Important KTAC Insurance Update

[Butch]

Folks I just received my annual KTAC Insurance renewal notice. Normally I would receive in the renewal package a copy of the new KTAC Insurance Policy for the next Policy period spelling out in detail all coverages, deductions, exceptions and limitations ... but not this year.

Yesterday, I received in the US Mail my annual renewal notice from Kubota KTAC Insurance Agency consisting of two sheets of paper, i.e. a cover letter from the Kubota KTAC Insurance Agency and an Equipment Physical Damage Policy Application from Ohio Indemnity Company, KTAC's Underwriter in the same envelope.

The Ohio Indemnity Physical Damage form was the same as I had always received. It spells out what Kubota equipment I own and the dollar amount I have each piece of equipment insured for if I'd have to replace it. My set initial coverage limits have never changed over the years however they did come with a hefty annual premiums that increased each year. It was worth it for the peace of mind.
Granted my B2410 is 22 years old and has 2600 hours on her.... it is very well maintained and in near perfect condition... I bought a policy through KTAC Insurance with at least enough coverage to soften the blow if I ever had to file a claim.

There are two elements on the Kubota Insurance Agency's cover letter that are game changers for the upcoming policy period. Here are the direct quotes verbatim from the letter dated May 2, 2022 inclusive of the bold type as presented in the letter:

First quote;
"This exclusive limited time offer is only valid until 06/12/22 , after which coverage will be no longer be available thru KTAC Insurance Agency for the equipment on this quote."

Second Quote;
"Benefits of the Policy:
Your renewal policy will offer the same coverage as you now enjoy. If there is a total loss on the covered equipment, the amount paid will be based on the Actual Cash Value of the equipment on the date of the total loss."

I called the KTAC Insurance Agency for clarification on what their Insurance Policy Definition was concerning their contractual term of "Actual Cash Value" and how would that affect my policy coverage in the event of a total loss. She said, (Paraphrased) "In he event of a total loss a KTAC Insurance Adjuster will be assigned to determine what the value of the equipment was at the time o the loss based on the condition, original cost of the equipment less depreciation, age and the number of hours on the equipment."

She also said (Paraphrased) "The only instance where KTAC would do a full replacement policy was on Kubota equipment covered under a current purchase installment plan regardless of what you had it covered for."

The thing that bugs me the most is.... in one sentence The Kubota Insurance Agency cover letter says by signing on for another policy year I'd enjoy the same coverage as in the current policy AND THEN in the very next sentence it changed by definition how you loss will be valued regardless of what you have it insured for and by a third party insurance adjuster at that.
Does that sound the same coverage to you all?

 

[jimh406]

No, it doesn't sound like the same coverage.

 

[NCL4701]

That’s a huge change, particularly on an older machine with substantial hours.

If you went from replacement cost to actual cash value (i.e. market value immediately prior to loss) I certainly hope your coverage limit went down to reflect ACV rather than RCV and your premiums went down a commensurate amount.

No real point wasting premium money on $30k of coverage to replace a machine when $8k ACV is the max you could possibly ever collect. (Obviously, those numbers are made up. I have no clue what RCV or ACV of your equipment is.)

Might be time to shop your coverage with other companies to see if you’re really getting a good deal at this point.

 

[Henro]

No, it doesn't sound like the same coverage.

Sounds like the coverage on my 20 year old van. And the reason I only carry liability insurance on it now. Because I know if I had an accident that was my fault, they would total the van and pay a pittance for it.

 

[Daferris]

Certified Insurance counselor and commercial lines sales agent here.... Both statements are correct in the legal sense....
The coverage is the same.... The perils that the tractor is covered for have not changed.
BUT what has changed is the loss settlement prevision. That has changed from replacement cost to actual cash value (ACV). In a nut shell on that old of a tractor with 2600 hours on it you are not going to get anything remotely close to what it would cost you to replace the tractor if it were a total loss.
Another phrase to watch for that is no better than ACV is " stated value" coverage that allows the insurance company to pay less than the insured amount if they can replace the item for less. The BEST coverage is "agreed" value (Typically you have to have a 3rd party appraisal at the time of binding coverage to determine the insured value) that is where you and the insurance company AGREE to the payment amount of a total loss BEFORE the claim. ALL other settlement options (including replacement cost) the payment amount is determined AFTER the loss.

Just a personal opinion but myself I would have self insured the tractor probably about the time it hit 5 years old. BUT everyone has their own "threshold of pain" I.E. how much of a financial hit they can afford to take. For some folks they can't sleep at night unless the tractor is fully covered. Others are able to afford to take the risk and are fine with the chance that they might lose a substantial amount of money if it were to be stolen for example.

