Originally Posted by sweryap
It's a little scary though, that the insurance company gets to make such a subjective decision on what the direct replacement value would be...
They only get to make a subjective decision if you opt for the cash, because they can depreciate all your parts.
Here's the scenario: Let's say you have a 98 XJ with 210,000 miles on it, worth about $3200. And you have an ARB front bumper ($1000 new), a Warn M8000 winch ($600 new), and an OME 3" lift ($900). So to replace everything today, it would cost you $5700.
Your XJ gets stolen 3 years after you built it.
If you take the cash, they can say your ARB Bumper has a 2 year useful life and is worth $0 three years later. Your Warn M8000 has a 5 year useful life and is worth $200. Your OME Lift has a useful life of 8 years and is worth $340. Since you have a $250 deductible, they cut you a check for $3490. You're out of pocket $2210 to get you back to where you were.
If you push for a direct replacement....they find you a 98 XJ with 218,000 miles on it that has no lift. Separately, they find you a used ARB front bumper and an M8000 winch that they ship to your house. Value for the XJ is diminished by $50 for the extra 8,000 miles (making this up). They can't find a suitable replacement used lift. You end up getting a check for $140 and they wish you luck finding a suitable replacement lift. You're out of pocket $760 to get back to where you were.
This works better for stock vehicles because it easier for the insurance company, but call your agent to see if you can get that kind of coverage. We were with Travelers.