NEWS ARTICLES

Many Fire Departments have had the unfortunate experience of an accident, which totaled their motor vehicle, only to discover that their insurer covered the vehicles for Actual Cash Value. The value of the vehicle is then determined by replacement cost less depreciation and/or fair market value. Actual Cash Value settlements can factor several different criteria into the evaluation including subjective opinion of the condition of the vehicle prior to the accident. Unfortunately this can lead to a difference of opinion with regard to the value and the settlement. It also puts the department in the difficult situation of attempting to replace their vehicle without an adequate sum of money. The result is either settling for a lesser vehicle than is really needed, or burdensome fund raising which will of course delay the replacement, or possibly going through the onerous task of increasing property taxes probably causing even a greater delay in obtaining the new vehicle.

Emergency Services Insurance Program offers coverage that is tailored toward the needs of our clients. Agreed Value Coverage on fire apparatus is an example of modifying the standard insurance policy to enhance coverage for the benefit of fire departments. Agreed Value Coverage means that the insured and the insurer agree on the value of each piece of apparatus and then list that value within the insurance policy. In the event of an accident or loss that causes damage sufficient enough to declare the apparatus a total loss, the unit's value is already pre-determined. The department is able to take into account the cost of replacing the vehicle compared to the need to replace the vehicle.

Agreed Value Coverage eliminates the subjective evaluation of apparatus after the loss has occurred and also eliminates possible lengthy negotiations between insured and insurer. It is also a tremendous advantage to a department that might have several pieces of older yet functional pieces of apparatus, should they experience the loss of one or more units and not have the funds to replace those units with new.

Agreed Value Coverage also permits the department to properly budget for replacement without the concern of that vehicle may become lost as a result of an accident or other covered loss before the scheduled replacement time. For instance, a department decides that they will replace an engine in six years. They begin a fund, providing one sixth of the total cost each year. After three years, the vehicle is involved in an accident and is completely lost. With an actual cash value settlement, they may have to withdraw from that fund to simply replace the engine with a similar one. Now, at the end of the six-year period, they still have a vehicle that needs to be replaced, but have only 50% of the funds to do so.

With Agreed Value Coverage, the vehicle could be replaced without needing money from the funding program and the new vehicle purchased as originally planned and budgeted for. This permits long range planning without the concerns of unforeseen incidents.

It is important to check your insurance policies or consult your agent to see to it that you are covered with Agreed Value Coverage. If you are so covered, review the agreed value amounts on a regular basis to see that they are sufficient for your needs and future plans.