Vehicle Operations Insurance: Are You Really Covered?

In the July 1998 installment of Emergency Vehicle Operations we examined an accident allegedly caused by a person who was driving a piece of fire apparatus while intoxicated. The apparatus involved was a 1970s-vintage aerial ladder. The apparatus was...


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Insuring apparatus for its actual cash value is not a bad choice. Your department probably has an established plan for financing or buying new equipment to replace old equipment (if you do not, develop one). If an engine or a rescue truck has to be "retired early" because it was totaled in a wreck, that does not mean your department did not get to use it for the years that you had it - you just "sold" it a little sooner than planned. You can still take the insurance money from the actual-cash-value settlement and use it as a down payment on a new rig.

There are, however, potential problems with actual-cash-value insurance. One problem is that if you do "total" a vehicle, you must negotiate with the insurance company to determine the actual cash value. An adjuster may say, for instance, that the useful life of your engine is 15 years, not 20, and if you cannot refute it, you will get a smaller check.

Another problem is that not every insurance company uses the classic or traditional definition for actual cash value. Some companies may define actual cash value as "fair market value," instead of replacement cost less depreciation. They may say they could depreciate the cost of repairs, even on a small claim, so that your department ends up paying part of the repair bill. Or they may insist on making the repairs as cheaply as possible, instead of doing it the way you want it done.

If your department has a solid financial plan for replacing old equipment, the insurance policy includes a good definition of actual cash value, and the carrier uses adjusters who are fair and reasonable, then actual cash value may be the way to go. But what other options are there? The next column will look at replacement-cost-value insurance.


Michael Wilbur, a Firehouse® contributing editor, is an FDNY lieutenant in Ladder Company 27 in the Bronx and a firefighter in the Howells, NY, Fire Department. He is an adjunct instructor at the New York State Academy of Fire Science and the Orange County Fire Training Center. Wilbur has developed and presented emergency vehicle operator courses throughout the country and has consulted on a variety of fire apparatus issues.