Yup, the moment you sign the buyers order it goes from a new car to a used car. Biggest depreciation that happens on a vehicle are within those few seconds.
Posted: Thu Jan 28, 2010 05:10 am Post Subject: Depreciation
Your car depreciates by 5% - 20% the moment you sign the papers and drive off the lot. Most cars within 5 years of their ownership retains only 35% of its original value.
Posted: Sat Jan 30, 2010 12:59 pm Post Subject:
When does a car start to depriciate?
As the others have said, the second your name is on the dotted line..
Posted: Sat Jan 30, 2010 11:01 pm Post Subject:
We should clarify new vs. used. New is an immediate depeciation. There's a reason for this that has nothing to do with insurance. The economics behind it are the assumption that no new car would be worth selling unless it were a lemon. Of course, there are several reasons why this wouldn't be the case--no the insurance company isn't going to listen to your appeal.
I'm no P&C expert, but I always thought it was sort of cheap on the insurance company's behalf to limit indemnification on a brand new car to replacement value and using depreciation shcedules to determine that amount. The economics behind it don't match up with the economics behind depreciation for resale values. I'm open to any explanation from someone with a better background in P&C than mine.
Posted: Sat Jan 30, 2010 11:37 pm Post Subject:
I'm no P&C expert, but I always thought it was sort of cheap on the insurance company's behalf to limit indemnification on a brand new car to replacement value and using depreciation shcedules to determine that amount
I can see arguments for both views... but bottom line is that the insured is getting what they paid for. I've seen some carriers offer RCV for vehicles less then 2 years old. I can't remember is this was an endorsement or built into the policy.
Posted: Sun Jan 31, 2010 01:57 pm Post Subject:
I've recently seen some replacement (auto) policys as well..The ones I've seen were endorsed, therefore the owner paid that additional premium for this.
BNTRS, I see your point 'kind of'...the carrier owes the ACV of the vehicle. Well, the ACV of a brand new car is what the market supports. Now having said that, the way that most 'brand new' (say within six months of ownership and reasonable miles) vehicle total loss claims that I've handled have been settled as follows..Starting with the amount anyone could walk on to the lot and buy this vehicle for then a certain dollar amount is deducted per mile (I think it's the same as the IRS allows for mileage, but I can't remember for certain, maybe .38 a mile).. Assuming of course that the vehicle is free from any 'non' accident related damage(s)
Posted: Sun Jan 31, 2010 07:05 pm Post Subject:
I have this with one of my vehicles we purchased new. It's an adapt (not sure what the exact term is) of the policy. Our policy covered the 1st year of ownership including any depreciation (regardless of miles). It gaurantees that if the vehicle totals, replacement of same make, model. Sort of like equal or lesser value. It's quite expensive. I will probably not consider the option with a new vehicle down the road. Insurance companies have offered this for years, it was something not advertised as much as it is today.
Posted: Wed Jan 27, 2010 06:48 pm Post Subject:
The moment the seller hands you the keys.
Posted: Wed Jan 27, 2010 08:57 pm Post Subject:
Yup, the moment you sign the buyers order it goes from a new car to a used car. Biggest depreciation that happens on a vehicle are within those few seconds.
Posted: Thu Jan 28, 2010 05:10 am Post Subject: Depreciation
Your car depreciates by 5% - 20% the moment you sign the papers and drive off the lot. Most cars within 5 years of their ownership retains only 35% of its original value.
Posted: Sat Jan 30, 2010 12:59 pm Post Subject:
When does a car start to depriciate?
As the others have said, the second your name is on the dotted line..Posted: Sat Jan 30, 2010 11:01 pm Post Subject:
We should clarify new vs. used. New is an immediate depeciation. There's a reason for this that has nothing to do with insurance. The economics behind it are the assumption that no new car would be worth selling unless it were a lemon. Of course, there are several reasons why this wouldn't be the case--no the insurance company isn't going to listen to your appeal.
I'm no P&C expert, but I always thought it was sort of cheap on the insurance company's behalf to limit indemnification on a brand new car to replacement value and using depreciation shcedules to determine that amount. The economics behind it don't match up with the economics behind depreciation for resale values. I'm open to any explanation from someone with a better background in P&C than mine.
Posted: Sat Jan 30, 2010 11:37 pm Post Subject:
I'm no P&C expert, but I always thought it was sort of cheap on the insurance company's behalf to limit indemnification on a brand new car to replacement value and using depreciation shcedules to determine that amount
I can see arguments for both views... but bottom line is that the insured is getting what they paid for. I've seen some carriers offer RCV for vehicles less then 2 years old. I can't remember is this was an endorsement or built into the policy.Posted: Sun Jan 31, 2010 01:57 pm Post Subject:
I've recently seen some replacement (auto) policys as well..The ones I've seen were endorsed, therefore the owner paid that additional premium for this.
BNTRS, I see your point 'kind of'...the carrier owes the ACV of the vehicle. Well, the ACV of a brand new car is what the market supports. Now having said that, the way that most 'brand new' (say within six months of ownership and reasonable miles) vehicle total loss claims that I've handled have been settled as follows..Starting with the amount anyone could walk on to the lot and buy this vehicle for then a certain dollar amount is deducted per mile (I think it's the same as the IRS allows for mileage, but I can't remember for certain, maybe .38 a mile).. Assuming of course that the vehicle is free from any 'non' accident related damage(s)
Posted: Sun Jan 31, 2010 07:05 pm Post Subject:
I have this with one of my vehicles we purchased new. It's an adapt (not sure what the exact term is) of the policy. Our policy covered the 1st year of ownership including any depreciation (regardless of miles). It gaurantees that if the vehicle totals, replacement of same make, model. Sort of like equal or lesser value. It's quite expensive. I will probably not consider the option with a new vehicle down the road. Insurance companies have offered this for years, it was something not advertised as much as it is today.
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