Does your RV insurance include loss coverage?
Your loss coverage determines what happens if you have a total loss of your recreational vehicle.
In insurance terms, a total loss occurs when your vehicle suffers so much damage, it wouldn’t be practical to repair it.
For example, last spring, lightning struck a mobile home in an RV park in Waxahachie, Texas. The mobile home burst into flames. And the fire spread to two more units. All three were destroyed. In each case, the RV owner suffered a total loss.
So what happens after a disaster like a lightning strike that burns your mobile home to the ground? That depends on the insurance coverage you’ve selected.
Collision coverage is designed to protect you if you’re in an accident. Comprehensive coverage will cover costs for damage caused by something other than a collision. But neither of these coverages will protect you in the case of a fire, an explosion or earthquake, colliding with an animal, malicious mischief or vandalism, riot or civil commotion, theft or larceny, windstorm, hail, water, floor or glass breakage not caused by a collision.
If you want to make sure you can replace your vehicle when disaster strikes, consider special RV Loss Coverages.
Total Loss Replacement
You get the highest level of protection from Total Loss Replacement coverage. In this case, your insurance company will pay for you to replace your adventure vehicle with a like make and model. You just pay your deductible.
With Total Loss Replacement coverage, you’re protected from depreciation. The value of a new RV usually drops after purchase. But with TLR, the value at the time of the accident doesn’t matter. Your insurer will pay to replace your unit with a new unit from the same model year or later. (Most Total Loss Replacement policies limit full replacement for losses that occur during the first five model years.)
So, let’s say you spend $60,000 on your Jayco Bungalow this year and it’s destroyed by lightning a couple years from now. Even if your RV’s value declined over those two years, your insurer will replace your RV with a similar model from the same model year or later, even if the new unit costs more than $60,000.
Actual Cash Value Coverage
If you have Actual Cash Value coverage at the time of a total loss, your insurer will pay you the market value of your vehicle at the time of your loss. So if your vehicle is worth $50,000 at the time it is struck by lightning, you get $50,000.
The problem is, RVs, like all vehicles, loose value over time. So you spent more than $50,000 to purchase your vehicle. And, it’s going to cost you more than $50,000 to replace it with a new vehicle.
Agreed Value Loss Coverage
If you have a bus conversion, used or custom RV, this coverage could be useful. In the case of a total loss, your insurer pays you an amount that you have agreed on at the time the coverage was purchased.
For vehicles that don’t have a standard market price, you may be able to show your vehicle is worth more than you paid for it. You could use an appraisal or Kelley Blue Book values, for example.
So, you got a great deal when you bought a used travel trailer for $60,000. And you can show that it’s worth $80,000. Your Agreed Value coverage would be based on $80,000 and that is what you would be paid in the case of a total loss. It doesn’t matter what the market value is at the time of your loss.
Which Loss Coverage Should You Choose?
There are a couple of things to consider. First, how big is your emotional and financial investment in your vehicle? If it were destroyed, do you have the financial means to replace it? Did you purchase your recreational vehicle with a loan? If so, do you have the means to pay off the loan, or the difference remaining after an actual cash value payoff?
You will pay higher premiums for the Total Loss Replacement and Agreed Value Coverage, but you will be getting greater peace of mind.
If you have a loan and it is greater than the cash value of your RV, you could purchase Gap Insurance. But this will not help you to replace your vehicle.
So weigh your options, then get a quote to see what fits your needs and your budget.
