These days, it is easy to spend between ten and twenty thousand dollars on a new ATV or UTV. With this kind of an investment, you will probably want to fully insure your new vehicle, just like you would with a car of the same value. Even if the value of your off road vehicle is much lower, it is still prudent to carry Liability along with some other basic injury coverage on it. So what is the price to insure such a vehicle?
First, if you are buying a brand new four wheeler or side-by-side, you can probably expect to spend between $100 and $400 a year in premium, if you an adult over age 25 in Minnesota with a good driving and claim record and average or better credit. If your machine is somewhat older, your cost to insure it will likely fall in the lower half of this range or maybe slightly less.
If your ATV isn’t worth too much, your main concern may be protection in case someone is injured. If you qualify for preferred rates, many carriers may offer basic Liability and/or injury coverage for $75 per year (the minimum premium on many policies). If you find a carrier willing to add the coverage to an Auto or Homeowners policy, your price might be even less.
Keep in mind that there are many factors that affect an insurance rate. I’d be happy to answer your questions and provide you with a personalized quote to protect your investment, as well as your peace of mind.
If you own a boat, four wheeler, ice house, motorcycle, camper, snowmobile, motorhome or jet ski, I hope that you have purchased insurance to cover your investment. But how well is your vehicle actually covered if there is a total loss?
There are basically four types of total loss settlement options offered in the insurance industry for specialty vehicles. Keep in mind that some of these options may be offered for some types of vehicles and not others. I’m presenting these options from most coverage to least coverage:
1. Replacement Coverage.
This is typically the best option, if you can get it. There are a number of variations of this coverage, but the basic premise is that if your vehicle suffers a total loss, your insurance carrier will pay to replace it with a brand new, current model year vehicle that resembles what you had as closely as possible. This means that you may receive more than what you originally paid for your vehicle. This option is typically only offered when buying the vehicle new, and it will usually age off your policy after a few years. In many cases, you may be asked for documentation for how much you paid new for your vehicle, which is then used to determine your physical damage premium.
2. Agreed Value
It may not be as good as a replacement guarantee, but Agreed Value still protects you from future depreciation, and this feature provides you the confidence of not having to wonder how much you would receive in a total loss. In some cases, you may be asked for documentation such as a bill of sale. In other situations, you may simply specify a value and if the insurance company agrees by issuing the coverage at that amount, then you are good to go. This agreed value is normally used to determine your physical damage premium. Depending on the type of vehicle and the carrier, Agreed Value may be available on vehicles of any age, vehicles up to a certain age or not at all. In some cases, it may age off (or require you to reset the value) after a certain number of years.
3. Actual Cash Value
With pure Actual Cash Value coverage, there is no discussion of the value at all when insuring the vehicle. Instead, if there is a total loss, the insurance company will complete their own valuation or appraisal of what your vehicle was worth immediately prior to the loss. This involves looking at its age, condition and features and comparing it to what other similar models have sold for or been offered for sale for in your region. This is the same method used to insure nearly all personal autos. Since no value has been mentioned, your physical damage premium will be based either on the cost new of the vehicle or simply on the insurance company’s knowledge of what claim payments for this kind of vehicle average.
4. Stated Value
If Stated Value sounds better to you than Actual Cash Value, then read this paragraph closely. Stated Value will never pay more than Actual Cash Value, but it may pay less. With Stated Value, you normally tell the insurance company what desired physical damage limit you wish to carry. In a total loss, you will be paid the LESSOR of the Actual Cash Value (as appraised by the insurance company) and the limit you set. Your physical damage premium is based on this limit, this stated value. So all the risk rests on you: if you state a value too high, you are paying for a level of coverage you won’t receive; if you state the value too low to save premium, you may be underpaid in a total loss. While it may not sound overly attractive compared to the options further above, Stated Value is often a practical way to easily and inexpensively establish coverage for many vehicles; the important thing is that you understand that Stated Value is not the same as Agreed Value. You may also wish to periodically review the stated value and adjust it as your vehicle depreciates.
