Your tractor and trailer’s market value may be more than you think.
Tractors and trailers can weigh you down in more ways than just the physical act of moving them from one place to another. Insufficient equipment values of the tractors and trailers listed on your insurance policy can have an impact in the event a claim is filed. As transportation demand is increasing, managing your equipment comes with more than just ensuring it’s properly maintained.
While the industry has expressed concerns regarding economic factors, ACT Research's North American Commercial Vehicle Outlook expressed mild optimism for 2023. According to their most recent report, several factors including growth in order backlogs and higher production values will impact freight volume and demand. This, in turn, will drive overall market conditions. Therefore, it is essential to keep these factors in mind when looking at policy limits.
Also, it’s entirely understandable if you’re in the market for a new or used truck or trailer and you’re feeling the sticker shock. As with many other aspects of your business, inflation has driven prices up. The positive side to this, though, is that the equipment you already own has likely also increased in value.
For example, imagine you own a trailer today that was purchased three years ago for $40,000. Your insurance policy may indicate this trailer is insured for a stated value of $40,000. If that trailer is totaled in an accident tomorrow, the most your insurance policy will pay is $40,000 for the damaged trailer. However, it might cost $75,000 to purchase a replacement—which may be closer to the actual cash value of the trailer being replaced based on comparable trailers in the market. On a stated value insurance policy, the insurer will pay the lesser of the actual cash value and the stated value on the policy. In this case, that would be $40,000 versus a potential $75,000.
What can you do?
A key part of taking care of our customers is making sure they have adequate coverage limits on their equipment. This is why it is important to review policies regularly to make sure the value listed for equipment is accurate.
At Marsh McLennan Agency (MMA), we invite our insured motor carriers to request an update of the value for the equipment listed on their policies. This can be done at any time during the policy period, not just at renewal time.
