Commercial Truck Insurance: Stated Amount

Commercial truck insurance is different from normal private insurance for small passenger vehicles. It is often insured with a “Stated Amount” basis for physical damage.

When insurers are deciding how to determine a policy for private vehicles they take into account the original cost of the car and its age because these types of vehicles depreciate at a fairly standard rate from the moment they are driven off the lot and it is easy to predict and calculate their value.

Large trucks, on the other hand, are actually designed to outlive their engines. They are created to withstand brutal punishment from every day use, so they need the best, most secure parts. Hauling trucks that travel hundreds of thousands of miles each year are expected to have their engines replaced on a semi-regular basis. As an example, a 5-year-old dump truck with a brand new engine would be worth considerably more than a 5-year-old dump truck with its original engine, but the same can’t be said about a min-van or convertible.

Because commercial truck insurance is more difficult to calculate for heavy trucks and does not require simple equations involving original value and age, truck insurance businesses have developed a unique method called “Stated Amount.” Stated Amount is used for providing physical damage protection and choosing a premium.

Here’s how it works: the person getting insured states the maximum value of his or her truck, and the premium is a percentage of that stated amount. When the deductible increases, the percentage goes down.

Typically, the older vehicles that are worth less pay a higher premium percentage because major physical damage could wreck that truck, whereas it would only do slight damage to a newer truck.

One important thing to note is that Stated Value must be determined in advance by the owners and gets reevaluated with each renewal of a commercial truck insurance policy. If the owner’s claim is significantly varied from the insurance company’s evaluation, then additional justification may be necessary so that an accident does not cause huge claims losses on either side.

The advantage of Stated Amount is that it puts an automatic cap on the amount paid out, makes negotiations easier, and makes comparing quotes and percentages easier for the vehicle owner.

By: Patrick Winchester

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Patrick Winchester is a writer with info about commercial truck insurance. For more information on policies, visit royaltytruckinsurance.com/.