Sherry FlamardINSURANCE TIP

The stated amount endorsement establishes a maximum coverage limit for the cycle’s value. The Stated Amount Coverage endorsement provides coverage in the situation where the value of a cycle may be greater than a typical cycle of the same year, make and model, and the customer or agent wants this identified. Typical examples of when the endorsement may be appropriate include: Highly customized cycles, Custom-made or one-of-a-kind cycles, Cycles made by limited addition manufacturers.

Let’s say you buy an older cycle for $3,000 but then spend $20,000 converting it to a chopper. The actual cash value (ACV) of that cycle is somewhere between $3,000 and $23,000. The stated-value endorsement should be used to establish a value agreed upon by both the insured and your insurance company. Even though you spent $20,000 upgrading the chopper, it may only be able to be sold for $15,000. An appraisal is the best way to establish the true value of your bike.

The endorsement typically states an insurer will pay the lesser of actual cash value or the stated amount because the value of the cycle is subject to change after the endorsement is put on the policy. Poor economic conditions might lower demand for custom cycles, or the insured might not properly maintain the cycle. Either of these conditions may make the actual cash value less at the time of loss than the stated amount agreed to when the cycle was written.

It is important to talk with your Agent and be sure they explain the endorsement up front, so you fully understand how appraisals and stated value will work for your situation. You do not want to be surprised if you receive less than the stated amount at claim time. The stated amount should be reviewed periodically to make sure it is still accurate as market values change.

Keep your appraisals up to date and I recommend connecting with your agent annually. If you have questions or concerns about your custom cycle, please call my office. I am always happy to assist a fellow biker.

Sherry Flamard,
Sherry Flamard Agency
5140 W Peoria Ave., Ste. 146 • Glendale, AZ 85302
Office: 623-225-7299 • Mobile: 602-614-8736 • sflamard@amfam.com

May 25, 2016    Insurance Tips