When buying insurance, most people ask for “full coverage” without knowing what they’re asking for. What’s the problem? There is no such thing as “full coverage”. While understanding your coverage is important for everyone, it is vitally important if you’re driving a Mercedes, BMW, Bentley, Rolls-Royce, Porsche, Viper, Ferrari, Lamborghini, Lotus, or Aston Martin.
If you’re driving an expensive, exotic or high-performance car, you will want to make sure that after an accident you receive OEM parts, OEM paint, the ability to repair your vehicle at the auto body shop of your choice, and the amount of money needed for the repair.
Repairing an expensive car with non-OEM parts and/or improper workmanship will result in substantial diminished value. With expensive cars, even a proper repair will result in diminished value. What is diminished value? It is the lowered market value of a vehicle subsequent to repair. For instance, a Porsche or Ferrari will be worth less after an accident, even after it has been properly repaired.
You do not want to get into an argument with your insurance company as to whether or not your vehicle can be repaired or should be totaled. Often, insurance companies will want to repair your car, when you think it should be totaled. If the insurance company agrees to total your car, most insurance policies only provide “actual cash value” insurance coverage which would only give you with a payment based on the current replacement cost of your vehicle, less depreciation (the decrease in the value of your car due to use, deterioration and the passage of time).
In the event that an exotic or high-priced car is totaled, the best replacement coverage is “agreed value” or “stated value”. That’s the exact amount you’ll receive if your car is stolen or totaled in a covered loss. Never mind the “book” value. We even waive the deductible. No haggling, no depreciation, no deductible, no problem.”
Equivalent New Automobile Replacement for Total Loss is offered for vehicles within the first year of purchase or the first 15,000 miles, whichever comes first.
For high-value cars, its agreed value coverage every year and readjusts the agreed value upon policy renewal. From what I have seen, the adjusted agreed value even years and over 100,000 miles later is substantially higher than actual value. Additionally, on a different topic, it also offers up to $1 million of underinsured coverage, which is also vitally important.
For average value new cars, it does not offer its Equivalent New Automobile Replacement coverage after the first year or first 15,000 miles. For drivers of most new cars, this is still a good value because it is not uncommon for someone to total their new car soon after purchasing it. Usually, just driving a car out of the showroom can result in as much as $10,000 depreciation.