Diminished Value Coverage

When a vehicle being transported suffers damage, its market value often drops—even after perfect repairs. This coverage addresses the gap between a vehicle’s pre-accident value and its reduced market value following repairs. Auto dealers increasingly require this protection from specialized auto haulers to protect their inventory’s full retail value.

Constructive Total Loss (CTL) Coverage

This increasingly essential coverage protects against a challenging scenario: when a new vehicle is damaged during transport and can be restored to safe operating condition, but not to the pristine “new car” standard expected by dealerships and consumers. Without CTL coverage, transporters face significant financial exposure as dealers reject vehicles that don’t meet showroom-ready standards. This coverage is sometimes called consequential loss protection.

Additional Specialized Protections

• Over Height Load Coverage: Provides protection when loads exceed clearance heights, resulting in damage from bridges or overpasses—a common challenge for auto transporters.
• Theft from Unattended Vehicle Coverage: Unlike standard policies that exclude this risk, this coverage protects cargo even when the tractor/trailer must be temporarily left unattended.

Understanding Constructive Total Loss in Practice

A Constructive Total Loss occurs when a vehicle isn’t completely destroyed but is damaged to the point where the insurance company determines repairs are economically impractical. The insurance company will “total” the vehicle and take possession of the title. Typically, damage ranging from 50-60% of the stated value triggers a CTL determination. This makes accurate value declarations critical to avoid financial shortfalls.

Real-World Example:

Adam invested in two new flatbed trailers—a “lead” ($40,000) and a “pup” ($45,000). Believing he could handle repairs himself, he insured them at just $15,000 each to reduce his premium costs.

After an accident causing $12,000 damage to the lead trailer and $9,500 to the pup, Adam expected his $15,000 coverage per trailer would cover repair costs. However, the Claim Adjuster determined both trailers qualified as Constructive Total Losses. Adam received $30,000 from his insurer, but had to surrender ownership of both trailers.

The insurer sold the salvaged trailers for $40,000, reimbursed the $30,000 claim, and provided Adam the remaining $10,000. Adam ended up with $40,000 to replace $85,000 worth of equipment—a substantial $45,000 shortfall.

Had Adam accurately declared the trailers’ values, his premium would have been higher, but he would have received sufficient compensation to restore or replace his equipment properly—even in a CTL situation.