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How useful is replacement value on insurance policy?

Discussion in 'Model S' started by gordo, Jan 30, 2015.

  1. gordo

    gordo Member

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    I called Travellers for a quote because they advertised a replacement value policy add-on for up to 5 years in case of a car getting totaled, while my current insurance only covers the first year at replacement value. Travellers said they could add such an add-on for my upcoming P85D for around $400/year on top of the base rate. After the 5 years are up, it then converts to cash value based on some depreciation schedule and you no longer pay the extra $400.

    I guess the question is, with all these threads about very high repair costs, whether you guys think it's worth having replacement value on a $125k car? Thing is, I suppose if it comes down to $30k worth of body repair work versus having to pay me $125k for a new car, they'd basically never want to total the car unless they absolutely must, but with the battery covered for 8 years, I'm not sure what kind of scenario would have replacement value actually kick in... Perhaps if I drove it head first into a wall or flipped it on the highway (two incredibly unlikely scenarios)?
     
  2. David_Cary

    David_Cary Member

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    So you could get sideswiped and be totalled very easily. 6 months from now they might give you $100k as value. You are out $25k. That is the scenario that you are insuring against. It is very easy to total a Model S
     
  3. Canuck

    Canuck Active Member

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    #3 Canuck, Jan 30, 2015
    Last edited: Jan 30, 2015
    Very useful if you need it. A waste of money if you don't. Since you can't see into the future, you can only analyze the odds:

    How many miles do you drive a year? Where are you driving? Do you drive in snow/ice? Who will be driving the car and what driving experience/accident history do they have? Does $400 mean a lot to you each year? Does $25,000 depreciation mean you can't buy a new one if totalled and you don't have a replacement cost endorsement?

    But even after doing that analysis, you can be the safest driver in the world, only drive on dry payment on the last Sunday of each month, and back out of your driveway only to have some yahoo total your car. Odds are that won't happen, but you never know.
     
  4. gavine

    gavine Petrol Head turned EV Enthusiast

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    He said $400 per year, NOT per month.....
     
  5. Canuck

    Canuck Active Member

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    Yes, of course. Obvious typo now corrected.
     
  6. TomL

    TomL Member

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    Isn't replacement value the same as gap insurance?
     
  7. SFPD

    SFPD Member

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    Gap insurance only applies if the car is leased or financed. If you paid for you car in cash 'agreed value' or 'replacement value' is the only way you are sure what the insurer will pay out if your car is totaled.
     
  8. gordo

    gordo Member

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    So, I'm driving about 10k miles a year. In 23 years of driving, I haven't ever been at fault in a major accident and I'm driving it 95% of the time. $400 annually seems reasonable all told, but I suppose what I'm really asking is whether the $400 doesn't just raise the bar such that it would be virtually impossible for them to actually total the car? Even if the car sustains say $90k worth of damage, won't they just opt to do the work rather than pay out $125k for a new one?
     
  9. Canuck

    Canuck Active Member

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    Good point. That's why it's best to buy replacement cost insurance with a different insurer. Then they only pay out the difference in value between what your insurer pays in actual cash value and the replacement cost. I did that when I bought my Tahoe Hybrid in 2008 and it cost me $2,500 for 5 years so $500 a year (Canadian). I regretted that decision though since a total loss wouldn't have been a big deal to me and investing that money in 2008 would have been much better than paying it to an insurer for an event that has never happened to me in 30 years of driving.
     
  10. Chris TX

    Chris TX Active Member

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    Just as a reference point, I found out USAA has a "New Car Buying Assistance" as part of their auto insurance. I declined it initially, but upon a recent review, I found out the option is that they give you 20% more than the car's value at the time of the accident if it's totalled. This raised my monthly auto ins bill by $7.
     
  11. Nosken

    Nosken Member

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    yes, but I can't find where I can get a Tesla through the USAA Car buying service?
     
  12. dsm363

    dsm363 Roadster + Sig Model S

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    I didn't know about this either. Will try and find it too.
     
  13. Haggy

    Haggy Member

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    I know nothing whatsoever about Travellers, but I do have experience with two vehicles that were totaled. In both cases, I had State Farm. In one case, the other insurance company paid for it. In the other, a third party, whose insurance was with State Farm, was driving my car and totaled it.

    One was two years old and one was seven. In both cases, the insurance company looked at all listings of cars for sale in the area to find one as close as possible to mine. There were some features missing and some items on mine that were in better condition, so they added to the settlement. For the two year old car, the settlement was enough to get a new one of the same model with more features. With the other, I looked at cars after the fact and found that if I had wanted to replace my car with an almost identical one, I would have been able to do so. I opted to get an MS instead.

    I had three options, but only two of them came up in the first instance. I had the right to take the money, and I had the right to ask the company to get me an exact replacement, meaning same make/model/year/options/mileage, or better such as fewer miles. The third option was to keep the car and get paid the difference between the salvage value and the proposed monetary settlement. That most likely would have been more than would have been needed to have fixed the car, which would have given me a car in excellent condition but with a salvage title.

    My policies had no special riders. I had to pay the deductible in the second instance and the person who was driving reimbursed me.

    Part of the reason I didn't want an almost exact replacement is that I had no idea what kind of care the previous owner(s) gave it. I wouldn't typically buy a used car, but it would have been the same as one that was used because I used it. With a Model S, I'm almost certain that the owner took good care of it. Tesla service would have taken care of any problems and will continue to take care of any problems, so at least at this point, I'd accept a used car with under 5000 miles on it as a replacement if mine got totaled, as long as it had all the features that mine had and I liked the color. I wouldn't take a cash settlement since it would likely have too much depreciation and I'd insist that the insurance company buy me the replacement.
     
  14. mknox

    mknox Well-Known Member

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    My insurance company (RBC in Canada) gave me two years replacement value as part of my coverage plan.
     
  15. Andyw2100

    Andyw2100 Well-Known Member

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    I didn't even know this was possible.

    I had asked my insurance company, State Farm, about replacement cost coverage, after reading about the benefits of it on TMC, but apparently State Farm doesn't offer it in New York State. Have any of you bought separate replacement cost insurance from a different company, as Canuck suggests, and if so, can you recommend some companies that sell this type of coverage?

    Thanks.
     
  16. Chris TX

    Chris TX Active Member

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    #16 Chris TX, Feb 1, 2015
    Last edited: Feb 1, 2015
    You can't. The car buying services is completely different from the Car Replacement Assistance rider on the auto insurance. The first one just gets you $750 off the dealer's best price whereas the second one gets you a fat check cut to you for 20% over the car's value at the time of totalling. If you have to use the insurance rider, you don't have to use their car buying service to get the replacement. Just go to "Change Coverages" in the Auto Insurance section.

    USAA Replacement.png
     
  17. ArtInCT

    ArtInCT Always Learning

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    When you buy collision insurance of any kind, replacement or otherwise, you are essentially betting ON the fact that you will be using the insurance.
    So in the case of the OP, is a $400 per year bet X 5 years one that you want to bet on?
    Can you financially withstand a loss that pays out less than your replacement value? Only you can say.
    I know this statement I made is probably considered by many as an odd way of putting it, but I am fairly certain it is true.
     
  18. CHGolferJim

    CHGolferJim Member

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    It's a bet of $500-$2500 for the downside protection that you won't have to eat $20k-$60k depreciation during that 5 years in the event of totaling. A friend mentioned that insurance companies will total a car if estimated repairs are 73% of market value (not verified).
     

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