Replacement Cost vs. Actual Cash Value for RV Replacement Coverage
For many years, the traditional point of view regarding recreational vehicles was that they were great for people who loved the outdoors. Yet today, people have discovered that RV’s offer a lot more than just a comfortable space to sleep in while camping. Those who love to travel find them to be a cost-effective option to standard forms of transportation and lodging. Plus, they allow users to take all of the comforts of home with them on the road. If you are considering buying an RV for you and your family to enjoy, then you could be on the cusp of opening an exciting new chapter of your recreational life. However, you should also understand the level of financial commitment required to properly manage such a vehicle.
You may not fully comprehend it now, but buying an RV is similar to buying a new home, particularly when it comes to the monetary commitment required. According to the website AxleGeeks.com, an average RV costs $122,715. If you’re looking for a luxury model, the price can easily rise into the $300,000 range. When committing that kind of money to a purchase, you want to ensure that you have as much protection as you can against losses. Fortunately, just like with your home, insurance is available to help protect your investment. Unfortunately, given that your RV is exposed to many more risks while out on the road, the chances of you needing to rely on your coverages are much greater. Is your current policy completely covering your investment? Contact us for a free policy review and quote.
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The Problems with an Actual Cash Value Policy
To help recoup the funds needed to replace your RV in the event of a major accident, you should consider investing in complete replacement coverage. When doing, however, you must be mindful of the type of replacement coverage being offered. Most policies will first offer you replacement insurance at the actual cash value of your vehicle. Simply put, this is the actual cash value minus depreciation. This may sound all fine-and-good, but you should know that RV’s typically don’t follow the same depreciation rates as other vehicles. This could leave you tens of thousands of dollars short of being able to afford a replacement vehicle.
It is true that RV’s share some of the same depreciation factors as cars, trucks, and SUV’s, such as:
- Declining value when new models with new features are brought to market
- Lack of information regarding a vehicle’s service and maintenance history
- Accumulation of mileage and general wear-and-tear
However, there are unique aspects to RV’s that cause them to depreciate at a faster rate than other vehicles. High fuel consumption, increased exposure to the outside elements, and the added energy requirement needed to power the vehicle’s comfort systems are among some of them. All of these add up to RV’s losing as much as 50 percent of their value within as little as five years after purchase.
Why Replacement Cost Coverage May Be Better
As such, you may be better served going with a policy that offers total loss replacement/replacement cost coverage. This gives you the exact amount needed to replace your RV with another that is of comparable value. With this coverage, you’re much more likely to be back enjoying the open road sooner. Request a free quote at https://rvinsurances.com/quote or call us at 1-844-727-7207.
As is the case with any significant financial investment, you need to consider all of the different risks that you may be assuming when purchasing an RV. Yet no other investment offers the potential of such a unique return. If you’re willing to dedicate the time and effort needed to properly research and manage the risks of RV ownership, then you’re virtually guaranteed to enjoy years and years of family fun and adventure.