Which of these valuation methods apply on the policy insuring your specialty vehicle? I can tell you that if you added your vehicle to either your Auto or Homeowners policy, it’s almost never going to be insured for Replacement or Agreed Value. In addition, I know several of the largest insurance carriers rarely (if ever) offer these options on any of their policies.
If you want Replacement or Agreed Value, you’ll normally only find it on specialty vehicle policy, and often you may need to go to an independent agent like us to get one with these options. A specialty vehicle policy may cost more than adding the vehicle to your Homeowners or Auto insurance, but in many cases it actually costs less. It will almost always provide more and/or better-fitted coverages, and it also may protect your Homeowners or Auto policy from going up or being non-renewed due to claims you file for your specialty vehicle. A specialty vehicle policy may not offer Replacement or Agreed Value in all cases, however; so you’ll still need to talk to your agent about the options available to you.
Have questions? I look forward to hearing from you so I can answer them.
One question clients frequently ask me is what will happen if they buy a vehicle on the weekend and get in an accident on the way home – before they are able to reach me to add the vehicle to their insurance policy.
There is much confusion on this point. Some people have heard that you have ten days of free coverage or that you have a thirty-day window to call and add your vehicle. Neither of these are necessarily correct.
Most Personal Auto insurance policies do have a “newly acquired vehicle” provision. This provision provides a window of time after you buy a vehicle to report it and be covered as of the date you purchased it. However, there are several points of caution I’d like to share with you.
First caution tip: You need to have an existing policy in place. Once I had a prospective client come in. He had recently purchased a vehicle and been told by the dealer he had “thirty days to get it insured”. The problem was that he did not have an existing Auto insurance policy; so there was no policy to provide him a window to report the vehicle for retroactive coverage. If you are buying a vehicle and don’t already have Personal Auto insurance, you shouldn’t drive the vehicle off the lot.
Second caution tip: If you are the one buying the vehicle, you must have an insurance policy in your name. Let’s say Junior has been covered as a driver on Mom and Dad’s insurance for two years since he got his license. Now that he is 18, he goes out on a Saturday and buys a vehicle in his own name. Unfortunately, he gets into a wreck on Sunday evening. On Monday, Dad calls to report the vehicle and the accident and Junior and his parents confront an unwelcome surprise: The policy was in Dad and Mom’s name. Junior was just a driver. There was no reporting window to report the vehicle purchase, because Mom or Dad didn’t buy the vehicle. Junior needed to have arranged for coverage before he drove off the lot. (Similar issues can arise when buying a vehicle in the name of a trust or a business.)
Thirdly, there is no standard for how long you have to report your new vehicle. Different insurance companies set different time limits for different situations. Depending on your insurance carrier, whether it is an additional or replacement vehicle, what coverages you currently carry on other vehicles, what coverage you expect to receive on this vehicle and even where you are in your policy period, you may have as little as less than a day or as long as 364 days to report your vehicle for retroactive coverage. While most policies will provide at least 3-4 days in most situations and often you may have a couple weeks, there are exceptions. Some policies even include a stipulation that to have any reporting window at all, you must insure all autos that you own with them – a problem if you own an uninsured parked vehicle or maybe a collector vehicle on its own special policy.
Fourth, you don’t have any reporting period at all under your Personal Auto policy when you buy a boat, four-wheeler, snowmobile, motorhome, camper or even a motorcycle. This reporting period provided in your Auto policy typically applies to private passenger automobiles only – meaning cars, SUVs, light vans and light trucks (up to one ton, usually). Of course, if you already have a Motorcycle policy in force, it may give you some kind of a reporting period for buying a second motorcycle. But if it is your first bike, you definitely aren’t covered if you just drive it off the lot.
Finally, this reporting period is not free coverage. When you call to add your vehicle effective the purchase date, you will have to pay for coverage back to the purchase date, assuming your request falls within the terms of your policy.
