, means  you're not getting much, if anything, for your former ride.

Better auto insurance policies look at the "fair market value" of your vehicle, which take market factors ( including automotive industry car value guide books, and local car dealer pricing) into account, instead of a one-size-fits-all depreciation devaluation. This common-sense method means you'll usually get more from your car insurance at claims time.

If you'd like me to help you review you current policy and see if you have ACV claims settlement, just call on me.

David Yates Insurance Agency
1881 General George Patton Dr., Suite 103
Franklin, TN 37067
Phone 615-778-1816  Fax 615-778-1817

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