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Does insurance have to pay value or replacement cost?

Lake Stevens, WA |

I have a 2012 RSV4 R motorcycle which I wrecked a few weeks ago. THe insurance wants to total out the bike but they are not willing to give me the total cost it would be to replace the bike. The issue is that the bike is somewhat a rare bike and the only way to get a value on the bike is to price the bike what is new. A new bike also has a freight and setup fee which all dealers charge and the insurance is subtracting some money for the mileage on the wrecked bike. It is to my understanding that insurance is to pay what the actual replacement cost of the bike is, not the value. The difference in price is about $1,200 so I am pretty upset by this. THe KBB is also higher than the price they are giving but they also say they can't go by KBB.

I should also note that this bike is being financed through the bike so I am also told not form them but from other people I know that the bank basically has the power to allow the insurance to pay what they say whereas I don't really have a say at all.

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Attorney answers 5


You need to look at your policy as to replacement value versus fair market value. Most policies use fair market value, not replacement which means that you need to find a used version of your bike or a comparable one if not exactly the same that is for sale in this market. Take a look at the policy and see if there is an Appraisal section under collision coverage for very often policies have a proviso that allows each side to obtain their own appraisers to evaluate the loss if they continue to disagree on the value of the lost vehicle.

Kevin Coluccio

Kevin Coluccio


Crystal has stated the law well. You need to look at your policy.


Crystal gave an excellent answer and advice. Essentially, the insurer company's obligation comes down to policy language. So, you need to review your policy to determine what "value" the insurance company is obligated to pay. In many cases, on specialty cars or motorcycles, I recommend that the client purchase insurance through a specialty insurer that offers either replacement value or appraised value. However, these policies are usually reserved for "collector" type cars or motorcycles. Finally, the bank doesn't get to change the language in the insurance policy, the insurer is still obligated to pay what is required by the policy.

Crystal is correct about the "appraisal" section in your policy but, generally, I don't recommend this approach. By the time the appraisal process runs its course and you pay the costs of the appraisal process, you have paid more than the value of any disputed amount. Good luck.

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The carrier is obligated to pay the fair market value of the motorcycle (FMV). All to often this does not allow for the purchase of a replacement. This is an unfortunate aspect of the law.


Insurance policies usually pay FMV of the destroyed property. However, in the past, insurance companies carried extra riders for actual loss or replacement cost policies. So, if you have one of those policies, you could get your whole loss paid by your insurance. In other words, you get what you pay for. Best of luck.

This answer is provided by Manuel A. Juarez, Esq., El Abogado de Accidentes de Autos de California: 510-206-4492. El Abogado de Accidentes de Autos provides answers of a general context. These answers are not intended to form an attorney client relationship. El abogado de Accidentes de Autos y Lesiones Personales practices in Antioch, Berkeley, Concord, Oakland, Hayward, Martinez, Newark, Richmond, San Francisco and San Rafael. El abogado de accidentes y lesiones is licensed only in California. This information is good only in California and it is not to be taken as legal advice on car accidents, personal injury, divorce, bankruptcy or in any other type of situation. Esta respuesta es del Abogado de Accidentes de Autos y Lesiones Personales de Acidentes de carros, Manuel A. Juárez, 510-206-4492. Abogado Hispano de Accidentes, Divorcios, Abogado Latino de Accidentes, y Abogado de Acidentes de Oakland, Hayward, San Francisco, y California. Estas respuesta son solo para información general y no consisten en consejo legal sobre divorcios, mantención de esposas, mantención de hijos o bancarrotas. Las respuestas son comentarios legales que no forman una relación de abogado y cliente. Manuel Juarez, Esq., esta licenciado solo en el Estado de California.


Typically fair market value FMV.

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