Financing Kubota Financing Question

[bandit67]

If you get the coverage through Kubota, then everything that has been financed will be covered.

I'm not getting the coverage through Kubota because my homeowner's policy already covers the machine & attachments when on my property, minus my deductible, at no additional cost. My ins. agent fills out a form for Kubota showing coverage.

If I decide to take on paying jobs, I can take out a policy covering the machine off my property, plus any liability I'll need for working on someone else's property.

 

[JoeG]

Be careful with the Kubota insurance and make sure you are making an apples-to-apples comparison. Your homeowners or inland marine policy should cover your asset at cash value. The Kubota policy covers your equipment at the value of the balance of the loan. That makes a big difference to me! If after two years of your three year loan your original 20k tractor is destroyed and has a used market value of 14k but you only owe 6k then the Kubota policy only pays Kubota the 6k. In essence it is only there to protect Kubota, that's why it costs so much less than a cash value based policy.

 

[bandit67]

Good points, Joe!

When I was checking with my insurance agent, we were talking about full replacement value, at whatever time the replacement needs to happen, so that I get a brand new machine & implements if my machine is destroyed, stolen, etc. They do it that way because similar used tractors can be very difficult, if not impossible, to find in a reasonable time frame.

 

[seapea]

Be careful with the Kubota insurance and make sure you are making an apples-to-apples comparison. Your homeowners or inland marine policy should cover your asset at cash value. The Kubota policy covers your equipment at the value of the balance of the loan. That makes a big difference to me! If after two years of your three year loan your original 20k tractor is destroyed and has a used market value of 14k but you only owe 6k then the Kubota policy only pays Kubota the 6k. In essence it is only there to protect Kubota, that's why it costs so much less than a cash value based policy.

That's not true. If it were, the policy would cost more in the early years of the loan. Read section 5 of the policy "Limit of Liabilty Settlement Options". This is where it disusses what will be paid out, and it only refers the value of the tractor (collateral), replacement cost, or cost of repair, not the amount due in the loan.

 

[Foozle]

That's not true. If it were, the policy would cost more in the early years of the loan. Read section 5 of the policy "Limit of Liabilty Settlement Options". This is where it disusses what will be paid out, and it only refers the value of the tractor (collateral), replacement cost, or cost of repair, not the amount due in the loan.

Seapea -- does it say anything about the attachements, if they were also included in the financing deal? Also, I called Farm Bureau today and they were quoting a pretty good savings from the Kubota quote, so I might go that route. The Farm Bureau doesn't include commercial coverage, but I'm just using on my property in any case, so should be ok.

 

[seapea]

It covers everthing that was financed and nothing that wasn't financed. I still haven't purchased the insurance. I'm waiting for the agent to respond to the fpllowing in the Exclusions section:

20. For loss while the collateral is in the possession or control of you, your employees, or your representatives.
​

This to me sounds like it is pretty much never covered. When I told her this, she paused, seemed confused, and said she'd have to ask her boss about it.

Chris

 

[Foozle]

It covers everthing that was financed and nothing that wasn't financed. I still haven't purchased the insurance. I'm waiting for the agent to respond to the fpllowing in the Exclusions section:

20. For loss while the collateral is in the possession or control of you, your employees, or your representatives.
​

This to me sounds like it is pretty much never covered. When I told her this, she paused, seemed confused, and said she'd have to ask her boss about it.

Chris

That does seem like an odd exclusion given it will most always be in your possession. I'm glad you are studying the policy as I'm learning also. I'll need to have some sort of insurance in place before I take delivery so I'm scrambling a bit at this point. I don't think you can cancel the Kubota coverage midstream either, from what I understand.

 

[seapea]

Sections 18 and 19 talk about cancellation. You can cancel at any time. The last paragraph says:

...return premium will be calculated at ninety (90) percent of pro-rata basis, les the policy fee specified in the DECLARTIONS.
​

I'm assuming the policy fee is some fixed amount you paid that is basicaly a documentation or processing fee.

 

[JoeG]

Seapea,

Glad to hear that you are happy with your coverage.

My information is based upon my own purchase experience a few years back, a conversation with the folks at Chubb who underwrite for Kubota, and various discussions here on TBN. Of course I could be wrong. Maybe they changed the policy form?

BTW, when I read the word collateral, in the context you wrote it, I understand that to be the collateral value (the amount you owe), not the total value of the collateral. Also, since the rate for the loan is determined by the loan duration any change in rate over that time because of a declining property value is already reflected in the aggregate rate.

But the point of my post was to encourage buyers to make valid comparisons. There are a lot of products out there that have a lot of "includes" and "excludes". A decision based on cost alone would not necessarily be a wise one.

The skeptic in me views it like this. Kubota insists that the buyer provide security for Kubota. Kubota frankly has no stake in protecting the purchaser. If you cannot prove that you can provide security for Kubota they will make sure you can protect Kubota. I'd prefer to find a policy that I'm sure protects me. If that product also protects Kubota then that's great too. Kubota happens to own the captive that ultimately takes the risk for these policies.

One caveat is that the policy is only tied to the life of the loan. If you pay the loan off early do you lose your coverage?

My question for Kubota is: If this is such a great product and value then why do you not offer it to cash buyers or owners after their loan has been fulfilled?

Again, my suggestion is that you simply make sure you are purchasing a policy that covers you in a way that has meaning and provides value to you. A personal property or non-marine policy from the right carrier, and I don't know who the right carrier is, still sounds like the best long term protection to me.

 

[Turtro]

This is all good information, thanks for sharing, I want to take advantage of
the 42M 0% when I purchase, guess I better check with my home insurance co to see if I'm covered.