At this point hopefully you can understand why I’m saying that the issue of “coverage to drive off the lot” is not always as simple as many people think. That’s why I encourage you to call your personal insurance agent before you make a vehicle purchase to discuss your situation and confirm how much time you have to report your vehicle after you buy it. If you don’t have a relationship with a personal agent to get answers to these kinds of questions, then maybe we should talk.
Whether you are on the road, on the water or riding down a trail, one of the risks that you face 'behind the wheel" is being injured in an accident caused by a irresponsible driver, boater or rider. Let's face it - someone who operates their vehicle irresponsibly is unfortunately also less likely to be adequately insured.
If you seriously hurt in an accident, this could have serious financial affects going forward. While I hope that you have good health insurance to cover your resulting medical bills, that won't cover your lost income if you can't work or the special care or assistance you could need if permanently disabled.
Uninsured and Underinsured Motorist coverage protects you financially if you are injured in an accident caused by someone without any insurance (Uninsured Motorist coverage) or someone with low limits insufficient to fully compensate you for the financial effects of your injury (Underinsured Motorist coverage). Another risk that you face is an accident caused by a hit and run driver; if that driver can't ever be identified, they are "uninsured" for all practical purposes, as you aren't going to be able to collect under their Liability coverage.
Whether you carry this coverage (and how high of limits you carry) could have a serious impact on both your financial future and your quality of life after a serious accident for which someone else is at fault. This coverage is often overlooked but is quite important.
Here's some information on how this coverage works for different types of insurance policies:
On your Auto policy
Minnesota Auto policies are required to include both Uninsured Motorist and Underinsured Motorist coverage, at no less than limits of $25,000 per person and $50,000 per accident. However, most policies are written with higher Uninsured/Underinsured limits equal to your Bodily Injury Liability coverage, which is usually a very small percentage of your overall policy premium.
On your watercraft policy
Unlike Auto policies, watercraft policies don't always include this valuable coverage, even though there are many, many boats out on the water without any insurance at all. Protecting yourself against uninsured boaters is quite inexpensive - maybe $10 or $20 dollars a year on average. Therefore, we usually include it as a standard coverage included on watercraft policies we quote. However, we see many boat policies purchased elsewhere that don't include this valuable protection.
On your motorcycle, ATV or snowmobile policy
Powersports policies also aren't required to carry this protection. Unlike Auto and Watercraft policies, there is a much higher risk of being injured on a bike, sled or four wheeler; so Uninsured/Underinsured Motorist becomes a more expensive option. But for the same reasons, it is protection you should seriously consider paying for. Because of the added expense, we offer this as optional and encourage our clients to seriously consider adding this protection to their powersports policy.
On your Personal Umbrella policy
Personal Umbrella policies provide an additional layer of Liability coverage if you are sued for more than the limits on your Auto, residential, boat or powersports policy. Many Umbrella policies also offer the option to add Excess Uninsured/Underinsured Motorist, which broadens your additional layer of protection, so that it covers not only your risk of being sued if the car accident is your fault to also your risk of financial loss as the victim.
Regardless what we include on our initial quote, we give our clients the final choice on what optional coverages are included in their policies.
Ice houses have come a long way in the last few years. Many of us hardy Northerners have invested in fish houses which are becoming more and more like full-amenity camping trailers, with the added bonuses of being much better heated and insulated and being able to be lowered onto the ice. We now have a manufacturer right here in Bemidji cranking out these units fast as they can.
First of all, is there a legal requirement to carry insurance coverage on an ice house? The state of Minnesota requires you to carry Liability coverage while on public roads. The good news is that for a trailer, your Minnesota Personal Auto policy will extend Liability coverage from the vehicle pulling the trailer. (Note that coverage might work differently on a commercial auto policy.) But as long as your pickup is covered under your Minnesota Personal Auto policy, whatever it is hauling is covered for Liability. So if you backup into something with the trailer or swing to wide and hit another vehicle, the resulting property damage will be covered by the policy covering your vehicle pulling it.