There is not 1 answer that suits everyone....

 

[bbxlr8]

Certified Insurance counselor and commercial lines sales agent here.... Both statements are correct in the legal sense....
The coverage is the same.... The perils that the tractor is covered for have not changed.
BUT what has changed is the loss settlement prevision. That has changed from replacement cost to actual cash value (ACV). In a nut shell on that old of a tractor with 2600 hours on it you are not going to get anything remotely close to what it would cost you to replace the tractor if it were a total loss.
Another phrase to watch for that is no better than ACV is " stated value" coverage that allows the insurance company to pay less than the insured amount if they can replace the item for less. The BEST coverage is "agreed" value (Typically you have to have a 3rd party appraisal at the time of binding coverage to determine the insured value) that is where you and the insurance company AGREE to the payment amount of a total loss BEFORE the claim. ALL other settlement options (including replacement cost) the payment amount is determined AFTER the loss.

Just a personal opinion but myself I would have self insured the tractor probably about the time it hit 5 years old. BUT everyone has their own "threshold of pain" I.E. how much of a financial hit they can afford to take. For some folks they can't sleep at night unless the tractor is fully covered. Others are able to afford to take the risk and are fine with the chance that they might lose a substantial amount of money if it were to be stolen for example.

There is not 1 answer that suits everyone....

Interesting to hear this applied to old tractors that are used as tractors... The statement on agreed value is on-point for collector-classic cars/trucks/motorcycles and probably collectible antique tractors as well.

 

[fried1765]

Interesting to hear this applied to old tractors that are used as tractors... The statement on agreed value is on-point for collector-classic cars/trucks/motorcycles and probably collectible antique tractors as well.

My personal use only Kubota L48 TLB is covered by my " homeowners personal property replacement value coverage"
My 2006 Kubota TLB could only be "replaced" by a new L47 TLB, which with accessories, would likely now cost $70K+ .
USAA has repeatedly assured me that my machine would be "replaced", if it were destroyed by fire, or if stolen.
My L48 is 16 years old (251 hours)
I do not consider my total homeowner premium to be outlandish.
At 81 years old, if I had a tractor loss, I might try to instead negotiate for a cash settlement.

 

[bbxlr8]

Great points - I have state farm and will have to check on this but recall some bit about ratios or maximums on outbuildings.

I am on KTAC for at least the duration of the financing and I think I remember some discussions where they are now limiting or changing coverage on older tractors which is the OP's main point

 

[ACDII]

That changed last year based on your seeing it now. When I bought my L4060 I researched KTAC and compared it to HO. Full coverage for the first 5 years I believe, then ACV after that.

What you want to check is that they will still do repairs if damaged like when under finance. If the front gets damaged, will it still get repaired for the deductible. If not, you are no better off than with having it covered under HO.

 

[Henro]

Just a personal opinion but myself I would have self insured the tractor probably about the time it hit 5 years old. BUT everyone has their own "threshold of pain" I.E. how much of a financial hit they can afford to take. For some folks they can't sleep at night unless the tractor is fully covered. Others are able to afford to take the risk and are fine with the chance that they might lose a substantial amount of money if it were to be stolen for example.

There is not 1 answer that suits everyone....

Just a LOL comment, but I have always laughed when I heard the expression "I am self insured" which really means "I am not insured!"

Describes me to a T in many cases. But not for my home OR personal liability...

 

[D2Cat]

Just a LOL comment, but I have always laughed when I heard the expression "I am self insured" which really means "I am not insured!"

Describes me to a T in many cases. But not for my home OR personal liability...

Nope, self insured means I am willing to absorb the damage incurred without paying someone else if damages occur. Many companies self insure their employees health benefits. What do you think the deductible is on your home or auto? You're self insuring that portion.

 

[Dieseldonato]

Nope, self insured means I am willing to absorb the damage incurred without paying someone else if damages occur. Many companies self insure their employees health benefits. What do you think the deductible is on your home or auto? You're self insuring that portion.

Never thought of it that way, but yeah makes sense.

 

[Jester67]

When I researched KTAC before buying my L2501 in 2020 I found out that the replacement coverage was only for tractors financed through Kubota finance. If you paid cash/ finance through some other means the KTAC would be on the actual value at the time of loss NOT full replacement value. It was also underwritten by a company in Ohio most likely the same one above. I was told that at the end of the contract ( i paid for the full length of the loan) or if I paid it off early then I would have to switch to a yearly contract that only paid actual value. Again this would appear to be consistent with the post above and nothing new.

