Car value up. Insurance, if total loss, how much paid out?
Discussion
When I wrote off my Elise the insurance companies first offer was higher than the value I had declared when I insured it. It is worth noting that unless you are on an agreed value policy the value you give them is an estimate. The risk of the value increasing is with the insurance company. You are insuring the asset not the nominal sum you declare
TwigtheWonderkid said:
On a non agreed value policy, you get the market value or the value you declared, whichever is the lower.
That's not quite what the Financial Ombudsman thinks. Linky (old version of their webpage as the current version has been made more "user-friendly" by having most of the information removed - but AFAIK the underlying policy has not changed)Financial Ombudsman said:
We are likely to award the consumer the full retail value – even if they inadvertently underestimated the value of the vehicle when filling in the proposal form or luckily bought the vehicle for less than it was worth. And we have seen exceptional cases where a vehicle’s value genuinely rose between the date it was bought and the date of the damage or theft
Which is fair enough - the average customer is not an expert at valuing cars so as long as his estimate of the value was a vaguely reasonable one he shouldn't be penalised if it turns out that he underestimated it slightly. I suppose if he claimed that his Ferrari was worth £500 in order to get a cheaper premium then arguably the insurer would be justified in only paying out £500 for it - I guess that's what the word "inadvertently" is alluding to.OP - the link above should contain most of the information you need. If it's a rare or classic car (I assume it is - your average Ford Focus doesn't tend to go up in value over time) then you're probably best with an agreed value policy so there are no nasty surprises; however a standard policy should pay out the market value at the time the car was written off.
I had a car written off that had increased in value and was insured for market value . The insurance only paid out what it was insured for. They said to get the higher figure I should have advised them that it had increased in value. I argued that I did so, each time the renewal came up. Other than that what could I have done; advise them weekly, monthly, each time I checked the values? They didn't have an answer for that. Market value my ar5e.
BertBert said:
TwigtheWonderkid said:
On a non agreed value policy, you get the market value or the value you declared, whichever is the lower.
The ombudsman would appear to disagree with you!The Spruce goose said:
dacouch said:
People familiar with the Ombudsman will be aware that before they modernised the link you used to make it more user friendly, that it contained this...
"We are likely to award the consumer the full retail value – even if they inadvertently underestimated the value of the vehicle when filling in the proposal form or luckily bought the vehicle for less than it was worth. And we have seen exceptional cases where a vehicle’s value genuinely rose between the date it was bought and the date of the damage or theft."
It is no different to using publications to work out a price, like glass's guide, parkers etc."We are likely to award the consumer the full retail value – even if they inadvertently underestimated the value of the vehicle when filling in the proposal form or luckily bought the vehicle for less than it was worth. And we have seen exceptional cases where a vehicle’s value genuinely rose between the date it was bought and the date of the damage or theft."
Another link http://www.financial-ombudsman.org.uk/publications...
BertBert said:
But I believe you are incorrect. Car insurance is not an indemnity. So what you paid for the car is not necessarily related to what the insurance company plans to pay out.
This is what Admiral have to say on the matter...
Market value
The cost of replacing your car, with one of a similar make, model,
year, mileage and condition based on market prices at the time
of the loss. Use of the term ‘market’ in which you would normally
shop for your car e.g. Retail value, will not apply if you bought
your car privately or at an auction. Non-European manufactured
cars will be valued based on European import values or the
nearest British equivalent
I didn't say that it would be based on what he paid, but on what the vehicle is worth. As this fluctuates, the financial loss is calculated at the time of loss.This is what Admiral have to say on the matter...
Market value
The cost of replacing your car, with one of a similar make, model,
year, mileage and condition based on market prices at the time
of the loss. Use of the term ‘market’ in which you would normally
shop for your car e.g. Retail value, will not apply if you bought
your car privately or at an auction. Non-European manufactured
cars will be valued based on European import values or the
nearest British equivalent
Motor insurance is an indemnity insurance, which is modified by policy wordings and excesses. That Admiral wording basically states that the policy is a full indemnity contract; that the size of loss is determined by current market value, not a sum insured or limit of indemnity.
As stated in Re Wilson and Scottish Insurance (1920), the calculation of indemnity is agreed by its value at the date and place of loss, not its cost.
CAPP0 said:
I realised last year that the replacement cost of my Defender had risen massively over what I paid for mine, and risen considerably over what I had stated the value at. I called the ins co and increased the value. I understand fully the market value piece above, but didn't want them turning around in the event of a total loss and saying "yes Cappo, we realise you can't get one like that for less than £6k now but you said it was worth £3k so that's all you're getting".
They tried that with me when my bike got pinched. But I got the difference - all £200 of it - out of them in the end.Edited by CAPP0 on Friday 14th July 07:51
Did the standard eBay completed listings search and emailed a private seller off Gumtree to establish the market value.
As values and percentage change were low, I don't think they cared that much, so other people's mileage may vary, but it can be done.
But I still disagree. Indemnity insurance is a different thing. It is designed to put you in the position you were before the loss. Car insurance does not do this.
_Marvin said:
I didn't say that it would be based on what he paid, but on what the vehicle is worth. As this fluctuates, the financial loss is calculated at the time of loss.
Motor insurance is an indemnity insurance, which is modified by policy wordings and excesses. That Admiral wording basically states that the policy is a full indemnity contract; that the size of loss is determined by current market value, not a sum insured or limit of indemnity.
As stated in Re Wilson and Scottish Insurance (1920), the calculation of indemnity is agreed by its value at the date and place of loss, not its cost.
Motor insurance is an indemnity insurance, which is modified by policy wordings and excesses. That Admiral wording basically states that the policy is a full indemnity contract; that the size of loss is determined by current market value, not a sum insured or limit of indemnity.
As stated in Re Wilson and Scottish Insurance (1920), the calculation of indemnity is agreed by its value at the date and place of loss, not its cost.
The danger of taking out an Agreed Value insurance policy is that you will get the agreed value and NOT the market value at the time of the loss.
So for a car whose value is constantly rising - which appears to be anything slightly older/rare thanks to the current asset bubble market - you'd have to be on the phone to the insurer constantly updating the agreed-value figure and supplying evidence of the new value photos. Quite some hassle (and £25 admin fee each time, I presume?)
(If/when this asset bubble bursts, I wonder if there'll suddenly be a lot of unexplained fires in agreed-value cars?)
So for a car whose value is constantly rising - which appears to be anything slightly older/rare thanks to the current asset bubble market - you'd have to be on the phone to the insurer constantly updating the agreed-value figure and supplying evidence of the new value photos. Quite some hassle (and £25 admin fee each time, I presume?)
(If/when this asset bubble bursts, I wonder if there'll suddenly be a lot of unexplained fires in agreed-value cars?)
Real life story.
I had an e46 m3 in 2006.
It was written off.
Book value / cap value / first offer from a well known high street insurer was £20k.
I said no way, replacement value 'like for like' was £26k.
After 1 month of debate, I received £26k less my insurance excess.
My point is, regardless of book value, the fair replacement value was also considered.
I have the same debate on a z3m coupe - agreed value or not? Hope I never have to have that discussion...
I had an e46 m3 in 2006.
It was written off.
Book value / cap value / first offer from a well known high street insurer was £20k.
I said no way, replacement value 'like for like' was £26k.
After 1 month of debate, I received £26k less my insurance excess.
My point is, regardless of book value, the fair replacement value was also considered.
I have the same debate on a z3m coupe - agreed value or not? Hope I never have to have that discussion...
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