Let’s say you just bought a 2014 Freightliner day cab for $38,000.  If you insured it with Eastern Atlantic today, the price you paid would be its stated amount.  If it is totaled in an accident next month, we would pay you $37,000 less a $1,000 deductible.  Simple, right?  Now let’s imagine you don’t have that accident and you go on to renew your Eastern Atlantic policy two more years.  Unfortunately, you get very busy hauling freight, which is what you do after all, and forget to check the current market value of your tractor.  Meanwhile, your policy still shows $38,000.  Not only is the truck two years older, but you’ve put another 200,000 miles on it.  You’ve been fortunate that you haven’t had to install a new engine or other major components, but they are also two years older.  What will your 2014 Freightliner day cab be worth in 2020?  Assuming it depreciates 20.0% a year, it could be worth $22,800, yet you’re still paying premium based on $38,000.  If the truck is totaled then, you’ll receive $21,800 after deductible because stated amount insurance pays the lesser of the stated amount or the actual cash value.  Why does this happen?

A “Stated Amount” is the value you tell us your commercial vehicle is worth. If you sold your truck, tractor or trailer this week, the price you’d expect to get for your vehicle would be its stated amount.  Stated amount coverage allows you to insure your truck, tractor or trailer for what it is actually worth. The stated amount includes your vehicle’s condition, the value of a new engine, special equipment, special modifications, or improvements you may have added since the date of purchase.  If you’re getting the idea that stated amounts are not written in concrete, then you are beginning to understand what you need to do to avoid being underinsured.

Stated Amounts MUST be updated EVERY year

The only way to be sure the values of your equipment are up to date is to check them against current market conditions at renewal time.  Don’t kid yourself about values.  Everything depreciates.  Sooner or later your new truck will have to be replaced.  Until that time arrives, its stated amount will continue to decline.  The only exceptions are upgrades such as the new engine, transmission, etc., mentioned earlier.  We need to know if you increase the value of your equipment significantly.  Since this can happen anytime, you may not want to wait until renewal to tell your agent.  Yes, this will mean a pro rata additional charge, but it could mean the difference between proper settlement after a loss, or being underinsured.  And if you  don’t upgrade your truck, we still need to know what it is worth for your next renewal to make sure you aren’t paying too much to insure it.

For more information on Stated Amount coverage, talk to your agent, or visit us on the web at .   Our website offers several ways to help you determine an accurate Stated Amount.  We urge you to check it out and review your equipment values.  Chances are they are in need of updating.

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