Unfortunately, as a towing business owner, you have to combat many risks. Even if you comply with regulations, follow protocol, and make sure your drivers maintain a clean record, the risk of an accident is always there. Therefore, understanding an insurance policy is crucial for the sake of getting adequate coverage.
Since your tow trucks are high-dollar pieces of equipment, you want to make sure they’re fully protected. Therefore, you’ll want to understand the difference between actual value and stated value. Failing to know the difference can possibly leave your tow trucks underinsured!
In this article, we’ll go over in-depth actual value vs stated cash value for tow trucks. This way you can fully understand your tow truck insurance policy and coverage options.
Actual Value vs Stated Value for Tow Trucks
These two coverages are an integral part in the insurance process and understanding them is key to choosing the best insurance for your tow trucks. It helps you identify the amount of coverage you need and get an in-depth view of how the overall insurance policy is constructed.
Accidents can happen to anyone but what matters is how well you evade the costs you may have to bear. Luckily, an insurance policy does just that! This way you can keep your hard-earned money without having to spend it on costly repairs and damages.
To do this, you need to know how much your vehicles are worth in the event you have to replace one of them. So, here’s the breakdown of actual value vs stated value for tow trucks.
What’s Actual Value?
Actual cash value is a term commonly used by insurers in the towing industry. In simple terms, this is what your truck was worth today before the accident. An insurance adjuster will assess your vehicle and look up its value before the incident to determine a settlement amount.
When you go to purchase tow truck insurance you should have a good idea of what the overall value of your tow trucks are.
What’s Stated Value?
In simple terms, your coverage is determined by how much you state your tow truck is worth. If you go with this coverage option you want to ensure you have up-to-date records on your vehicle’s current value. It’s best to go slightly over to avoid being underinsured.
The problem with stating an amount that’s less than its current value is you won’t be fully protected in the event of a claim. For instance, if you state that the current value of your tow truck is $10,000 but it’s actually worth $15,000 then you’ll only get compensated for what you state in the policy.
We know it sounds tempting to insure your trucks for less than what they’re worth; however, you’re only hurting yourself in the long run. Therefore, it’s always best to insure your vehicles based on their current value, nothing less.
To make sure that you don’t have further surprises waiting for you after an accident, you have to pick the right policy for your tow truck. This will give you a clear idea of what you can expect from the insurance company after an accident.
Make sure you gather quotes from multiple insurers before making a decision.