Motorhome Replacement: Why Standard Insurance Isn’t Enough
Motorhome owners face a troubling reality when standard insurance policies fail to match their investment’s actual value. The numbers tell a stark story: the cost of auto damage claims has surged, yet many policies still pay only the actual cash value during claims.
Unfortunately, many discover their vulnerability only after filing a claim. Standard policies handle depreciation value calculations in ways that leave owners shouldering unexpected costs. Motorhome owners feel this impact particularly hard because today’s recreational vehicles cost significantly more to repair or replace than previous generations. This isn’t just a motorhome issue, though.
The 2022-23 SGI Auto Fund’s annual report highlights that damage claims in the current year, not including catastrophe claims, are up 23.4% compared to the previous year. This jump is due to more claims happening and each claim costing more. As people are driving more often after the pandemic slowdown, we’ve seen more claims overall. On top of that, inflation and ongoing supply chain issues have driven up the average cost of each claim.
Catastrophe claims themselves are also $40.5 million higher than the previous year. This is because there were five more major weather events in 2023. At the same time, the average cost for each damage claim increased from $5,479 to $6,447 (SGI Auto Fund Annual Report).
The gap between what you paid for your motorhome and what insurance covers grows wider each year your vehicle ages. Meanwhile, replacement costs for comparable new models keep rising, creating a dangerous financial squeeze that standard policies simply cannot address.
Over the past 10 years, motorhome sales have been increasing across Canada. These vehicles become more luxurious and sophisticated with each passing year. Sandbox can help protect your new asset with a delightfully simple insurance policy.” – Ro Allie, Saskatchewan Growth Partner at Sandbox Mutual Insurance.
We’ll explore how replacement cost coverage works with Sandbox Mutual Insurance and why actual cash value coverage falls short
Standard Coverage: The Foundation
A standard auto policy offers liability coverage for your motorhome, which means they’ll cover amounts you become legally responsible for paying due to your motorhome’s use or ownership. You can choose liability limits from $1 million to $5 million.
When it comes to damage to your motorhome, your policy gives you the option to choose a lower deductible if you make a collision or comprehensive claim.
- A collision loss means your motorhome is damaged from hitting another vehicle or object.
- A comprehensive loss covers any other direct damage to your motorhome outside of a collision.
Where Standard Policies Fall Short
Standard policies typically cover your motorhome at actual cash value rather than replacement cost. This distinction becomes increasingly important as your motorhome ages.
What does this mean for you? If your three-year-old motorhome initially costs $100,000 but is written off as a total loss, actual cash value coverage might pay only $60,000 after depreciation deductions.
The Role of Depreciation in Motorhome Claims
How much do you think your three-year-old motorhome is actually worth today? Unfortunately, the answer might shock you when filing an insurance claim. Depreciation quietly erodes your financial protection each year, creating gaps in coverage. This invisible threat leaves many owners discovering too late that their coverage falls drastically short of replacement needs.
How depreciation affects claim payouts
Depreciation strips away your motorhome’s value the second you drive it off the sales lot. When insurers calculate settlements, they rely on Actual Cash Value (ACV)—essentially, your replacement cost minus every year of depreciation that’s accumulated.
Insurers assess your motorhome’s current market value, which has decreased over time due to depreciation reflecting aging, wear and tear at the time of loss. Insurance policies typically limit coverage to this current value rather than your original purchase price.
This approach ensures the insurer’s payout matches actual market worth at claim time—not what you originally invested or what a comparable replacement would cost today.
Actual Cash Value vs. Replacement Cost:
Definition
Actual Cash Value (ACV) represents what your motorhome is worth today, after accounting for depreciation from age, condition, and market trends. Insurance companies calculate this using depreciation tables and market research to determine the current worth—essentially th value of your motorhome immediately before the loss occurred.
The math is simple: ACV equals replacement cost value minus the depreciation.
Replacement Cost Value (RC) takes an entirely different approach. This coverage pays the full expense of replacing your motorhome or damaged components with new items of similar quality and kind, without subtracting depreciation.
Rather than focusing on what your old motorhome was worth at the time of the loss, RCV looks at what you’d pay to replace it with something comparable and new.
Pros and cons of ACV vs. RC
ACV policies appeal to budget-conscious motorhome owners because premiums typically run lower than replacement cost policies. The reduced cost makes sense since potential payouts are smaller. For owners of older vehicles where replacement cost coverage might seem expensive, ACV can appear attractive.
Replacement cost policies carry higher premiums, yet they deliver much stronger protection. The primary advantage? You receive sufficient funds to actually replace your motorhome or damaged components without bearing additional costs. This becomes increasingly valuable for newer motorhomes where the gap between purchase price and depreciated value grows wider each year.
Mike Hordichuk, VP of Product Development at Harvard Western Insurance commented,
One of the biggest issues we run into with motorhome claims is underinsurance. It’s a tough situation when you realize you’re underinsured and facing significant out-of-pocket costs, especially with today’s repair and replacement expenses. We want to help clients avoid that financial squeeze. It really highlights why it’s so critical to insure your motorhome for its correct replacement value
.
Why Choose Sandbox Mutual Motorhome Coverage
Sandbox Mutual Insurance addresses the coverage gaps that leave motorhome owners vulnerable during claims.
Replacement Cost Coverage
Sandbox offers Replacement Cost Coverage for brand-new motorhomes. This type of coverage pays to replace your total loss motorhome with a brand-new version without subtracting depreciation.
It is available for five years on eligible motorhomes, giving insureds extra protection and peace of mind.
After the 5 years of replacement coverage have passed, all losses would be settled on an Actual Cash Value (ACV) basis. Depreciation is determined by reviewing the age, condition, and life expectancy of the property immediately preceding the loss.
Additional Coverage Options
Road Hazard Glass: This coverage pays for the repair or replacement of your motorhome’s windshield and surrounding glass if they are damaged by an object thrown up from the road or another vehicle. You can choose deductible options of $50, $100, and $200.
Loss Of Use: This coverage pays for the rental of a substitute vehicle while your motorhome is out of use due to a Collision or Comprehensive claim. It even includes “downtime” coverage, which pays the rental company for the time they are unable to rent out a vehicle that was damaged by a covered peril while in your custody. Coverage limits are $1,500, $2,250, and $3,000, so insureds are able to find an option that works perfectly for them.
Included Coverage Options
Family Protection Coverage: Included with your liability coverage, Family Protection helps protect you and your family if you’re injured in an accident caused by someone with little to no insurance. This coverage matches your liability limit, up to $2 million.
The motorhome insurance market presents a clear choice: accept the limitations of standard coverage or secure true protection through replacement cost policies.
In Storage Coverage: Even when your motorhome is unlicensed at the end of the summer, your Sandbox coverage stays in place to protect you from mishaps while it’s in storage. Just remember that for this coverage to apply, unlicensed vehicles should be parked on your private property, not on public streets.
Replacement cost coverage eliminates the guesswork and frustration that comes with depreciation calculations during claims. While the premium difference might seem significant initially, it pales compared to the potential out-of-pocket costs you’d face with standard coverage after a major loss.
Sandbox Mutual Insurance addresses the fundamental flaws in typical motorhome policies. Their replacement cost coverage and flexible deductibles provide the peace of mind that standard policies simply cannot deliver.
Protecting that investment properly ensures you can focus on what matters most – enjoying the open road ahead.
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Posted in Auto on June 16, 2025 by Hope Prost
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