Setting an agreed value for your classic motor
vehicle
I can’t be the only one marvelling at this seemingly
never-ending classic car price spiral, but it shows no signs of
abating. I observed the near half million quid sale of a Radford
shooting brake Aston DB5 recently with a heavy heart; Astons in
particular have gone bonkers price-wise over the last two years and
I’m now routinely dealing with requests for £50k increases in value
when a policy renews. This can’t go on, as any economics greenhorn
will tell you.
Maybe the whole phenomenon has been fuelled partly by easy and
cheap credit and partly by the rising housing market, although both
look a little shaky as I write. But in any case, nothing goes up
forever - including rockets - and rocketing is just about
the only word for some of the price rises we’ve witnessed recently.
When someone pays £40k for a gear knob, you’ve got to wonder if
it’s time to start smoking bananas.
This all has major implications for insurers and Agreed Value
policies. The problem lies in the way these policies are issued, in
that once the value is agreed, it stays that way for the term of
the policy – usually a full year. So, if there’s a price crash
early on in the policy and a total loss occurs late in the policy,
the insurer will have to pay the value they’ve agreed at the outset
- not the value pertaining at the time, which could be by that time
significantly less.
All of which means they’re going to be extra cautious when
agreeing values from hereon in, especially on the big ticket stuff
such as Astons, Ferraris and the like. It’s not hard to see why,
because in the recession of 1990-92, there was a massive increase
in total loss claims by fire and theft - the ones where it’s
difficult to prove culpability. It’s also hard to prove the
condition of the vehicle if it either can’t be found, or it’s a
pile of ash.
The difference is that today’s systems for cross-checking a
fraud prevention are highly sophisticated, so if there’s suddenly
an outbreak of this kind of thing, it’s highly likely the
perpetrators won’t get away with it this time. However, for a tiny
minority, the temptation to do so may still be too great when they
think they can recover much more than the market value for their
motor by going down the insurance route.
This is the reason why classic values will now be scrutinised
much more carefully by insurers for new policies as well as
renewals. Remember, Agreed Value is simply the fair value on the
open market, but agreed at the outset as opposed to being set at
the time of a claim. Many still seem convinced this means market
value plus 30%, but whilst this may be true for antiques, it
certainly doesn’t work for sophisticated machinery such as classic
cars, which suffer wear and tear.
So, my advice for anyone insuring their classic is to be
realistic about the value they’re requesting, because this is less
likely to be challenged or rejected - do bear in mind once
positions become entrenched, you’re much less likely to get what
you want.
Looking for classic car insurance cover?
Towergate Classic Motor can help you find the right classic car insurance
cover for your motor vehicle. Call us today on 0870 990
6060 for a quote.