Safety Means Protecting Your Investment
Sometimes all the safety precautions in the world just aren't enough. You can do everything right and still have plans go wrong. You replace leaky hoses and turn your propane off while traveling, but your neighbor at the campground is careless and doesn't extinguish the campfire. You employ every safe driving technique in the book, but can't avoid the drunk driver coming at you in the wrong direction.
Sometimes you can't avert disaster-but you can be prepared for it. Safety doesn't stop at prevention; it extends to doing what it takes to minimize your damage after a disaster. In that respect, your insurance plays a role in any safety plans you make.
Since you purchased your bus, you have invested thousands of dollars and countless hours of blood, sweat and tears in the conversion process. Now that the project is complete-or nearly complete-it is important to think about how to best insure your investment. If you've called your local agent or insurance company, you've quickly discovered that you have two very big problems.
First, your auto insurance company may want nothing to do with a converted bus-even when you explain that it's really a motorhome. Second, if they do agree to insure it as an RV, they will typically provide coverage on an actual cash value (ACV) basis-the same as on your autos. This means that in the event of a total loss you would receive only the depreciated market value of the bus, an amount that's likely to be far below its true value. How will you ever be able to duplicate the vehicle you had with such a low monetary settlement?
Clearly, an ACV policy is not what you really need, but perhaps you have settled for it since you're relieved to be able to buy any type of insurance coverage for your unique RV. But what do you tell the insurance company when they ask what your bus is worth, and can you document this value? While you have a significant investment, how do you document the true value of your converted bus? What dollar rate do you use for your hundreds of hours of labor? Do you have every receipt for everything you ever purchased for the bus? Certainly, nobody knows more about your bus than you do, but will the insurance company accept your opinion of its value? Not likely.
Insurance companies rely heavily on industry publications, like the Kelley Blue Book and the NADA or National Automobile Dealers Association Appraisal Guide, to determine the insurable value of motorhomes, but these valuation guides do not include buses. This presents a problem for insurance company underwriters since they use these reference materials values to the policy premium. Similarly, claims adjusters normally rely on these guides for establishing the value of a vehicle in case of a total loss.
So, what is the value of your bus, and who sets it? Put yourself in the shoes of the claim adjuster who may not be familiar with motorhomes, let alone a converted bus. Now consider that he has no blue book for reference. It now falls on you, the policyholder, to prove your loss. Your only hope is that the adjuster will accept your pile of receipts for parts and labor, along with your bill of sale, as proof of your investment. Even if the adjuster accepts your documentation, this total may fall far short of your vehicle's true completed value.
As the owner, what can you do to prove to your insurance company what your converted bus is worth for insurance purposes? And even more important, once the value is known, how do you make sure the insurance company will actually pay that amount if your bus is stolen or destroyed by fire?
Remember that most motorhome policies today will pay only the actual cash value at the time of your claim. There is an answer to this insurance problem--it's called an Agreed Value policy. This policy provides insurance coverage equal to the agreed-upon value of your bus, as determined by a qualified appraiser. You pay a premium based on this appraised value, and in the event of a total loss you would receive this agreed value. This agreed value (appraised value) appears on your policy and remains unchanged unless modified by an updated appraisal, typically required every two to three years.
This type of coverage should not be confused with Replacement Cost, or Total Loss Replacement, policies now available from companies specializing in RV insurance. With Total Loss Replacement Coverage, an RV owner receives full replacement value on their RV after a total loss if it occurs within the first five model years. Since converted buses are actually custom "one of a kind" vehicles, Agreed Value coverage fits the bill by locking in the appraised value (insurable value) up front when the policy is written.
The cost of adding the Agreed Value feature to your policy is minimal. In order to add this coverage to a new or existing policy, typically all that's needed is a current professional value appraisal. There are numerous sources qualified to appraise converted buses. If you're not familiar with any such sources for bus appraisals, email us or call us toll-free at 800-449-8943. We can refer you to a qualified appraiser.
Since you've taken the time to purchase your one-of-a-kind bus conversion, it is important to take a few minutes to look into Agreed Value coverage to protect your investment.
Disclaimer: The information in this article was obtained from various sources. This content is offered for educational purposes only and does not represent contractual agreements, nor is it intended to replace manuals or instructions provided by the manufacturer or the advice of a qualified professional. The definitions, terms and coverage in a given policy may be different than those suggested here and such policy will be governed by the language contained therein. No warranty or appropriateness for a specific purpose is expressed or implied.