Over-valuing your vehicle
One of the benefits of having Agreed Value on your classic car
insurance is the theoretical absence of drama should the worst
happen to your pride and joy. The value is set in stone and
that’s what it pays out, no matter what. Right? Well, not
always. Allow me to explain:
There are six main principles upon which all insurance is
based - I won’t list them all here as I want you to keep
reading past this point, but one of the most important is what’s
called Utmost Good Faith. The premise here is that insurers
can’t possibly know everything about you or your car, so they have
to rely on a degree of trust, or good faith, in order to do
business with you. That means they count on you to be truthful with
them and in return, they’ll use the information you’ve given to
produce a fair premium for your risk.
This delicate system of balance works well 99% of the time, but
falls down when the wrong information is fed into the process.
Sometimes this is caused by innocent misrepresentation where the
condition of the car may be wrongly seen through a doting owner’s
rose-tinted spectacles; but equally on occasion, there seems to be
a more worrying trend of deliberate false information being given
in order to get a better rate, higher value, or simply an insurance
certificate to get a car taxed.
Way back in the early nineties I recall seeing an instance of a
1970 Bentley T Series being proposed at a fanciful value of
£40,000. When the owner became hard-up, he put in a claim for
fire, but when the assessor examined the charred remains, he found
the thing had no engine. When confronted with this, the owner
was of the opinion that it must have melted….
The issues raised back then have shaped the modern
industry. This guy didn’t get away with it because he was
proved to have lied both about the value and the fact he’d sold the
engine before he torched the rest of the car. These days,
nobody is going to allow an inflated £40k value for a £10k T Series
and what’s more, insurers share information under an arrangement
known as Central Underwriting Exchange (CUE).
So, insurers having closed the door to blatant over-valuation by
individually assessing each car as it comes in, are now faced with
the shrewd operators who are turning to digital photography for
their next trick. Anyone with a good working knowledge of
software such as Photoshop can at the stroke of a mouse, eradicate
huge swathes of rust, flat paint, scratches and even dents.
Had one of these recently where the claims assessor was querying
my expertise on a BMW 635CSi. It had been stolen and the value
agreed at £7,000 was about to be paid out when, due to sheer luck
the car had been discovered by the police. Whilst the
condition in the photos was commensurate with a value of £7,000,
the reality was very different; all panels were very rusty and
there were dents and scrapes that had clearly been there well
before the Beemer was ‘stolen’.
Not surprisingly, the insurers refused to pay out, even though
the value was ‘agreed’, because there had blatantly been a breach
of Utmost Good Faith. In this case, there was also a case for fraud
as the photos had been altered to influence the insurer’s valuation
and therefore profit from the deception. A couple of new wings and
a respray would have seemed a small price to pay compared to a year
of cold porridge oats at Her Majesty’s pleasure…