Value Over Time: Understanding Depreciation with RV Insurance in Alberta

By Sam Lemna | February 13, 2024

While you enjoy your RV adventures in Alberta and beyond, it’s essential to understand how your insurance coverage works. In this article, we delve into the often-overlooked aspect of RV insurance – depreciation. Understanding how depreciation impacts your insurance claims is a key financial consideration and helps you make informed decisions when purchasing coverage.  

What is depreciation? 

Depreciation is the decrease  of your RV’s value over time.  This is due to wear and tear, increased age, and market demand. Whether you buy a new or used RV, its value typically depreciates in value over time. This impacts its resale value and potentially impacts your insurance coverage.  

Why does depreciation matter for insurance in Alberta? 

When you purchase RV insurance in Alberta, you need to decide on your loss settlement: this determines the amount you will be paid in the event of a total loss claim on your RV. There are two main options: actual cash value and replacement cost. Depreciation matters when it comes to the actual cash value loss settlement.  

Actual Cash Value (ACV) 

ACV is the depreciated value of your RV at the time of loss. This is usually calculated as the original purchase price minus depreciation.  

This loss settlement option results in lower premiums, but your payout will also be lower.  

Replacement Cost 

Replacement cost ensures you can replace your RV with a new, similar model. It does not account for depreciation. Premiums for this coverage are higher, but you have additional peace of mind that you can replace your RV. Keep in mind there are age restrictions for both trailers and motorhomes for this coverage – ask our experienced RV insurance brokers for specifics.  

The Role of Depreciation in RV Insurance Claims in Alberta 

If your RV is written off as a total loss by your RV insurance company after a covered claim, your loss settlement coverage will determine how your RV is valued and how much money you will receive. If you have ACV coverage, depreciation matters. Your insurer will take the original purchase price of your RV and subtract the depreciation amount.  

For example, let’s say you have an RV that you purchased for $16,000 several years ago. Unfortunately, your RV is severely damaged in a big storm and written off as a total loss by your insurance company. You have ACV coverage so your insurer will take $16,000 and subtract depreciation. Let’s suppose that in the current market, your RV is valued at $11,000 by your insurer. This is the amount you will receive for the total loss of your RV (minus your deductible if it isn’t waived). 

Keep in mind you can contest the value determined by the insurer. You’ll need to provide evidence such as: 

  • Listing of RVs of the same or similar age, make and model for sale. 
  • Receipts for upgrades to your RV that may have impacted the value. 
  • Receipts for maintenance and repairs for your RV. 

Your broker can help you choose the right loss settlement option and explain how RV insurance claims and depreciation work in Alberta. Feel free to reach out with any questions or to review your policy. Safe travels and may you enjoy your RV adventures!