Quote:
Originally Posted by jhv48
What am I missing here? Declared value? Stated value? Our cars are still only worth what they're worth, and if you don't trust your insurance company to make a fair determination, then maybe you should change your insurance company!
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No, it's not a matter of trust. Remember, insurance is nothing more than gambling -- you don't have to insure your Cobra for what it's worth, or its replacement cost. Just like gambling, you choose a number you feel comfortable with. Plus, you really don't know how much your Cobra is really worth, until you sell it, and even then you might not know (all you really know is what you sold it for).
With your ordinary daily driver, it's pretty easy to figure out what the car is worth, and what a replacement car, of like kind, would cost. And most people have to actually replace a daily driver when something happens to it so you end up with one of those two numbers. Not so with a Cobra. Who knows what my ERA is really worth. I honestly don't know. (I have that beautiful CS signature that references my exact car -- what's that worth? $10K? One dollar? It sure can't be replaced now.) I do know that to replace my car would almost certainly cost way, way more that what I could sell it for, but maybe I don't want to insure it for either of those two costs. Rather, I might just want to mitigate my exposed risk because I know a higher agreed value number will have a higher premium and I'm gambling that I'll never have a claim anyway. Sooooo, maybe I choose an agreed value of say, $45k, or $65k, knowing that the likelihood of a total loss is rather small and I'll end up coming out ahead by saving the premium... but I don't want to have it valued at $25k because that risk is just a little too great for my taste. Of course, most insurance companies won't let you insure an asset for more than it's truly worth (or is arguably worth). That's where insurance does differ from pure gambling.
Most people tend to only think of agreed value as a way of avoiding conflicts with your insurance company (and it is a wonderful method for doing that). But you should also think of it as a method of mitigating your risk on a rather unusual asset, while giving you flexibility on how you do it.