 

[Butch]

Certified Insurance counselor and commercial lines sales agent here.... Both statements are correct in the legal sense....
The coverage is the same.... The perils that the tractor is covered for have not changed.
BUT what has changed is the loss settlement prevision. That has changed from replacement cost to actual cash value (ACV). In a nut shell on that old of a tractor with 2600 hours on it you are not going to get anything remotely close to what it would cost you to replace the tractor if it were a total loss.
Another phrase to watch for that is no better than ACV is " stated value" coverage that allows the insurance company to pay less than the insured amount if they can replace the item for less. The BEST coverage is "agreed" value (Typically you have to have a 3rd party appraisal at the time of binding coverage to determine the insured value) that is where you and the insurance company AGREE to the payment amount of a total loss BEFORE the claim. ALL other settlement options (including replacement cost) the payment amount is determined AFTER the loss.

Just a personal opinion but myself I would have self insured the tractor probably about the time it hit 5 years old. BUT everyone has their own "threshold of pain" I.E. how much of a financial hit they can afford to take. For some folks they can't sleep at night unless the tractor is fully covered. Others are able to afford to take the risk and are fine with the chance that they might lose a substantial amount of money if it were to be stolen for example.

There is not 1 answer that suits everyone....

Could not have said it better... dead balls on the money.

 

[Butch]

That changed last year based on your seeing it now. When I bought my L4060 I researched KTAC and compared it to HO. Full coverage for the first 5 years I believe, then ACV after that.

What you want to check is that they will still do repairs if damaged like when under finance. If the front gets damaged, will it still get repaired for the deductible. If not, you are no better off than with having it covered under HO.

I agree..

 

[fried1765]

Just a LOL comment, but I have always laughed when I heard the expression "I am self insured" which really means "I am not insured!"

Describes me to a T in many cases. But not for my home OR personal liability...

The ONLY thing I am self insured for is the deductibles on my policies.
I really don't see how at this point I can loose with insurance over my remaining lifetime.
I once collected a new house, and contents worth over $350K.
I will always keep lotsa coverage!
Lightening can strike twice ......( fire was not caused by lightening)

 

[Daren Todd]

That’s a huge change, particularly on an older machine with substantial hours.

If you went from replacement cost to actual cash value (i.e. market value immediately prior to loss) I certainly hope your coverage limit went down to reflect ACV rather than RCV and your premiums went down a commensurate amount.

No real point wasting premium money on $30k of coverage to replace a machine when $8k ACV is the max you could possibly ever collect. (Obviously, those numbers are made up. I have no clue what RCV or ACV of your equipment is.)

Might be time to shop your coverage with other companies to see if you’re really getting a good deal at this point.

I carry a rider policy on my home owners insurance for replacement of my zero turn if lost, stolen, or totalled. Granted, won't cover repairs. But at least I can get another one. And it's about 1/4 the price of what KTAC was.

My 16ft landscape trailer is covered under my auto policy for theft and damages. That wasn't much either.

 

[Henro]

Nope, self insured means I am willing to absorb the damage incurred without paying someone else if damages occur. Many companies self insure their employees health benefits. What do you think the deductible is on your home or auto? You're self insuring that portion.

Agree. Self insured means you have no insurance and pay for every thing yourself, as I said… not a difficult concept. You take the risk and you take the consequence, if the bad happens.

That is what I generally do.

Granted, the deductible is self insurance, but it is generally a small percentage of what the potential payment could be.

So at the end of the day you either pay for insurance or you don’t.

 

[NCL4701]

The original post is great info, particularly for those with KTAC who may not be prone to close scrutiny of policy stuffer docs that come from insurance companies.

Thing that always bothers me a little about detailed insurance discussions beyond generalities in a forum like this is the coverages in various policies varies from state to state within the US, definitely varies from one country to another, and a place or type of usage that may seem minor to the owner may be the difference between payment and no payment to the insurer. You can also pay way too much for way too little by buying a policy or endorsement with ACV coverage when your usage of the equipment already qualified it for automatic RCV coverage on your homeowners for no additional premium, albeit usually without the peril of collision which can be important on these at times.

KTAC is KTAC. Past that, discussing your specific situation with a local agent experienced in covering equipment is probably a good idea to make sure you have the coverage you want and don’t have coverage you don’t want.

 

[JimmyJazz]

Cant really blame them. This type of thing happens all the time with insurance.