However, this does not mean that any damage to the fish house from such a collision will also be covered by your Auto insurance policy. Unless you add the fish house as a trailer to your policy for additional premium, your Personal Auto insurance won't cover any damage to it, even if it is being pulled by a covered vehicle at the time the damage occurs. Homeowners policies do usually provide some coverage for trailers, but this is usually limited to one or two thousand dollars - not nearly enough for newer fish houses - many of which are worth $10,000 to $25,000 new.
So how should you go about insuring your investment? You have a couple options.
As mentioned above, you may be able to add the fish house as a trailer to your Auto policy. This will typically give you coverage for physical damage, theft or falling through the ice. However, coverage will usually be limited to the current depreciated value (or the value you stated, whichever is less). Also, if someone breaks into your ice house and steals personal property, most Auto policies won't cover the personal property loss - only the damage to fish house itself.
Keep in mind that in the event of a break-in, you may be able to file a claim on your Homeowners policy for the items stolen from your ice house, but this would mean absorbing both your fish house deductible and your Homeowners deductible -which is usually $1000 or even more. Also, filing a theft claim on your Homeowners policy usually leads to increased rates going forward.
To get better, more well-rounded coverage, we recommend considering a specialized RV policy to insure your fish house. Not only can you get coverage for its contents, but if it is brand new you may be able to secure Total Loss Replacement coverage - which would pay for a new unit in the event of a total loss within the first few years (instead of just paying the current depreciated value). You may also be able to add Roadside Assistance and other coverage features as well.
What questions do you have about insuring your fish house? Send us a message and let us know.
It’s winter. There is plenty of snow on the ground, and one of northern Minnesota’s great pastimes is in full swing – snowmobile season in the north country. Do snowmobiles need to be insured in Minnesota?
The answer is that you can legally operate a snowmobile in Minnesota without insurance, but that doesn’t mean that you should. Not only is the value of your sled at risk if you get in an accident or your snowmobile is stolen, but, more importantly, your financial assets and future could be at risk as well if there is a serious injury for which you are held responsible.
If you think that a snowmobile accident is too unlikely to ever happen to you or someone you know, think again. Each year, around 14,000 people in North America are injured on snowmobiles, with approximately 200 snowmobile fatalities. This shouldn’t be surprising, since snowmobile these days weigh up to six hundred pounds and can reach speeds of 90 miles per hour (way above Minnesota’s 50mph maximum speed limit).
Just like when you are driving your car, you are financial responsible for any injury or property damage that results from your actions operating a snowmobile. That’s why Liability insurance coverage is important – protection against the potential of a financially catastrophic loss if there’s a serious accident.
Beyond Liability insurance, you should consider purchasing Physical Damage coverage for your sled. New snowmobiles are now costing more than $11,000, and even a used sled may represent a significant financial investment worthy of protection.
Physical Damage coverage will typically cover damage caused by accidents, theft and even fire if your snowmobile is stored in a garage that burns down. (Contrary to common assumptions, snowmobiles are not covered by most Homeowners insurance policies, even while stored in your garage.) If you are buying a new sled, ask us about optional Replacement Cost coverage, which would pay to replace your snowmobile with a brand new one, in the event of a total loss.
Other coverage you should consider for your snowmobile include Medical (to cover your basis medical bills if hurt while riding) and Uninsured/Underinsured Motorist (to protect yourself against riders and other motorists who don’t do the prudent thing and buy coverage – in case you are injured in an accident).
Snowmobile insurance is typically less expensive than Auto insurance. In fact, a seasoned adult rider with a good driving record may be able to fully insure their sled for $10 or $20 a month, or even less for just basic Liability coverage.
What questions do you have about snowmobile insurance? We’d love to hear from you.
Ken Cobb is owner of Pine Country Insurance and has been active in the insurance industry for over 15 years. Meet Ken.
Coverage descriptions found in this blog are summaries provided for general educational purposes and cannot fully detail the terms, conditions, limitations or exclusions of a specific insurance policy. Please read your policy carefully.